Interim Results

Marks & Spencer PLC
7 November 2000

                                                               7 November 2000




                         Interim Results Announcement

                       26 weeks ended 30 September 2000

HIGHLIGHTS

  * Group sales were level with last year

  * Group profit before tax and exceptional items was £183.4 million

(1999 - £192.8 million)

  * Interim dividend held at 3.7p

STATEMENT BY LUC VANDEVELDE, CHAIRMAN AND CHIEF EXECUTIVE

The organisation has changed enormously in the past 18 months. I am sure the
major changes were right, indeed long overdue. However, with too much activity
and not enough focus on results, the effect has been that the organisation has
lost sight of some of the basics of retailing.

We now must deliver on those basics, particularly in adult clothing:

  * better product and availability

  * improved store environment and visual merchandising

  * a more flexible supply chain

There are no quick fixes. We are here to rebuild the business to create solid
long-term shareholder value.

FINANCIAL REVIEW

UK Retail

Turnover for the 26 weeks was similar to last year. Operating profit was down
from £161.0 million last year to £124.7 million. The fall in profit is largely
attributable to £28 million of one-off operating costs, referred to in
September and described below.

A sales analysis (including VAT), for the 26 weeks to 30 September and the 5
weeks current trading through to 4 November, is given below.
                                    26 wks to 30/9           5 wks to 4/11
                               Actual   Like-for-like*   Actual Like-for-like*

                               % v LY       % v LY       % v LY     % v LY
Clothing, Footwear and Gifts
                                               -         -14.6         -
                                -1.7
Home                            13.0           -          7.6          -
Total General                   -0.5         -3.1        -12.9       -15.7

Merchandise
Food                            2.6           1.1         5.8         4.6
Total                           0.8          -1.2         -6.4       -8.4



*Like-for-like sales are estimated by comparing sales with new and developed
stores excluded.

The poor sales performance in the last five weeks has been distorted by a
comparison to autumn 1999 when we undertook extensive price activity. This
included a promotion when all menswear was reduced by 20%, and an 'Autumn
Windfall' event during the last week of October. Together, these events
generated an estimated £37 million additional sales. In order to protect
margins, we decided not to repeat the same level of activity this autumn.
Without the effect of the uplift on last year's figures, general merchandise
sales would have been down approximately 5.4%, instead of the 12.9% reported.
The decision not to repeat the extensive promotions clearly reduced sales, but
the impact on profit was small.

The weighted-average selling space increased by 2.2%. We opened three new
stores in the autumn - Harborne (Birmingham) and Southgate (north London),
both 10,000 sq ft food stores; and Southampton, a relocation to a 73,400 sq ft
store, giving net extra selling space in Southampton of 30,900 sq ft.

Within general merchandise overall, our volumes increased over the 6 months to
the end of September by approximately 2.5%, and we reduced average selling
prices by 3%. More recent trends during the month of September indicate price
deflation pressures have eased.

     Within adult clothing, performance has varied across the Business Units.


    (i)     Womenswear - For the first half, volumes increased but the average
    selling price declined by a similar amount, largely due a more significant
    summer sale promotion. The net effect was to deliver level sales with the
    comparable period last year. Customer reaction to some products has been
    excellent, but the pattern is not consistently represented across all
    categories (in particular, blouses and knitwear).

    (ii)     Menswear - The menswear market as a whole is down some 3% on the
    year, and we have lost market share, but better buying has contributed to
    a significant improvement in the bought-in margin.

    (iii)     Lingerie - We have been particularly affected by poor
    availability due to supply chain problems and overall sales have declined,
    despite favourable reaction to our new ranges.

Sales have been stronger in the other general merchandise areas:


    (iv)     Childrenswear - Despite particularly strong price competition in
    this market, we have held market share and improved margins. The breadth
    of our offer has been widened to include Nursery and Maternity products,
    which are currently in 24 stores.

    (v)     Beauty - We are continuing to develop and grow this business,
    adding new products and designer ranges, including 400 new lines before
    Christmas. We are also adding our new 'Beauty Shop' scheme to 32 stores in
    time for Christmas.

    (vi)     Home - Sales at the half year increased by approximately 13%. We
    continue to perform very well in this large and fragmented market, which
    has great potential for us.

In general merchandise overall, we achieved a slight improvement in the net
achieved margin, where the benefits achieved to date from better buying
exceeded the higher costs of the summer sale.

