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Net cash inflow from operating activities
of £5,887 million in the 2001 financial year compared with £5,849
million in the 2000 financial year and £6,035 million in the 1999
financial year. Special contributions to the main pension fund,
described below, of £300 million in the 2001 financial year, £230
million in the 2000 financial year and £200 million in the 1999
financial year were paid, consequently reducing the cash inflow
in those years.
Tax paid in the 2001
financial year totalled £669 million compared with £1,311 million paid in the
2000 financial year. The lower tax paid in the 2001 financial year was due to
the lower profits earned in the 2001 and 2000 financial years compared with the
1999 financial year. The payments in the 2001 and 2000 financial years included
the first quarterly instalments under the new corporation tax regime in the UK.
Tax paid in the 1999 financial year, which totalled £630 million, included the
second and final windfall tax instalment of £255 million which had been levied
by the UK Government on privatised companies in the 1998 financial year. Less
UK corporation tax was paid in the 1999 financial year than in the two
succeeding years because the advance corporation tax (ACT) on a special
dividend paid in September 1997 was able to be offset. The tax paid in the 1998
financial year had included £561 million ACT paid in respect of the special
dividend.
HM Government 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 financial year. The changes
are being phased in over the 2000 to 2002 financial years, and replace
the former main single corporation tax payment made nine months
after the financial year end and ACT payments associated with dividends.
Net cash outflow of £8,442
million for capital expenditure and financial investment in the 2001 financial
year was principally for capital expenditure on plant and equipment of £4,756
million and £4,208 million invested in third-generation mobile licences. The
net cash outflow of £3,752 million in the 2000 financial year was principally
for capital expenditure on plant and equipment. In the 1999 financial year,
there was a net cash inflow of £1,046 million which mainly comprised the £4,159
million proceeds of the MCI shares sold in September 1998 offset by expenditure
on plant, equipment and property totalling £3,220 million.
Net cash outflow on
acquisitions totalled £13,754 million in the 2001 financial year. This included
£11,438 million invested in Viag Interkom, including acquisition of its
licences, £1,233 million in Telfort, £1,176 million in completing the Esat
Telecom Group acquisitions, offset by £464 million received on the disposal of
sunrise communications and from other divestments. The net cash outflow on
acquisitions of £6,405 million in the 2000 financial year was principally
£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 outflow on
acquisitions of £1,967 million in the 1999 financial year was mainly the
acquisition of MCI’s minority interest in Concert Communications and the
investments in LG Telecom and Maxis Communications, as well as additional
funding of our European ventures. We paid the consideration of £856 million for
the completion of the Esat Digifone minority acquisition in early April 2001.
Equity dividends paid in
the 2001 financial year totalled £1,432 million, compared with £1,364 million
in the 2000 financial year and £1,186 million in the 1999 financial year. As
explained above, we do not intend to pay any equity dividends in the 2002
financial year.
