Note 27 - Group cash flow statement

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

	2004	2003	2002
	£m	£m	£m
Operating profit of Group undertakings	1,855	1,612	1,060
Group exceptional operating items	277	476	673
Depreciation and amortisation	1,117	1,088	876
Decrease/(increase) in stocks	31	(16)	3
(Increase)/decrease in debtors	(121)	(149)	222
(Decrease)/increase in creditors	(6)	159	(180)
Decrease in provisions	(95)	(16)	(260)
Net cash inflow from operating activities before exceptional items	3,058	3,154	2,394

b) Disposal of investments

	2004	2003	2002
	£m	£m	£m
Cash consideration received	33	328	37
Comprises:
Disposal of Group undertakings	-	92	37
Disposal of other investments	33	236	–
	33	328	37

c) Acquisition of Group undertakings

	2004	2003	2002
	£m	£m	£m
Payments to acquire Group undertakings	–	–	(943)
Overdraft of Group undertakings acquired	–	–	(7)
	–	–	(950)

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

	2004	2003	2002
	£m	£m	£m
Movement in cash and overdrafts	13	34	22
Net cash outflow/(inflow) from the management of liquid resources	48	138	(347)
Decrease/(increase) in borrowings	426	(267)	(1,206)
Change in net debt resulting from cash flows	487	(95)	(1,531)
Acquisition of Group undertakings	–	–	(3,678)
Disposal of Group undertaking	–	(62)	–
Exchange adjustments	534	593	20
Settlement of EPICs (see note 4(b))	243	–	–
Other non-cash movements	(18)	(15)	(5)
Movement in net debt in the year	1,246	421	(5,194)
Net debt at start of year	(13,878)	(14,299)	(9,105)
Net debt at end of year	(12,632)	(13,878)	(14,299)

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 re-translation 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

			Acquisition		Other
	At 1 April	Cash	of Group	Exchange	non-cash	At 31 March
	2001	flow	undertakings	adjustments	movements	2002
	£m	£m	£m	£m	£m	£m
Cash at bank and in hand	28	82	–	–	–	110
Bank overdrafts	(24)	(60)	–	–	–	(84)
		22
Current asset investments	491	(347)	215	(5)	–	354
Borrowings due after one year	(8,254)	(1,830)	(3,189)	11	549	(12,713)
Borrowings due within one year	(1,346)	624	(704)	14	(554)	(1,966)
		(1,206)
	(9,105)	(1,531)	(3,678)	20	(5)	(14,299)
			Disposal		Other
	At 1 April	Cash	of Group	Exchange	non-cash	At 31 March
	2002	flow	undertakings	adjustments	movements	2003
	£m	£m	£m	£m	£m	£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)
					Other
	At 1 April	Cash	Exchange	Settlement	non-cash	At 31 March
	2003	flow	adjustments	of EPICs	movements	2004
	£m	£m	£m	£m	£m	£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)