Interim Results

MFI Furniture Group PLC 27 July 2000 MFI FURNITURE GROUP Plc INTERIM RESULTS FOR THE 24 WEEKS ENDED 17 JUNE 2000 MFI Furniture Group Plc, the UK's largest manufacturer and retailer of kitchen and bedroom furniture, announces its interim results for the 24 weeks ended 17 June 2000. Financial Highlights * Turnover on continuing operations up 17% to £435.5m (H1 1999: £373.1m) - UK Retail up 15% to £337m - Howden Joinery up 47% to £58.1m - France level in local currency at £38.6m * Pre-tax profit up 37% to £34.7m (H1 1999: £25.3m) before £19.4m benefit from exceptional items * On track to achieve £8m cost savings targeted for full year * Pre-exceptional basic earnings per ordinary share up 37% to 4.19p (H1 1999: 3.06p) - Reported earnings per share up 129% to 7.01p after exceptionals Interim dividend increased by 29% to 0.9 pence per share (H1 1999: 0.7p) Strong cash flow with net cash of £96m as at 17 June 2000 Strategic Priorities * Extensive review of market position and branding undertaken from 10,000-strong customer sample * Continuing focus on operational improvements and programme of overhead reduction * Roll-out of initiatives building on core business turnaround in UK kitchens and bedrooms * Substantial store opening programme planned to achieve full UK geographic coverage: - Up to 20 new out-of-town furniture centres - Two new pilot high street stores opening in Greater London - Conran Design Group appointed to develop new look for stores * Agreement to sell Hygena kitchens in Currys stores John Hancock, Chief Executive, said: 'Today we are reporting on an encouraging first half, showing a strong recovery in sales and profits. 'The aggressive turnaround of MFI is continuing and we are taking some very practical actions to unlock value. We are working hard to achieve operational improvements throughout the business and are also implementing plans to drive organic growth which are both low risk and build on the Group's existing strengths and skills. Through these, I am confident that MFI's transformation can be achieved.' Contacts: MFI Furniture Group Plc John Hancock, Chief Executive 020 8913 5319 Brunswick Group Limited Susan Gilchrist / Charlotte Elston 020 7404 5959 William Cullum / Katya Wright CHAIRMAN'S STATEMENT __________________________________________________________________ I am pleased to report on an encouraging performance for the first 24 weeks of 2000. Following the change to our year-end, all financial comparisons are based on pro forma data for the same period in 1999. Sales were very robust, particularly in the critical first quarter. Turnover on continuing operations rose by 17% to £435.5m (£373.1m). On a pre- exceptional basis, operating profit on continuing operations increased by 18% to £32.1m and pre-tax profit rose 37% to £34.7m. Excluding the effect on rentals of the various sale and leaseback arrangements last year, operating profit would have been £3.8m higher, an increase of 32% on last year's operating profit from continuing operations. In view of this result, the Board has declared an interim dividend of 0.9p per share, which will be paid on 27 October 2000 to members on the register at 15 September 2000. This is in line with our objective of maintaining an acceptable level of dividend cover while providing shareholders with dividend growth, and represents an increase of 29% on the previous year. OPERATIONS All parts of the UK business contributed to solid sales growth. UK retail sales rose by 15% to £337m and Howden Joinery by 47% to £58.1m with like-for- like sales rising by 29%. Howden Joinery continues to show excellent potential, and we shall open our 150th outlet in September. Following two years of strong growth, sales in