BT 2007 Annual Report Download - page 44

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FINANCING
Summarised cash flow statement 2007
£m
2006
£m
2005
£m
Cash generated from operations 5,245 5,777 5,906
Income taxes paid (35) (390) (332)
Net cash inflow from operating
activities 5,210 5,387 5,574
Net purchase of property, plant,
equipment and software (3,209) (2,874) (2,945)
Net acquisition of subsidiaries,
associates, joint ventures and
group undertakings (237) (167) (418)
Net sale of current and non current
asset investments 258 3,220 1,247
Dividends received from associates
and joint ventures 612
Interest received 147 185 374
Net cash (used) received in
investing activities (3,035) 365 (1,740)
Net repayment of borrowings (765) (2,946) (1,292)
Equity dividends paid (1,057) (907) (784)
Repurchase of shares (279) (339) (193)
Interest paid (797) (1,086) (1,260)
Net cash used in financing activities (2,898) (5,278) (3,529)
Effect of exchange rates on cash and
cash equivalents (37) ––
Net (decrease) increase in cash and
cash equivalents (760) 474 305
(Increase) decrease in net debt
resulting from cash flows (219) 199 887
The cash inflow from operations of £5,245 million in the 2007
financial year compares with £5,777 million in the 2006
financial year and £5,906 million in the 2005 financial year. The
reduction of £532 million in the 2007 financial year, compared
to the 2006 financial year, is mainly due to the pension
deficiency payment of £520 million in the 2007 financial year
(2006: £54 million, 2005: £nil). The reduction in the 2006
financial year when compared to the 2005 financial year was
primarily as a result of lower working capital inflows of
£120 million compared with £253 million in the 2005 financial
year. Net tax paid in the 2007 financial year was £35 million
compared with £390 million in the 2006 financial year and
£332 million in the 2005 financial year. The reduction in net tax
payments in the 2007 financial year when compared to the
2006 financial year mainly reflects the initial net cash receipt of
£376 million in relation to the settlement with HM Revenue and
Customs discussed in the specific items section of this Financial
review. The increase in tax payments in the 2006 financial year
when compared with the 2005 financial year was primarily as a
result of normalisation of tax payments following low tax
payments in the 2005 financial year.
Net cash outflow from investing activities of £3,035 million in
the 2007 financial year compared with a net cash inflow of
£365 million in the 2006 financial year and net cash outflow of
£1,740 million in the 2005 financial year. The 2006 financial
year includes a net cash inflow of £3,220 million on the sale of
investments, which was used to partly fund the repayment of
maturing debt in the 2006 financial year, compared to a net
cash inflow of £258 million from the sale of investments in the
2007 financial year. Net cash outflow for the purchase of
property, plant and equipment and computer software was
£3,209 million in the 2007 financial year, compared to
£2,874 million in the 2006 financial year and £2,945 million in
the 2005 financial year. The increase in the 2007 financial year
reflects the preparations for 21CN and the systems
developments required by the Undertakings agreed with Ofcom.
The net cash outflow for acquisitions in the 2007 financial year
totalled £237 million and mainly related to the acquisition of
INS, PlusNet, dabs.com and Counterpane. In the 2006 financial
year, the net cash outflow for acquisitions was £167 million and
mainly related to the acquisitions of Radianz and Atlanet. In the
2005 financial year, the net cash outflow for acquisitions of
£418 million mainly related to the acquisitions of Infonet and
Albacom. Interest received was £147 million in the 2007
financial year, compared to £185 million in the 2006 financial
year and £374 million in the 2005 financial year. The interest
receipts in the 2007 financial year include an initial cash
settlement of £74 million from HM Revenue and Customs
discussed in the specific items section of this Financial review.
Excluding this receipt, interest received was £112 million lower
than the 2006 financial year reflecting the lower level of
investments held by the group. The 2005 financial year included
receipts of £153 million on restructuring the group’s swap
portfolio.
Net cash outflow from financing activities of £2,898 million in
the 2007 financial year compares with £5,278 million in the
2006 financial year and £3,529 million in the 2005 financial
year. In the 2007 financial year, the full and part maturity of
notes and leases resulted in a cash outflow of £1,085 million
mainly offset by the net issue of commercial paper of £309
million. Included in the 2006 financial year net cash outflow is a
repayment of £4,432 million for maturing debt. In addition, the
group raised new sterling floating rate borrowing of £1,000
million and issued commercial paper raising net proceeds of
£464 million. Equity dividends paid in the 2007 financial year
were £1,057 million, compared with £907 million and
£784 million in the 2006 and 2005 financial years, respectively.
Interest paid in the 2007 financial year was £797 million
compared to £1,086 million and £1,260 million in the 2006 and
2005 years, respectively. The reduction in the 2007 financial
year mainly reflects the impact of debt maturities noted above.
The reduction between the 2005 and 2006 financial years
reflects payments of £139 million made in the 2005 financial
year associated with restructuring the group’s swap portfolio.
During the 2007 financial year the share buyback programme
continued with the group repurchasing 148 million shares for
consideration of £401 million and issued 67 million shares for a
consideration of £123 million. During the 2006 and 2005
financial years the group repurchased 166 million and
101 million shares for a consideration of £360 million and
£195 million, respectively.
At 31 March 2007, net debt was £7,914 million, compared
with £7,534 million at 31 March 2006 and £7,893 million at
31 March 2005. Net debt consists of loans and other borrowings
(current and non current) less current asset investments and
cash and cash equivalents. Loans and other borrowings are
measured at the net proceeds raised, adjusted to amortise any
discount over the term of the debt. For the purpose of this
analysis current asset investments and cash and cash equivalents
are measured at the lower of cost and net realisable value.
BT Group plc Annual Report & Form 20-F 43
Report of the Directors Financial