Note 27 – Group cash flow statement

a) Reconciliation of operating profit to net cash inflow from operating activities before exceptional items

	2005   £m	2004 (restated) £m	2003 (restated) £m
Operating profit of Group undertakings	1,845	1,830	1,572
Group exceptional operating items	251	277	479
Depreciation and amortisation	1,132	1,117	1,088
(Increase)/decrease in stocks	(10)	31	(16)
Decrease/(increase) in debtors	15	(121)	(149)
(Decrease)/increase in creditors	(111)	(6)	159
Decrease in provisions	(35)	(95)	(16)
Share-based payment charges	16	25	37
Net cash inflow from operating activities before exceptional items	3,103	3,058	3,154

b) Disposal of investments

	2005 £m	2004 £m	2003 £m
Cash consideration received	8	33	328
Comprises:
Disposal of Group undertakings	–	–	92
Disposal of joint venture	8	–	–
Disposal of other investments	–	33	236
	8	33	328

c) Acquisition of Group undertakings

	2005 £m	2004 £m	2003 £m
Payments to acquire Group undertakings	(1,151)	–	–
Cash at bank of Group undertakings acquired	29	–	–
	(1,122)	–	–

d) Reconciliation of net cash flow to movement in net debt

	2005 £m	2004 £m	2003 £m
Movement in cash and overdrafts	13	13	34
Net cash outflow from the management of liquid resources	54	48	138
(Increase)/decrease in borrowings	(1,068)	426	(267)
Change in net debt resulting from cash flows	(1,001)	487	(95)
Disposal of Group undertaking	–	–	(62)
Exchange adjustments	112	534	593
Settlement of EPICs (see note 4(b))	–	243	–
Other non-cash movements	(28)	(18)	(15)
Movement in net debt in the year	(917)	1,246	421
Net debt at start of year	(12,632)	(13,878)	(14,299)
Net debt at end of year	(13,549)	(12,632)	(13,878)

During the year ended 31 March 2004 certain cross-currency swaps were terminated and £209m of cash was received. £61m of this cash flow was reported in the cash flow statement within the total of net cash outflow for returns on investments and servicing of finance amounting to £(692)m, and £148m was reported within net cash inflow from financing. Termination of these cross-currency swaps also necessitated a retranslation of Euro denominated debt at new swapped rates amounting to £(140)m, which was reported within the net exchange adjustments of £534m reported above.

e) Analysis of changes in net debt

	At 1 April 2002 £m	Cash flow £m	Disposal of Group undertakings £m	Exchange adjustments £m	Other non-cash movements £m	At 31 March 2003 £m
Cash at bank and in hand	110	12	–	(3)	–	119
Bank overdrafts	(84)	22	–	–	–	(62)
		34
Current asset investments	354	138	–	(10)	–	482
Borrowings due after one year	(12,713)	(1,226)	(55)	497	1,264	(12,233)
Borrowings due within one year	(1,966)	959	(7)	109	(1,279)	(2,184)
		(267)
	(14,299)	(95)	(62)	593	(15)	(13,878)

	At 1 April 2003 £m	Cash flow £m	Exchange adjustments £m	Settlement of EPICs £m	Other non-cash movements £m	At 31 March 2004 £m
Cash at bank and in hand	119	(21)	(2)	–	–	96
Bank overdrafts	(62)	34	2	–	–	(26)
		13
Current asset investments	482	48	(10)	–	–	520
Borrowings due after one year	(12,233)	(1,117)	448	–	1,360	(11,542)
Borrowings due within one year	(2,184)	1,543	96	243	(1,378)	(1,680)
		426
	(13,878)	487	534	243	(18)	(12,632)

	At 1 April 2004 £m	Cash flow £m	Exchange adjustments £m	Other non-cash movements £m	At 31 March 2005 £m
Cash at bank and in hand	96	5	(1)	–	100
Bank overdrafts	(26)	8	–	–	(18)
		13
Current asset investments	520	54	(4)	–	570
Borrowings due after one year	(11,542)	(301)	80	800	(10,963)
Borrowings due within one year	(1,680)	(767)	37	(828)	(3,238)
		(1,068)
	(12,632)	(1,001)	112	(28)	(13,549)

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