France were level in local currency, but fell by 1% to £38.6m in terms of sterling. In the MFI retail business, we have actively driven a wide-ranging programme of business improvement initiatives. Our Quick Stock programme has now introduced smaller and lower-priced items into 112 retail branches. We have negotiated a number of Group-wide purchasing discounts with our major finished goods and raw materials suppliers. We have also made significant improvements in the efficiency and productivity of our logistics operation which will produce cost savings in the second half of the year. The Chiswick store - our pilot town-centre outlet - continued to exceed expectations, with sales per square foot running at twice the Group average. We shall continue to test this new retail model carefully, and will open further shops in Staines (August) and Clapham (October). FINANCIAL REVIEW Gross margins have been held within our target range of 54 - 55%.Costs continue to be controlled and we expect to meet our targeted £8m reduction in overheads in the course of 2000. Payroll costs increased from £80.3m to £97.3m on a continuing operations basis, due principally: to the expansion of Howden, which held its payroll steady as a percentage of sales; to performance bonuses and increased sales commission arising from an excellent first quarter for MFI; and to associated increased staff costs for manufacturing. The Group generated an exceptional profit of £19.4m before tax. Following a major review of our business we have decided to consolidate our distribution arrangements at the purpose-built Northampton centre, which enables us to write back some £12.7m of provisions made in the 1998 accounts. We also realised a £11.2m profit on the sale of our packaging business. Against this, we incurred non-recurring costs of £4.0m associated with structural change and the reorganisation of the supply chain. We have also provided £0.5m in connection with the disposal of our pilot operation in Spain. The Group's cash position has been dramatically improved over the period, due to strong cash generation from trading and to the sale of our packaging business and the remaining three Home Delivery Centres. Against net borrowings at last June of £110m, we now have a positive net cash balance of some £100m, giving us a sound base on which to invest for the future. Capital expenditure for 2000 is forecast to be no more than £30m. STRATEGIC DEVELOPMENT We have undertaken a thorough strategic review of our market, our customers, our brands and our product portfolio. The result is a two-phase plan which will enable us to drive MFI forward as an integrated business over the next five years. 1. Core Business Turnaround In the first phase, we are concentrating on unlocking the very considerable potential within our existing business. - Store Openings: we plan to achieve full national coverage for our out-of-town MFI stores in the UK through a mixture of new openings and relocations which will expand the number from 186 to around 220. Subject to careful testing of the concept, we may open up to 45 smaller town-centre outlets. We shall also expand our network in France towards a planned 200 stores. At the same time, we shall focus on improving the productivity of each outlet through a programme of refurbishment and redesign. - New Product Development: we shall also harness our existing product development skills in order to achieve design leadership. Continued improvement to our product offering and our customer service will allow us to take full advantage of our control of every stage of the value chain. - Growing Howden Joinery: we shall continue to expand our trade business, and plan to double the number of Howden Joinery outlets over the next three years. 