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Net debt
 12 Months Ended
Mar. 31, 2020
Subclassifications of assets, liabilities and equities [abstract]  
Net debt
Net debt
Net debt represents the amount of borrowings and overdrafts less cash, current financial investments and related financing derivatives.

Funding and liquidity risk management is carried out by the treasury function under policies and guidelines approved by the Finance Committee of the Board. The Finance Committee is responsible for the regular review and monitoring of treasury activity and for the approval of specific transactions, the authority for which fall outside the delegation of authority to management.
The primary objective of the treasury function is to manage our funding and liquidity requirements. A further important objective is to manage the associated financial risks, in the form of interest rate risk and foreign exchange risk, to within pre-authorised parameters. Details of the main risks arising from our financing and commodity hedging activities are included in note 32.
Investment of surplus funds, usually in short-term fixed deposits or placements with money market funds that invest in highly liquid instruments of high credit quality, is subject to our counterparty risk management policy.
(a) Reconciliation of net cash flow to movement in net debt
 
2020

2019

2018

 
£m

£m

£m

Decrease in cash and cash equivalents
(183
)
(80
)
(807
)
Decrease in financial investments
(7
)
(822
)
(5,953
)
Increase/(decrease) in borrowings and related derivatives¹
(23
)
(708
)
1,209

Net interest paid on the components of net debt²
888

866

808

Change in debt resulting from cash flows
675

(744
)
(4,743
)
Changes in fair value of financial assets and liabilities and exchange movements
(1,081
)
(1,648
)
2,098

Net interest charge on the components of net debt
(1,097
)
(1,076
)
(1,017
)
Other non-cash movements
(84
)
(27
)
(66
)
Movement in net debt (net of related derivative financial instruments) in the year
(1,587
)
(3,495
)
(3,728
)
Net debt (net of related derivative financial instruments) at start of year
(26,529
)
(23,002
)
(19,274
)
Impact of transition to IFRS 16 (2019: IFRS 9)
(474
)
(32
)
—

Net debt (net of related derivative financial instruments) at end of year
(28,590
)
(26,529
)
(23,002
)

Composition of net debt
Net debt is comprised as follows:
 
2020

2019

2018

 
£m

£m

£m

Cash, cash equivalents and financial investments
2,071

2,233

3,023

Borrowings
(30,794
)
(28,730
)
(26,625
)
Financing derivatives¹
133

(32
)
600

 
(28,590
)
(26,529
)
(23,002
)
1.
The financing derivatives balance included in net debt excludes the commodity derivatives (see note 17).
2.
Excludes £6 million (2019: £23 million; 2018: £27 million) cash interest from the Quadgas shareholder loan included within discontinued operations in the cash flow statement.
29. Net debt continued
(b) Analysis of changes in net debt
 
 
 
 
Cash
and cash
equivalents
£m

Financial
investments
£m

Borrowings
£m

Financing
derivatives
£m

 
Total1
£m

At 1 April 2017
 
 
 
1,139

8,741

(28,638
)
(516
)
 
(19,274
)
Cash flow
 
 
 
(807
)
(5,983
)
2,108

(61
)
 
(4,743
)
Fair value gains and losses and exchange movements
 
 
 
(3
)
(149
)
1,088

1,162

 
2,098

Interest income/(charges)
 
 
 
—

85

(1,117
)
15

 
(1,017
)
Other non-cash movements
 
 
 
—

—

(66
)
—

 
(66
)
At 31 March 2018
 
 
 
329

2,694

(26,625
)
600

 
(23,002
)
Impact of transition to IFRS 9
 
 
 
—

—

(32
)
—

 
(32
)
At 1 April 2018 (as restated)
 
 
 
329

2,694

(26,657
)
600

 
(23,034
)
Cash flow
 
 
 
(80
)
(846
)
(240
)
422

 
(744
)
Fair value gains and losses and exchange movements
 
 
 
3

93

(733
)
(1,011
)
 
(1,648
)
Interest income/(charges)
 
 
 
—

29

(1,062
)
(43
)
 
(1,076
)
Other non-cash movements
 
 
 
—

11

(38
)
—

 
(27
)
At 1 April 2019
 
 
 
252

1,981

(28,730
)
(32
)
 
(26,529
)
Impact of transition to IFRS 16
 
 
 