The resulting cash outflow,
before liquid resources and financing, of £19,127 million for the 2001
financial year was funded by our issuing substantial amounts of long-term debt
instruments and drawing on our medium-term notes programmes. In December 2000,
we raised £6,909 million through the issue of four series of US dollar notes
totalling $10 billion, with maturities between three and thirty years. In
February 2001, we received £6,038 million through the issue of six series of
euro and sterling notes totaling €9.7 billion, with maturities between two and
sixteen years. In April 2000, we issued a twenty five-year £250 million
index-linked Eurobond. We issued £7,219 million of medium term notes in the
year. Commercial paper outstanding decreased by £1,390 million over the year to
31 March 2001. |
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| Summarised
cash flow statement |
|
|
|
|
| Net cash
inflow from operating activities |
5,887 |
|
5,849 |
|
6,035 |
|
| Dividends
from associates and joint ventures |
10 |
|
5 |
|
2 |
|
| Net cash
outflow for returns on investments and servicing of finance |
(727 |
) |
(163 |
) |
(328 |
) |
| Taxation
paid |
(669 |
) |
(1,311 |
) |
(630 |
) |
| Net cash
inflow (outflow) for capital expenditure and financial investment |
(8,442 |
) |
(3,752 |
) |
1,046 |
|
| Net cash
outflow for acquisitions and disposals |
(13,754 |
) |
(6,405 |
) |
(1,967 |
) |
| Equity dividends
paid |
(1,432 |
) |
(1,364 |
) |
(1,186 |
) |
|
| Cash inflow
(outflow) before management of liquid resources and financing |
(19,127 |
) |
(7,141 |
) |
2,972 |
|
| Management
of liquid resources |
(480 |
) |
1,236 |
|
(2,447 |
) |
| Net cash
inflow (outflow) from financing |
19,735 |
|
5,959 |
|
(458 |
) |
|
| Increase
in cash in the year |
128 |
|
54 |
|
67 |
|
|
| Decrease
(increase) in net debt in the year |
(18,942 |
) |
(6,582 |
) |
3,146 |
|
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In the 2000 financial year,
there was a net cash outflow of £7,141 million which was partly funded by the
issue of new long-term financial instruments, principally two US dollar Eurobonds
totalling US$1.2 billion and a £600 million Eurobond. In that year, 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 financial year, a net cash inflow, before liquid
resources and financing, of £2,972 million was mainly applied by investing in
short-term investments.
The cash outflow for the
2001 financial year resulted in net debt increasing to £27,942 million at 31 March
2001. In the previous financial year, the cash outflow for the year resulted in
net debt increasing to £8,700 million at 31 March 2000. This was in contrast to
the cash inflow for the 1999 financial 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 192% at 31
March 2001, compared with 53% a year earlier.
In the 2001 financial year,
the group borrowed £14,552 million in long-term loans and repaid £225 million
in long-term debt. This was in accordance with our intention, expressed at the
end of the 2000 financial year, to refinance a significant part of our
commercial paper borrowings with medium or longer-term debt when market
conditions allowed and also to raise further significant finance in the 2001
financial year to meet the financing needs of the UK third-generation licence,
won in April 2000, increased capital expenditure and acquisitions of interests
in subsidiaries, joint ventures and associates and their additional funding
requirements.
In April 2000, BT issued a
£250 million 3.5% index-linked Eurobond repayable in 2025. In December 2000, we
issued four series of notes comprising US$2.8 billion 8.625% thirty-year notes,
US$3.0 billion 8.125% ten-year notes, US$3.1 billion 7.625% five-year notes and
US$1.1 billion three-year floating rate notes. In February 2001, we issued six
series of notes comprising £700 million 7.5% sixteen-year notes, €2.25 billion
6.875% ten-year notes, €3.0 billion 6.125% six-year notes, £400 million 7.125%
six-year notes, €1.75 billion 5.625% three-year notes and €1.0 billion two-year
floating rate notes. Loans repaid during the year totalling £225 million were
mainly in respect of the Esat Telecom acquisition.
In the 2000 financial 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 five-year 6.75% Eurobond. In
August 1999, BT repaid a US$200 million Eurobond on maturity which was
refinanced 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. In the 1999 financial year, the group repaid
long-term debt totalling £457 million; no significant new long-term debt needed
to be raised.
In the 2002 financial year,
£507 million of long-term debt falls due. The rights issue is proposed to raise
approximately £5.9 billion, after expenses, which, together with the cash from
disposals already announced, should allow us to meet our debt reduction target
of £10 billion by December 2001. Any debt assumed by Yell or BT Wireless on
demerger or proceeds received from the sale of Yell will further contribute to
debt reduction. We expect net debt to increase as a result of net cash outflows
from our planned capital expenditure and interest payments even after taking
into account the restructuring plans. However, our target is now to reduce net
debt in Future BT to between £15 billion and £20 billion by 31 March 2002.
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