2. Development and Growth A stronger financial and operating platform will provide the basis for the second phase of our strategy, which will focus on developing new channels to market, both as a retailer and as a manufacturer. I am pleased to announce today that we have reached an agreement with Dixons Stores Group to operate kitchen concessions in a number of Currys outlets over the next three years. This is an exciting development which builds on MFI's strengths as the UK's number one manufacturer and retailer of kitchens and bedrooms. Where we identify profitable opportunities for MFI's own retail business, we shall continue to add new product categories, aiming to replicate 1999's successes in home office furniture. In Howden Joinery, we are taking advantage of existing relations with regional and local builders to pilot selling to the new-build market through existing depots. Our e-commerce web site was launched in August last year, generating sales approaching £2m to date. To date, we have deliberately concentrated our international efforts on the French market. The continuing success in France will give us confidence to look at other international options during 2001. THE IMMEDIATE OUTLOOK It is too early to forecast the outcome for the full year, although we have had an encouraging first half. Sales in the UK business have been volatile in recent months, and since last year's third and fourth quarters were relatively strong it may be difficult to maintain comparable levels of improvement in the second half. We have made significant improvements to the Group's business over the last year, and we believe that we are on course to deliver continued improvements in performance. Ian Peacock Chairman ------------------------------------------------------------------- KPMG __________________________________________________________________ Independent review report by KPMG Audit Plc to MFI Furniture Group Plc Introduction We have been instructed by the Company to review the financial information set out on pages (5) to (12) except for the pro forma financial information and related pro forma notes and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information reviewed by us. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of Interim financial information issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the 24 weeks ended 17 June 2000. KPMG Audit Plc Chartered Accountants London -------------------------------------------------------------------- CONSOLIDATED PROFIT AND LOSS ACCOUNT 24 weeks to 24 weeks to 19 June 1999 17 June 2000 Pro forma ------------------------ ---------------------- Total Opera- Excep- tions tional Con- Discon- Pre- Items tinuing tinued excep- Unau- Opera- Opera- tional dited Total tions tions Total Unau- (note Unau- Unau Unau- Unau- Notes dited 3) dited dited dited dited £m £m £m £m £m £m Turnover 2 435.5 - 435.5 373.1 12.0 385.1 Change in stocks 13.7 - 13.7 (8.3) - (8.3) Other operating income 9.2 - 9.2 10.6 - 10.6 ------ ------ ------ ------ ------ ------ 458.4 - 458.4 375.4 12.0 387.4 ------ ------ ------ ------ ------ ------ Raw materials and consumables 211.4 - 211.4 158.6 3.7 162.3 Staff costs 97.3 (0.4) 96.9 80.3 2.4 82.7 Depreciation of tangible fixed assets 14.5 - 14.5 15.0 0.9 15.9 Other operating charges 103.1 (7.8) 95.3 94.3 2.6 96.9 ------ ------ ------ ------ ------ ------ 426.3 (8.2) 418.1 348.2 9.6 357.8 ------ ------ ------ ------ ------ ------ Operating profit 2 32.1 8.2 40.3 27.2 2.4 29.6 Profit/(loss) on disposal of fixed assets 0.7 - 0.7 (0.7) - (0.7) Profit on disposal of discontinued operations - 11.2 11.2 - - - ------ ------ ------ ------ ------ ------ Profit on ordinary activities before interest 