BT 2011 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2011 BT annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 189

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189

50
FINANCIAL REVIEW FINANCIAL PERFORMANCE/LIQUIDITY
Dividends
The Board is committed to progressive dividends, while balancing
the need to invest in the business, reduce our net debt and support
the pension fund.
The total dividend proposed for 2011 is 7.4p per share, an increase
of 7% (2010: 6%) and totalling £574m (2010: £534m, 2009:
£503m).
The final dividend proposed is 5.0p per share, an increase of 9%,
amounting to approximately £388m (2010: £356m, 2009: £85m).
This will be paid, subject to shareholder approval, on 5 September
2011 to shareholders on the register on 12 August 2011.
A table setting out the interim, final and total cash dividends paid,
or in the case of the final dividend for 2011, proposed, for the last
five financial years is included in Information for shareholders on
page 164.
LIQUIDITY
Free cash flow
The major sources of the group’s liquidity for 2011, 2010 and 2009
were the cash generated from the group’s operations and
borrowing through short-term and long-term issuances in the
capital markets. These, as well as committed bank facilities, are
expected to remain the key sources of liquidity for the foreseeable
future.
In 2011 adjusted free cash flow was £2,223m, nearly trebling
compared with £772m in 2009. Adjusted free cash flow is defined
on page 58.
Reported free cash flow is one of the group’s key performance
indicators as detailed in Our strategy – Key performance indicators
on page 6. It is an important measure by which our financial
performance is measured, as it represents the cash we generate
Free cash flowa
500
737
1,933
700 900 1,100 1,300 1,500 1,700 1,900 2,100 2,300
2011
2010
2009
£2,223m 6%
a Before pension deficit payments.
b Before specific items.
772
2,106
2,011
2,223
Reported free cash flow
Adjusted free cash flowb
£m
Proposed dividends per share
pence
2009 2010 2011
7.4p 7%
6.5 6.9 7.4
4.6
2.3
1.1
5.4
5.0
2.4
Final
Interim
8
7
6
5
4
3
2
1
0
from operations after capital expenditure and financing costs. It
reflects the cash available to invest in the business, repay debt,
support the pension scheme and pay dividends.
The graph below shows how we have used the cash generated from
our business in 2011.
A reconciliation from net cash inflow from operating activities, the
most directly comparable IFRS measure, to reported free cash flow
and adjusted free cash flow is provided on page 58. Reported free
cash flow for the last five financial years is included in Selected
financial data on page 159.
Summarised cash flow statement
2011 2010 2009
£m £m £m
Cash generated from operations 4,775 4,476 4,934
Net income taxes (paid) received (209) 349 (228)
Net cash inflow from operating
activities 4,566 4,825 4,706
Pension deficit payments 1,030 525 –
Net capital expenditure (2,630) (2,480) (3,038)
Purchase of non-current
asset investments (18) – –
Dividends from associates and
joint ventures 7 3 6
Interest paid (973) (956) (956)
Interest received 29 16 19
Reported free cash flow 2,011 1,933 737
Pension deficit payments (1,030) (525) –
Acquisitions and disposals 64 (68) (227)
Net sale (purchase) of current
financial assets 365 (246) 286
Net (repayment) receipt of
borrowings (1,991) (497) 522
Dividends paid (543) (265) (1,222)
Net issue (purchase) of treasury
shares 8 4 (209)
Foreign exchange (3) (7) 54
Net (decrease) increase in cash
and cash equivalents (1,119) 329 (59)
Cash and cash equivalents at
the start of the year 1,444 1,115 1,174
Cash and cash equivalents at
the end of the year 325 1,444 1,115
Cash utilisation in 2011
£m
Operating
cash flowa
Capital
expendi-
ture
Reported
free cash
flow
Pension
deficit
payments
Dividends Otherc
Net
interest
OtherbNet debt
reduction
944
11
1,0302,011
543 29
467
5,596 2,630
0
1,000
2,000
3,000
4,000
6,000
5,000
a Net cash inflow from operating activities before pension deficit payments of £1,030m.
b Other includes purchase of non-current asset investments and dividends from associates
and joint ventures.
c Other mainly includes foreign exchange movements.
OVERVIEWBUSINESS REVIEWFINANCIAL REVIEWREPORT OF THE DIRECTORSFINANCIAL STATEMENTSADDITIONAL INFORMATION