—

—

(474
)
—

 
(474
)
Cash flow
 
 
 
(183
)
(42
)
450

450

 
675

Fair value gains and losses and exchange movements
 
 
 
4

25

(864
)
(246
)
 
(1,081
)
Interest income/(charges)
 
 
 
—

34

(1,092
)
(39
)
 
(1,097
)
Other non-cash movements
 
 
 
—

—

(84
)
—

 
(84
)
At 31 March 2020
 
 
 
73

1,998

(30,794
)
133

 
(28,590
)
Balances at 31 March 2020 comprise:
 
 
 
 
 
 
 
 
 
Non-current assets
 
 
 
—

—

—

1,205

 
1,205

Current assets
 
 
 
73

1,998

—

62

 
2,133

Current liabilities
 
 
 
—

—

(4,072
)
(254
)
 
(4,326
)
Non-current liabilities
 
 
 
—

—

(26,722
)
(880
)
 
(27,602
)
 
 
 
 
73

1,998

(30,794
)
133

 
(28,590
)
1.
Includes accrued interest at 31 March 2020 of £246 million (2019: £223 million; 2018: £197 million).
(c) Reconciliation of cash flow from financing liabilities to cash flow statement
 
2020

2019

2018

 
£m

£m

£m

Cash flows per financing activities section of cash flow statement:
 
 
 
Proceeds received from loans
4,218

2,932

1,941

Repayment of loans
(3,253
)
(1,969
)
(2,156
)
Payments of lease liabilities
(121
)
(70
)
(71
)
Net movements in short-term borrowings
(424
)
179

(764
)
Net movements in derivatives
(187
)
35

(267
)
Interest paid
(957
)
(914
)
(853
)
Cash flows per financing activities section of cash flow statement
(724
)
193

(2,170
)
Adjustments:
 
 
 
Non-net debt-related items
34

24

12

Derivative cash inflow in relation to capital expenditure
13

13

12

Derivative cash flows per investing section of cash flow statement
(223
)
(412
)
330

Discontinued operations
—

—

(231
)
Cash flows relating to financing liabilities within net debt
(900
)
(182
)
(2,047
)
 
 
 
 
Analysis of changes in net debt:
 
 
 
Borrowings
(450
)
240

(2,108
)
Financing derivatives
(450
)
(422
)
61

Cash flow movements relating to financing liabilities within net debt
(900
)
(182
)
(2,047
)


29. Net debt continued
(d) Reconciliation of changes in liabilities arising from financing activities
The table below reconciles changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the statement of cash flows within financing activities.
Following a review in the year, we have changed our accounting policy in relation to the presentation of certain derivatives in the cash flow statement to be presented as investing activities rather than financing activities (further detail is disclosed in note 1). The reclassified cash flows are in relation to derivatives associated with our net investment hedges, and given they are designated in a hedge relationship, the Group has decided to present them together with the underlying hedged item rather than as part of our overall financing activities.
As a result we have separately disclosed the reconciliation below, excluding derivatives associated with our net investment hedges, given that they are classified in the statement of cash flows within investing activities.
 
Borrowings
£m

Financing derivatives
£m

Total
£m

At 1 April 2017
(28,638
)
16

(28,622
)
Cash flow
2,108

281

2,389

Fair value gains and losses and exchange movements
1,088

222

1,310

Interest income/(charges)
(1,117
)
34

(1,083
)
Other non-cash movements
(66
)
—

(66
)
At 31 March 2018
(26,625
)
553

(26,072
)
Impact of transition to IFRS 9
(32
)
—

(32
)
At 1 April 2018 (as restated)
(26,657
)
553

(26,104
)
Cash flow
(240
)
23

(217
)
Fair value gains and losses and exchange movements
(733
)
(334
)
(1,067
)
Interest charges
(1,062
)
(14
)
(1,076
)
Other non-cash movements
(38
)
—

(38
)
At 1 April 2019
(28,730
)
228

(28,502
)
Impact of transition to IFRS 16
(474
)
—

(474
)
Cash flow
450

240

690

Fair value gains and losses and exchange movements
(864
)
(231
)
(1,095
)
Interest charges
(1,092
)
(9
)
(1,101
)
Other non-cash movements
(84
)
—

(84
)
At 31 March 2020
(30,794
)
228

(30,566
)