Exceptional items

Reported operating profit of £1,243 million included a net benefit of £20 million consisting of a £31 million gain relating to the break fee from News Corporation net of related costs and £11 million of restructuring costs which comprise severance payments in relation to a number of senior roles as part of a restructuring initiative to improve operational efficiency. Both exceptional items were recognised in administration costs.

Reported profit after tax of £906 million also included an additional £11 million exceptional gain, which consisted of a £7 million profit on disposal of our stake in Chelsea Digital Media, an exceptional gain of £19 million relating to the re-measurement of derivative financial instruments not qualifying for hedge accounting (2011: £18 million gain), a £5 million charge due to writing-off the fees relating to the previous revolving credit facility, and a £10 million charge relating to the tax effect on exceptional items. See note 1 of Summary financial statement.

Cash flow and financial position

Adjusted free cash flow increased by 14% to £992 million (2011: £869 million), excluding a one-off payment of £82 million in respect of the Premier League rights deposit for the season starting August 2013 (including the one-off payment, adjusted free cash flow was £910 million, see Summary financial statement for a reconciliation). The strong underlying cash flow growth reflects a 12% increase in adjusted EBITDA and a 9% improvement in working capital, offset by increased capital expenditure.

Capital expenditure increased by £34 million to £457 million (2011: £423 million), 6.7% of sales. The largest contributor to growth was the growing scale of our broadband network as we unbundled a further 388 exchanges to reach 83% coverage of the UK, expanded The Cloud WiFi network and launched a fibre product.

Net debt as at 30 June 2012 was £876 million (2011: £750 million). The value of shares repurchased to date under the £750 million share repurchase plan approved by shareholders on 29 November 2011 totalled £549 million, of which £236 million was completed in the fourth quarter.

The Group's liquidity and headroom are comfortable with no bond redemptions until October 2015 when £428 million falls due. As at the end of the year, cash and cash equivalents and short-term deposits were £1,174 million and the Company's £743 million revolving credit facility remained wholly undrawn.

Distributions to shareholders

The Directors propose an increase of 11% in the final dividend to 16.2 pence per share. Taking this into account the full-year dividend will be 25.4 pence per share, consistent with our policy of maintaining a payout ratio of 50% of adjusted earnings.

The proposed dividend continues our strong track record of delivering returns to shareholders and represents the eighth consecutive year-on-year increase in the dividend. Our full-year dividend has doubled since 2006 and has grown at a compound annual growth rate of 20% since it was restarted in 2004. Including the share buy-back, we will have returned almost £1 billion to shareholders in the last 12 months.

The ex-dividend date will be 24 October 2012 and, subject to shareholder approval at the Annual General Meeting to be held on 1 November 2012, the final dividend of 16.2 pence will be paid on 16 November 2012 to shareholders appearing on the register at the close of business on 26 October 2012.

Dividend per share

Back to top