At the half year, Food sales improved by 2.6%, we maintained our market share,
and we have since had a good start to the autumn season. Our rate of product
innovation continues to be very strong (approximately 1200 new products a
year), and we are focused increasingly on developing ranges which reflect
emerging customer trends, for example Celebration, Health and Wellbeing and
Food to Go. Food inflation was approximately 1%. At the half year, we had
increased the net achieved margin by over 0.5% while controlling operating
costs. For the second year, we have delivered an improvement in the operating
margin at the same time as better sales.

UK Retail operating expenses in the period increased by approximately 5.6%.
The £28 million one-off elements of cost were due to:

 i. Additional marketing costs incurred for the relaunch of the brand;
ii. Revenue costs associated with the 22 new concept stores that have opened
    since 30 September or are planned to open within the next week.

Excluding these costs, the underlying increase in operating expenses in the
first half was 2.6%.

International

We improved our International performance during the period. Sales have
increased by 5.0%, and we have broken even at an operating profit level,
compared to a loss of £20.1 million in the comparable period last year. We
achieved a better performance in both Brooks Brothers and Kings Super Markets;
we also benefited from recovery in the Far East, and delivered lower overall
losses in Europe.

Sales in Europe were level (+0.3%) overall, although trading in Germany and
France remains difficult. The reduction in the operating loss from £17m to £
11m is in part due to the closure of under-performing stores in the second
half of last year, helped by stronger performance in the franchise operations.

The currency impact of a strong Pound and Dollar, together with a weak Euro,
increased reported sales by £13.9 million and improved the operating margin by
£1.7 million.

Financial Services

We increased pre-tax profits within Financial Services by £2.8 million to £
48.9 million for the half year.


Following the acceptance of generic credit cards in stores, Financial Services
has received a merchant service fee from UK Retail on Chargecard transactions.
The interest rate reduction has made the M&S card more competitive and has
kept outstanding customer balances stable at approximately £640 million. The
cost to the Group of accepting generic cards has been some £16 million, with
third party credit card charges of £4 million, and a directly attributable
reduction in the profits of Financial Services of approximately £12 million.

In our personal lending activities, increased bad debt provisions and the
continuation of intense price competition for new business have led to a
reduction in margins. Careful targeting and competitive rates have delivered a
22% growth in loan advances.

We launched two new products towards the end of the period; a Mortgage Payment
Protection Plan and a Home and Contents insurance offer. These have been well
received, but neither is expected to contribute to profits this year.

Our captive insurance company contributed 14% of Financial Services profit,
compared to a break-even position last year.

Capital Structure

The Group balance sheet and cash position remains strong, with an ungeared
retail position. We have shareholders' authority to repurchase up to 10% of
our shares and the Board will be prepared to exercise this authority, subject
to appropriate market conditions, in order to enhance shareholder value.

KEY OPERATIONAL CHANGES

Supply Chain

As previously reported, we are moving to more flexible and cost effective
general merchandise sourcing. The results of this will deliver the expected
annualised savings of £400 million in 2002/03. This financial year, the
savings will be at least the planned £120 million, the majority of which will
be achieved in the second half.

Lack of flexibility has been a major weakness within our supply chain. In the
past, we bought stock to cover over 100% of budgeted sales well in advance of
the season. We have now discontinued this practice. For spring 2001, while 50%
of merchandise is core and therefore bought with long lead times, we will
commit to approximately 40% of merchandise much closer to the season, and a
further 10% will be bought within the season itself in response to emerging
fashion trends. We will continue to increase the proportion of merchandise
bought within season and will reduce long term stock commitments further.

Product Appeal and Availability

We are still working to improve the appeal of our clothing offer, particularly
in womenswear and menswear. Following a thorough review, we have enhanced
approximately one-fifth of our spring ranges in response to the lessons
learned this season. This illustrates a greater degree of flexibility that we
have had in the past.


We are also working on a number of short term actions that will improve
availability of fast selling merchandise in our stores during the critical
weeks leading up to Christmas.

Stores

We recognise we need urgently to improve the environment in many of our
stores. We are addressing this through the new concept store rollout. We are
also applying the most effective low cost components of the new concept
stores, such as stronger visual merchandising, throughout the chain. This will
not compromise our longer-term rollout plans for new concept stores, but will
ensure we benefit from the 'quick wins' available in the short and medium
term.

Our rollout of new concept stores remains on track. Of the 25 planned openings
pre-Christmas, we currently have 16 trading with the remaining nine opening by
mid-November. These represent approximately 16% of UK selling space and 19% of
annualised UK sales.

