BT 2000 Annual Report Download - page 36

Annual report and Form 20-F 35
respect of the special dividend and »255 million paid as
the ¢rst windfall tax instalment.
The UK Government has changed the pattern of
corporation tax payments from April 1999 by requiring
companies to pay tax in quarterly instalments starting at
the half-year stage in each ¢nancial year. The changes are
being phased in over the 2000 to 2002 ¢nancial years, and
replace the former main single corporation tax payment
made nine months after the ¢nancial year end and ACT
payments associated with dividends. The e¡ect of these
accelerated payment arrangements will be to increase the
tax payments to be made by the group in the 2001 and
2002 ¢nancial years.
Net cash out£ow of »3,752 million for capital
expenditure and ¢nancial investment in the 2000 ¢nancial
year was principally for capital expenditure on plant and
equipment of »3,568 million. In the 1999 ¢nancial year,
there was a net cash in£ow of »1,046 million which mainly
comprised the »4,159 million proceeds of the MCI shares
sold in September 1998 o¡set by expenditure on plant,
equipment and property totalling »3,220 million. The net
cash out£ow of »3,108 million in the 1998 ¢nancial year
was principally for capital expenditure.
Net cash out£ow on acquisitions totalled »6,405 million
in the 2000 ¢nancial year. This included »3,014 million on
the acquisition of the minority interest in BT Cellnet,
»1,254 million invested jointly with AT&T in Japan
Telecom and »659 million in Canadian interests, jointly
owned with AT&T. The net cash out£ow on acquisitions
of »1,967 million in the 1999 ¢nancial year was principally
the acquisition of MCI's minority interest in Concert
Communications, the investments in LG Telecom and Maxis
Communications as well as additional funding of the
European ventures discussed below. The group's investment
in Cegetel in September 1997 represented the main part
of the net cash out£ow of »1,501 million in the 1998
¢nancial year.
Equity dividends paid in the 2000 ¢nancial year
totalled »1,364 million, compared with »1,186 million in
the 1999 ¢nancial year. Dividends paid in the 1998
¢nancial year amounted to »3,473 million and included a
special dividend of »2,244 million originally declared in
September 1996.
The resulting cash out£ow, before liquid resources
and ¢nancing, of »7,141 million for the 2000 ¢nancial
year was partly funded by the issue of new long-term
¢nancial instruments, principally two US dollar
Eurobonds totalling US$1.2 billion and a »600 million
Eurobond. We also drew on commercial paper
programmes under which approximately »4.9 billion
was outstanding at 31 March 2000 and used the group's
existing short-term investments. In the 1999 ¢nancial year,
a net cash in£ow, before liquid resources and ¢nancing, of
»2,972 million was mainly applied by investing in short-
term investments. In the 1998 ¢nancial year, there was a
net cash out£ow of »4,052 million. This was ¢nanced by
the issue of new loans, principally two Eurobonds totalling
US$2.5 billion, and by using the group's existing short-
term investments.
The cash out£ow for the 2000 ¢nancial year resulted
in net debt increasing to »8,700 million at 31 March 2000.
This was in contrast to the cash in£ow for the 1999
¢nancial year, generated mainly by the MCI share sale
proceeds, which resulted in net debt falling to »953 million
at 31 March 1999.
Consequently, balance sheet gearing or the ratio of net
debt (borrowings net of cash and short-term investments)
to shareholders' equity and minority interests stood at 53%
at 31 March 2000, compared with 6.3% a year earlier.
In the 2000 ¢nancial year, the group borrowed
»1,473 million in long-term loans and repaid »587 million
in long-term debt. In May 1999, BT issued a »600 million
5.75% Eurobond repayable in 2028 and, in October 1999, a
US$1.0 billion ¢ve-year 6.75% Eurobond. In August 1999,
BT repaid a US$200 million Eurobond on maturity which
was re¢nanced by a further ten-year US$200 million
Eurobond. On the acquisition of Esat, BT assumed
approximately »550 million of debt, based on Esat's
31 December 1999 balance sheet. It is BT's intention to
re¢nance a signi¢cant part of its commercial paper
borrowings with medium or longer-term debt when market
conditions allow. In the 1999 ¢nancial year, the group
repaid long-term debt totalling »457 million; no signi¢cant
new long-term debt needed to be raised. In the 1998
¢nancial year, the group borrowed »1,637 million in long-
term loans and repaid »338 million in long-term debt. BT
issued a US$1.5 billion ¢ve-year 6.75% Eurobond in April
1997 and a US$1.0 billion ten-year 7% Eurobond in May
1997 in preparation for the group's cash requirements later
in 1997.
In the 2001 ¢nancial year, »529 million of long-term
debt falls due. In April 2000, we issued a »250 million
series of 3.5% index linked notes repayable in 2025. We
will raise further signi¢cant ¢nance in the 2001 ¢nancial
year to meet the ¢nancing needs of the 3G licence, won in
April 2000, increased capital expenditure and acquisitions
of interests in subsidiaries, joint ventures and associates
and their additional funding requirements. We expect to
fund this by liquidating short-term investments, ¢nancing
it with further debt or, if appropriate, public o¡erings and