32.8 19.4 52.2 26.5 2.4 28.9 ------ ------ Net interest receivable/ (payable) 1.9 - 1.9 (3.6) ------ ------ ------ ------ Profit before taxation 2 34.7 19.4 54.1 25.3 Tax 4 (9.8) (2.6) (12.4) (7.1) ------ ------ ------ ------ Profit for the financial period 24.9 16.8 41.7 18.2 Dividends 5 (5.3) - (5.3) (4.2) ------ ------ ------ ------ Amount transferred to reserves 6 19.6 16.8 36.4 14.0 ------ ------ ------ ------ Earnings per share Earnings per 10p ordinary share 7 4.19p 2.82p 7.01p 3.06p Diluted earnings per 10p ordinary share 7 4.12p 2.78p 6.90p 3.06p CONSOLIDATED PROFIT AND LOSS ACCOUNT cont 52 weeks to 1 January 2000 Pro forma --------------------------------- Continuing Discon- Operations tinued Total Unaudited Operations Unaudited Unaudited Note £m £m s £m Turnover 2 770.9 26.0 796.9 Change in stocks 7.8 - 7.8 Other operating income 22.8 - 22.8 ------- ------- ------- 801.5 26.0 827.5 ------- ------- ------- Raw materials and consumables 355.4 8.5 363.9 Staff costs 173.0 5.5 178.5 Depreciation of tangible fixed assets 33.5 1.9 35.4 Other operating charges 209.9 6.6 216.5 ------- ------- ------- 771.8 22.5 794.3 ------- ------- ------- Operating profit 2 29.7 3.5 33.2 Profit/(loss) on 4 disposal of fixed assets 4.1 0.1 .2 Profit on disposal of discontinued operations - - - ------- ------- ------- Profit on ordinary activities before interest 33.8 3.6 37.4 ------- ------- Net interest receivable/(payable) (8.2) ------- Profit before taxation 2 29.2 Tax 4 (7.0) ------- Profit for the financial period 22.2 Dividends 5 (8.3) ------- Amount transferred 6 to reserves 13.9 ------- Earnings per share Earnings per 10p ordinary share 7 3.73p Diluted earnings per 10p ordinary share 7 3.73p CONSOLIDATED BALANCE SHEET As at As at As at 17 June 19 June 1 January 2000 1999 2000 Unaudited Notes Unaudited Pro forma Audited FIXED ASSETS £m £m £m Tangible assets 280.9 456.3 315.6 Investments 11.2 8.0 9.2 ------- ------- ------- 292.1 464.3 324.8 ------- ------- ------- CURRENT ASSETS Stocks 105.7 85.1 92.6 Debtors 81.9 73.3 71.2 Investments 10 0.5 0.6 0.4 Cash at bank and in hand 10 102.0 55.6 30.2 ------- ------- ------- 290.1 214.6 194.4 ------- ------- ------- CREDITORS FALLING DUE WITHIN ONE YEAR Borrowings 10 3.3 155.5 18.8 Other amounts 222.7 183.8 169.5 ------- ------- ------- 226.0 339.3 188.3 ------- ------- ------- Net current assets/ 64.1 (124.7) 6.1 (liabilities) TOTAL ASSETS LESS CURRENT LIABILITIES 356.2 339.6 330.9 CREDITORS FALLING DUE AFTER MORE THAN ONE YEAR Borrowings 10 3.3 11.3 3.8 Other amounts 0.6 0.8 0.8 ------- ------- ------- 3.9 12.1 4.6 ------- ------- ------- PROVISIONS FOR LIABILITIES AND CHARGES 7.7 18.7 18.1 ------- ------- ------- Net assets 344.6 308.8 308.2 ------- ------- ------- CAPITAL AND RESERVES Called up share 59.5 59.5 59.5 capital Share premium 6 43.9 43.9 43.9 account Other reserves 6 18.2 15.3 17.0 Revaluation 6 43.4 111.8 44.3 reserve Profit and loss 6 179.6 78.3 143.5 account ------- ------- ------- Equity 344.6 308.8 308.2 shareholders' funds ------- ------- ------- CONSOLIDATED CASH FLOW STATEMENT 24 weeks to 24 weeks to 52 weeks to 17 June 19 June 1 January 2000 1999 2000 Notes Unaudited Unaudited Unaudited Pro forma Pro forma £m £m £m Cash inflow from operating activities 8 66.1 41.9 39.0 Returns on investments and servicing of finance 9 1.9 (3.2) (8.4) Taxation 6.8 (17.7) (17.7) Capital expenditure (net) 9 7.7 (12.2) 115.1 Proceeds from sale of subsidiary 13.7 - - Equity dividends paid (8.2) (4.3) (4.3) ------- ------- ------- 88.0 4.5 123.7 Management of liquid resources 9 (0.1) - 0.2 Financing 9 (16.1) 17.5 (127.0) ------- ------- ------- Increase/(decrease) in cash in the period 71.8 22.0 (3.1) ------- ------- ------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase/(decrease) in