Footage and Formats

We have not, in the past, been sufficiently disciplined in considering the
productivity of existing footage. Good business practice will, in future,
involve a regular review of our estate and use of space, including potential
new formats and services. It is essential all footage delivers an adequate
return on capital. In light of this, we have taken the decision to close six
UK satellites (Bristol, Bromley, Edinburgh, Leeds, Norwich and Watford) and
reduce footage in a further two (Bath and Derby), representing 170,000 sq ft
in the first half of next financial year. We will upgrade the main stores in
these centres, and there will be no redundancies, with all staff being
re-deployed. For the full year, this action will generate an asset write-off
charge of approximately £44 million.

Christmas Trading Statement

We will provide an update in late January on our trading performance over the
Christmas period.






Consolidated profit and loss account
                                                    26 weeks ended  Year ended
                                                    30 Sept 25 Sept   31 March
                                                       2000    1999       2000
                                                         £m      £m         £m
Turnover (see note 2)                               3,755.8 3,689.9    8,195.5
Operating profit (see note 3)
 Before exceptional operating charges                 173.3   187.0      543.0
 Exceptional operating charges (see note 4)               -  (24.7)     (72.0)
Total operating profit                                173.3   162.3      471.0
 Loss on termination of Canadian operation (see           -  (45.4)     (45.4)
 note 5)
 Loss on sale of property and other fixed assets      (3.7)   (8.3)     (22.3)
 (see note 6)
 Net interest income                                   10.1     5.8       14.2
Profit on ordinary activities before taxation         179.7   114.4      417.5
 Analysed between
 Profit before tax and exceptional charges            183.4   192.8      557.2
 Exceptional charges                                  (3.7)  (78.4)    (139.7)
 Taxation on ordinary activities (see note 8)        (55.7)  (54.4)    (158.2)
Profit on ordinary activities after taxation          124.0    60.0      259.3
 Minority interests (all equity)                      (0.4)     0.2      (0.6)
Profit attributable to shareholders                   123.6    60.2      258.7
 Dividends (see note 10)                            (106.3) (106.3)    (258.6)
Retained profit/(loss) for the period                  17.3  (46.1)        0.1
Earnings per share (see note 9)                        4.3p    2.1p       9.0p
Fully diluted earnings per share (see note 9)          4.3p    2.1p       9.0p
Adjusted earnings per share (see note 9)               4.4p    4.7p      13.2p
Fully diluted adjusted earnings per share (see         4.4p    4.7p      13.2p
note 9)
Dividend per share (see note 10)                       3.7p    3.7p       9.0p
Consolidated statement of total recognised gains and losses
                                                    26 weeks ended  Year ended
                                                   30 Sept  25 Sept   31 March
                                                      2000     1999       2000
                                                        £m       £m         £m
Profit attributable to shareholders                   123.6    60.2      258.7
 Exchange differences on foreign currency               3.7  (10.4)     (16.8)
 translation
 Unrealised surpluses on revaluation of investment        -       -
 properties*                                                               3.0
Total recognised gains and losses relating to the     127.3    49.8      244.9
period
* revalued annually in March.


Notes
1. Basis of preparation
The results for the first half of the financial year have not been audited and
are prepared on the basis of the accounting policies set out in the Group's
2000 Annual Report and Financial Statements. The results for the year ended 31
March 2000 comprise store sales and related costs for the 53 weeks to 1 April
2000. The summary of results for the year ended 31 March 2000 does not
constitute full financial statements within the meaning of s240 of the
Companies Act 1985. The full financial statements for that year have been
reported on by the Group's auditors and delivered to the Registrar of
Companies. The audit report was unqualified and did not contain a statement
under s237(2) or s237(3) of the Companies Act 1985.
2. Turnover
Turnover (excluding sales taxes for International operations) is analysed as
follows:-
                                     26 weeks ended                  Year ended
                                     30 Sept 25 Sept       Inc/        31 March
                                        2000    1999      (Dec)            2000
                                          £m      £m          %              £m
UK Retail (incl. VAT)
 Clothing, Footwear and Gifts        1,701.5 1,730.1      (1.7)         3,939.0
 Home Furnishings                      160.3   141.8       13.0           328.8
 Foods                               1,344.2 1,310.0        2.6         2,880.4
                                     3,206.0 3,181.9        0.8         7,148.2
 Less: United Kingdom VAT            (290.1) (289.7)        0.1         (665.5)
                                     2,915.9 2,892.2        0.8         6,482.7
Financial Services (UK)                180.6   169.7        6.4           364.6
International Retail
 Europe (excl. UK)                     253.1   252.3        0.3           555.6
 The Americas
  Brooks Brothers (incl. Japan)        204.0   174.9       16.6           395.5
  Kings Super Markets                  147.9   130.0       13.8           273.7
                                       351.9   304.9       15.4           669.2
  M&S Canada (see note 5)                  -    22.2                       22.2
                                       351.9   327.1        7.6           691.4
 Far East                               54.3    48.6       11.7           101.2
Total International (see note 7)       659.3   628.0        5.0         1,348.2
Total turnover                       3,755.8 3,689.9        1.8         8,195.5
Turnover is analysed as follows:-
 Retailing                           3,575.2 3,520.2        1.6         7,830.9
 Financial Services                    180.6   169.7        6.4           364.6
                                     3,755.8 3,689.9        1.8         8,195.5




