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Summary group cash flow statement for the year ended 31 March 2005	2005		2004
	£m		£m

Net cash inflow from operating activities ^(e)	5,898		5,389
Dividends from associates and joint ventures	2		3
Returns on investments and servicing of finance ^(f)	(878	)	(527	)
Taxation paid	(332	)	(317	)
Capital expenditure and financial investment	(2,408	)	(2,477	)
Free cash flow	2,282		2,071
Acquisitions and disposals	(418	)	(60	)
Equity dividends paid	(784	)	(645	)

Cash inflow before management of liquid resources and financing	1,080		1,366
Management of liquid resources	587		1,123
Financing	(1,485	)	(2,445	)

Increase in cash in the year	182		44
Decrease in net debt in the year resulting from cash flows	887		1,222

^(e) Net of deficiency and special pension contributions of £6 million (2004 - £742 million)
^(f) 2004 includes receipt of funds from restructuring the currency swap portfolio of £420 million

Free cash flow chart

Net cash inflow from operating activities
Cash receipts less payments from the group’s operating activities.

Capital expenditure and financial investment
Cash receipts less payments from the purchase and sale of fixed assets.

Free cash flow
Cash receipts less payments from the group’s activities before corporate transactions, dividend payments and financing.

Financing
Cash receipts less payments arising from loan advances or repayments (not interest) and the issue of shares.

Important note
This summary financial statement does not contain sufficient information to allow for as full an understanding of the results of the group and state of affairs of the company or the group and of their policies and arrangements concerning directors’ remuneration as would be provided by the BT Group plc Annual Report and Form 20-F (‘Annual Report’). Also, for the company’s disclosure on any significant ways in which the company’s corporate governance practices differ from those followed by US companies under NYSE listing standards, please see the corporate governance section of the Annual Report. Shareholders who would like more detailed information may obtain a copy of the full Annual Report for 2005 and/or future years, free of charge, by calling our Shareholder Helpline on Freefone 0808 100 4141 (+44 121 433 4404 from outside the UK) or can view it online at www.bt.com/annualreport

Forward-looking statements
Please see the cautionary statement regarding forward-looking statements in the 2005 Annual Report, available as set out in the paragraph below.