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Financial position and financial management
Financial position
Balance sheet
Our balance sheet at 31 March 2007 can be summarised as follows:
| Assets £m |
Liabilities £m |
Net assets £m |
|
|---|---|---|---|
| Property, plant & equipment and non-current intangible assets | 19,039 | - | 19,039 |
| Goodwill and non-current investments | 1,617 | - | 1,617 |
| Current assets and liabilities | 1,344 | (2,094) | (750) |
| Other non-current assets and liabilities | 36 | (1,902) | (1,866) |
| Post-retirement obligations | 37 | (1,282) | (1,245) |
| Deferred tax | - | (2,389) | (2,389) |
| Assets and liabilities held for sale | 1,968 | (450) | 1,518 |
| Total before net debt and held for sale | 24,041 | (8,117) | 15,924 |
| Net debt | 4,348 | (16,136) | (11,788) |
| Total as at 31 March 2007 | 28,389 | (24,253) | 4,136 |
| Total as at 31 March 2006 | 25,924 | (22,431) | 3,493 |
The increase in net assets from £3,493 million at 31 March 2006 to £4,136 million at 31 March 2007 resulted from the profit from continuing operations of £1,310 million, the profit for the year from discontinued operations of £86 million, net income recognised directly in equity of £103 million and other changes in equity of £43 million, partially offset by repurchases of shares of £169 million and dividends paid of £730 million.
Net debt and gearing
Net debt increased by £938 million from £10,850 million at 31 March 2006 to £11,788 million at 31 March 2007 as cash flows from operations of £3,271 million were exceeded by the combination of capital expenditure of £2,218 million, cash paid for acquisitions of £269 million, repurchases of shares of £169 million, dividends paid of £730 million, tax paid of £313 million and other movements of £510 million.
At 31 March 2007, net debt comprised borrowings of £15,711 million and bank overdrafts of £6 million, less cash and cash equivalents of £1,593 million, financial investments of £2,098 million and derivative financial instruments with a net carrying value of £238 million (31 March 2006: £13,126 million and £3 million, less £1,452 million, £384 million and £443 million respectively).
The maturity of borrowings is provided in note 27 to the accounts. At 31 March 2007 it can be summarised as follows:
Gearing at 31 March 2007 and 31 March 2006, calculated as net debt at that date expressed as a percentage of net debt plus net assets shown in the balance sheet, amounted to 74% and 76% respectively. We do not consider that this standard gearing ratio is an appropriate measure as it does not reflect the economic value of the assets of our UK and US regulated businesses. During 2007/08, we intend to develop a new measure to monitor gearing and financial discipline.
Equity shareholders' funds
Equity shareholders' funds rose from £3,482 million at 31 March 2006 to £4,125 million at 31 March 2007. The increase was mainly explained by the retained profit for the year to 31 March 2007 of £818 million, partially offset by net other recognised expense of £189 million, comprising net foreign exchange adjustments relating to the retranslation of US dollar denominated net assets and associated hedges, actuarial losses, net gains on hedges and available-for-sale investments and tax thereon.