BT 2016 Annual Report Download - page 236

242 BT Group plc
Annual Report 2016
A reconciliation from net cash inflow from operating activities, the most directly comparable IFRS measure, to reported and normalised
free cash flow, is set out below.
Year ended 31 March
2016
£m
2015
£m
2014
£m
Net cash inflow from operating activities 5,179 4,796 4,796
Add back pension deficit payments 880 876 325
Included in cash flows from investing activities
Net capital expenditure (2,459) (2,318) (2,346)
Interest received 10 10 6
Sales of non-current financial assets and dividend received from associates and joint ventures 17 8 4
Included in cash flows from financing activities
Interest paid (558) (590) (614)
Reported free cash flow 3,069 2,782 2,171
Net cash outflow from specific items 232 154 356
Cash tax benefit of pension deficit payments (203) (106) (77)
Normalised free cash flow 3,098 2,830 2,450
Net debt
Net debt consists of loans and other borrowings (both current and non‑current), less current asset investments and cash and cash
equivalents. Loans and other borrowings are measured as the net proceeds raised, adjusted to amortise any discount over the term of the
debt. For the purpose of this measure, current asset investments and cash and cash equivalents are measured at the lower of cost and net
realisable value.
Our net debt calculation starts from the expected future undiscounted cash flows that should arise when our financial instruments
mature. We adjust these cash flows to reflect hedged risks that are re‑measured under fair value hedges, as well as for the impact of the
effective interest method. Currency-denominated balances within net debt are translated to Sterling at swap rates where hedged.
Net debt is a measure of the group’s net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single
measure that can be used to assess both the group’s cash position and its indebtedness. The use of the term ‘net debt’ does not necessarily
mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure.
Net debt is considered to be an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure
is the aggregate of loans and other borrowings (current and non‑current), current asset investments and cash and cash equivalents. A
reconciliation from these to net debt is given below.
At 31 March
2016
£m
2015
£m
Loans and other borrowings 14,269 9,768
Less:
Cash and cash equivalents (497) (434)
Current asset investments (2,918) (3,523)
10,854 5,811
Adjustments:
To retranslate debt balances at swap rates where hedged by currency swaps (652) (357)
To remove accrued interest applied to reflect the effective interest method and fair value adjustments (357) (335)
Net debt 9,845 5,119