cash in the period 71.8 22.0 (3.1) Cash movement on : - debt and lease financing 9 16.1 (17.5) 127.0 - cash flow from decrease in liquid resources 0.1 - (0.2) ------- ------- ------- Change in net debt resulting from cash flows 88.0 4.5 123.7 Effect of foreign exchange rate changes 10 - - (0.3) ------- ------- ------- Movement in net debt in the period 88.0 4.5 123.4 Net cash/(debt) at the beginning of the period 10 7.6 (115.8) (115.8) ------- ------- ------- Net cash/(debt) at the end of the period 10 95.6 (111.3) 7.6 ------- ------- ------- STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 24 weeks to 24 weeks to 52 weeks to 17 June 19 June 1 January 2000 1999 2000 Unaudited Unaudited Unaudited Pro forma Pro forma £m £m £m Profit for the financial period 41.7 18.2 21.0 Translation differences on foreign currency denominated net investments - (1.1) (0.4) ---------- ---------- ---------- Total recognised gains and losses for the period 41.7 17.1 20.6 ---------- ---------- ---------- RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS 24 weeks to 24 weeks to 52 weeks to 17 June 19 June 1 January 2000 1999 2000 Unaudited Unaudited Unaudited Pro forma Pro forma £m £m £m Profit for the financial period 41.7 7.1 20.6 Dividends (5.3) (4.2) (8.3) ---------- ---------- ---------- Retained profit for the financial period 36.4 12.9 12.3 Equity shareholders' funds at beginning of the period 308.2 295.9 295.9 ---------- ---------- ---------- Equity shareholders' funds at end of the period 344.6 308.8 308.2 ---------- ---------- ---------- NOTES TO THE FINANCIAL STATEMENTS ______________________________________________________________ 1 BASIS OF PREPARATION Following the change in the financial year-end, pro forma consolidated profit and loss accounts and segmental information have been provided for the 24 week comparative period ended 19 June 1999 and the 52 weeks ended 1 January 2000 in order to provide a better understanding of the Group's performance. The information, which is unaudited, has been derived from previously published results and internal management accounts with adjustments being made for the adoption of FRS12 and the change in sales accounting policy. Exceptional items have been excluded from the analysis and the dividend policy has been restated to reflect two equal dividends of 0.7p per share in each half of the 1999 financial year. The accounting policies are consistent with those applied to the audited financial statements for the 36 weeks ended 1 January 2000. These statements do not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985.The Group's full financial statements for the 36 week period ended on 1 January 2000, on which the auditors made an unqualified report, have been delivered to the Registrar of Companies. On 4 January 2000 Hygena Packaging was sold to La Rochette SA. The business has therefore been shown as discontinued. 2 SEGMENTAL ANALYSIS 24 weeks to 17 June 2000 ---------------------------- 24 Weeks 52 Weeks Before to to Excep- Excep- 19 June 1 January tional tional 1999 2000 items items Total Pro forma Pro forma TURNOVER £m £m £m UK - Retail 337.0 293.2 597.8 - Trade 58.1 39.4 95.9 France and Spain 38.6 39.0 73.5 Other operations 1.8 1.5 3.7 ------- ------- ------- Continuing Operations 435.5 373.1 770.9 Discontinued Operations - 12.0 26.0 ------- ------- ------- 435.5 385.1 796.9 ------- ------- ------- PROFIT BEFORE TAXATION £m £m £m £m £m UK - Retail 22.0 8.7 30.7 16.7 13.2 - Trade 5.5 - 5.5 4.6 8.9 France and Spain 4.5 (0.5) 4.0 5.6 7.1 Other operations 0.1 - 0.1 0.3 0.5 ------- ------- ------- ------- ------- Continuing Operations 32.1 8.2 40.3 27.2 29.7 Discontinued Operations - - - 2.4 3.5 ------- ------- ------- ------- ------- Total operating profit 32.1 8.2 40.3 9.6 33.2 Profit on sale of subsidiary - 11.2 11.2 - - Profit/(Loss) on disposal of fixed assets 0.7 - 0.7 (0.7) 4.2 Net interest receivable/ (payable) 1.9 - 1.9 (3.6) (8.2) ------- ------- ------- ------- ------- Profit before taxation 34.7 19.4 54.1 25.3 29.2 ------- ------- ------- ------- ------- NET ASSETS/ (LIABILITIES) £m £m £m UK - Retail 196.0 346.9 232.0 - Trade 38.5 33.8 43.2 France and Spain 14.4 25.6 22.6 Other operations 0.9 17.3 10.7 ------- ------- ------- 249.8 423.6 308.5 Unallocated net assets/ (liabilities) 94.8 (114.8) (0.3) ------- ------- ------- 344.6 308.8 308.2 ------- ------- ------- Manufacturing operating profit has been apportioned across the separate divisions in proportion to the external sales of those divisions of in-house manufactured product. This method of apportionment is revised from previous years and is considered to be more appropriate as we develop towards a single pricing structure. Unallocated net assets/(liabilities) comprise balances in respect of dividends, cash and borrowings. The analysis of turnover by destination is not materially different to the analysis of turnover by origin. 3 EXCEPTIONAL ITEMS The exceptional items reflected in the Group profit and loss account arise as follows: £m Re-occupation of Northampton Distribution Centre 12.7 Reorganisation of supply chain and structural change costs (4.0) Provision for disposal of Spanish operations (0.5) ------- Total operating exceptionals 8.2 Sale of Hygena Packaging Limited 11.2 ------- Total exceptionals 19.4 ------- 4 TAXATION The taxation charge is calculated at 28% per cent on profit before exceptional items (24 weeks to 19 June 1999 - 28%, 52 weeks to 1 January 2000 - 28%), being the estimated effective rate of taxation for the 52 weeks ending 30 December 2000. 5 DIVIDEND The interim dividend will be paid on 27 October 2000 to shareholders on the register of members at the close of business on 15 September 2000. The shares will be quoted ex-dividend on 11 September 2000. 6 RESERVES Share Profit and premium Other Revaluation Loss account Reserves reserve Account £m £m £m £m As at 1 January 2000 43.9 17.0 44.3 143.5 Retained profit for the period - - - 36.4 Realised on disposal - - (0.9) 0.9 Amortisation of goodwill - 1.2 - (1.2) ------ -------- ------- ------- As at 17 June 2000 43.9 18.2 43.4 179.6 ------- ------- ------- ------- 7 EARNINGS PER SHARE Pro forma 24 weeks to 17 June 2000 24 weeks to 19 June 1999 ------------------------ ------------------------- Weighted Weighted average average number of Earnings number of Earnings shares per shares per Earning share Earnings share s £m m p £m m p Basic earnings per share (eps) Earnings per 41.7 594.9 7.01 18.2 594.9 3.06 ordinary shares Effect of dilutive share options - 9.8 0.11 - - - ------ ------ ------ ------ ------ ------ Diluted earnings per share 41.7 604.7 6.90 18.2 594.9 3.06 ------ ------ ------ ------ ------ ------ eps before exceptional items Basic earnings per share 41.7 594.9 7.01 18.2 594.9 3.06 Exceptional items net of tax (16.8) - (2.82) - - - ------ ------ ------ ------ ------ ------ Basic eps pre exceptional items 24.9 594.9 4.19 18.2 594.9 3.06 ------ ------ ------ ------ ------ ------ Diluted earnings per share 41.7 604.7 6.90 18.2 594.9 3.06 Exceptional items net of tax (16.8) - (2.78) - - - ------ ------ ------ ------ ------ ------ Diluted eps pre exceptional items 24.9 604.7 4.12 18.2 594.9 3.06 ------ ------ ------ ------ ------ ------ Pro forma 52 weeks to 1 January 2000 -------------------------------- Weighted average Earnings number of Earnings shares per share £m m p Basic earnings per share (eps) Earnings per ordinary shares 22.2 594.9 3.73 Effect of dilutive share options - 0.8 - ------ ------ ------ Diluted earnings per share 22.2 595.7 3.73 ------ ------ ------ eps before exceptional items Basic earnings per share 22.2 594.9 3.73 Exceptional items net of tax - - - ------ ------ ------ Basic eps pre exceptional items 22.2 594.9 3.73 ------ ------ ------ Diluted earnings per share 22.2 595.7 3.73 Exceptional items net of tax - - - ------ ------ ------ Diluted eps pre exceptional items 22.2 595.7 3.73 ------ ------ ------ 8 CASH FLOW STATEMENT Reconciliation of profit on ordinary activities before interest to operating cash flows : 24 weeks 24 weeks 52 weeks to to to 17 June 19 June 1 January 2000 1999 2000 Pro forma Pro forma £m £m £m Profit on ordinary activities before interest 52.2 28.9 37.4 Depreciation charge 14.5 15.9 35.4 Amortisation of fixed asset investments 0.2 - 0.4 Profit on disposal of discontinued operations (11.2) - - (Profit)/loss on sale of tangible fixed assets (0.7) 0.7 (4.2) (Increase)/decrease in stocks (13.9) 7.8 0.3 Increase in debtors (23.4) (25.5) (23.4) Increase/(decrease) in creditors and provisions 48.4 14.1 (6.9) ---------- ---------- ---------- Net cash inflow from operating activities 66.1 41.9 39.0 ---------- ---------- ---------- 9 ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT 24 weeks 24 weeks 52 weeks to to to 17 June 19 June 1 January 2000 1999 2000 Pro forma Pro forma £m £m £m Returns on investments and servicing of finance Interest received 1.9 - - Interest paid - (3.2) (8.4) ---------- ---------- ---------- Inflow/(outflow) on investments and servicing of finance 1.9 (3.2) (8.4) ---------- ---------- ---------- Capital expenditure and financial investment Payments to acquire fixed assets investments (2.2) - (1.6) Payments to acquire tangible fixed assets (13.5) (16.4) (30.3) Receipts from sales of tangible fixed assets 23.4 4.2 147.0 ---------- ---------- ---------- Inflow/(outflow) for capital expenditure and financial investment 7.7 (12.2) 115.1 ---------- ---------- ---------- Cash (outflow)/inflow from liquid resources (0.1) 0.2 - Financing (Decrease)/increase in bank finance (16.0) 17.5 (126.7) Capital element of finance lease rental payments (0.1) - (0.3) ---------- ---------- ---------- (Outflow)/inflow for financing (16.1) 17.5 (127.0) ---------- ---------- ---------- 10 ANALYSIS OF NET DEBT Cash at Current Revol- Net Total bank asset ving Short cash/ Fin- net and in invest- credit term (borrow- ance cash/ hand ments facility loans ings) leases (debt) £m £m £m £m £m £m £m As at 2 January 1999 33.6 0.6 (130.0) (19.3) (115.1) (0.7) (115.8) Cash flow 22.0 - (20.0) 2.5 4.5 - 4.5 ------ ------ ------- ------ ------ ------ ------ - - - - - - As at 19 June 55.6 0.6 (150.0) (16.8) (110.6) (0.7) (111.3) 1999 Cash flow (25.1) (0.2) 135.0 9.2 118.9 0.3 119.2 Exchange movement (0.3) - - - (0.3) - (0.3) ------ ------ ------- ------ ------ ------ ------ As at 1 January 2000 30.2 0.4 (15.0) (7.6) 8.0 (0.4) 7.6 Cash flow 71.8 0.1 15.0 1.0 87.9 0.1 88.0 ------ ------ ------- ------ ------ ------ ------ As at 17 June 2000 102.0 0.5 - (6.6) 95.9 (0.3) 95.6 ------ ------ ------- ------ ------ ------ ------ 11 SALE OF HYGENA PACKAGING LIMITED Net assets £m £m disposed of: Fixed assets 11.0 Cash (net of expenses of £1.5m) 14.0 Stocks 0.8 Cash sold with business (0.3) Debtors 7.1 ------- Creditors (16.4) 13.7 ------- ------- 2.5 Profit on disposal 11.2 ------- 13.7 ------- As announced on 15 December 1999 consideration amounted to £37.0m in cash and assumed debt. This comprised £7.6m for the sale of land and buildings from another subsidiary company, £13.9m of assumed debt and £15.5m for the sale of the company.

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