3. Operating profit
  Operating profit arises as follows:-          26 weeks ended      Year ended
                                              30 Sept      25 Sept   31 March
                                                2000         1999       2000
                                                  £m           £m        £m
UK Retail
  Before exceptional operating charges         124.7        161.0      420.1
  Less: exceptional operating charges (see
  note 4)                                          -        (16.0)     (63.3)
                                               124.7        145.0      356.8
Financial Services                              48.9         46.1      115.9
International Retail
  Europe (excl. UK)                            (10.1)       (16.5)      (4.1)
       Less: pre-opening costs                  (0.7)        (0.5)      (2.0)
                                               (10.8)       (17.0)      (6.1)
       Less: exceptional operating charges (see
              note 4)                              -         (8.7)      (8.7)
                                               (10.8)       (25.7)     (14.8)
  The Americas
       Brooks Brothers (incl. Japan)             2.5         (5.1)       7.9
       Kings Super Markets                       4.9          4.5       11.1
       Corporate Expenses                          -         (0.5)      (2.6)
                                                 7.4         (1.1)      16.4
       M&S Canada (see note 5)                     -            -          -
                                                 7.4         (1.1)      16.4
  Far East                                       3.1         (2.0)      (3.3)
Total International - analysed between:
  (Loss)/profit before exceptional operating
   charges                                      (0.3)       (20.1)       7.0
  Exceptional operating charges (see note 4)       -         (8.7)      (8.7)
                                                (0.3)       (28.8)      (1.7)
Total operating profit                         173.3        162.3      471.0
Analysis of operating profit
 Total operating profit before exceptional
  operating charges                            173.3        187.0      543.0
 
 Exceptional operating charges                     -        (24.7)     (72.0)
                                               173.3        162.3      471.0
  Retailing before exceptional operating
   charges                                     124.4        140.9      427.1
  Exceptional operating charges                    -        (24.7)     (72.0)
  Retailing after exceptional operating
   charges                                     124.4        116.2      355.1
  Financial Services                            48.9         46.1      115.9
                                               173.3        162.3      471.0


The geographical segments disclose turnover and operating profit by
destination and reflect management responsibility.

Operating profit for Financial Services includes £7.7m of merchant fee income
(last half year £nil) arising on Marks and Spencer Chargecard transactions.
This merchant fee is payable by UK Retail and has been deducted in arriving at
UK Retail operating profit.

4. Exceptional operating charges
                               26 weeks ended                       Year ended
                                   30 Sept 25 Sept                    31 March
                                      2000    1999                        2000
                                        £m      £m                          £m
UK redundancy costs (i)                  -    16.0                        63.3
European restructuring                   -     8.7                         8.7
costs (ii)
Total                                    -    24.7                        72.0
(i)  The £63.3m charge in the year to 31 March 2000 (of which £16m related to
     the half year to 25 September 1999) was in respect of the restructuring
     of UK Retail into customer business units, the rationalisation of store
     management and the refocusing of existing store roles to customer facing
     activities, and the closure of two distribution centres.
(ii) The European restructuring costs were in respect of store closures in
     France and Germany announced in the half year to 25 September 1999.

5. Loss on termination of Canadian operations
The operations of Marks and Spencer Canada were closed during the first half
of last year. The loss on closure of £45.4m consisted of net closure costs of
£21.0m and goodwill of £24.4m. In the period prior to closure, Marks and
Spencer Canada contributed £22.2m to turnover and £nil to operating profit.

6. (Loss)/profit on sale of fixed assets
                                26 weeks ended                      Year ended
                                   30 Sept 25 Sept                    31 March
                                      2000    1999                        2000
                                        £m      £m                          £m
Loss on sale of UK                       -       -                      (16.1)
investment properties (i)
Loss on sale of European                 -   (8.3)                       (8.3)
stores (ii)
(Loss)/profit on other               (3.7)       -                         2.1
asset disposals
Total                                (3.7)   (8.3)                      (22.3)

(i)    The loss on sale of investment properties in the year to 31 March 2000
       was in respect of the disposal of The Gyle shopping centre and a
       property in Newcastle.
(ii)   The loss on sale of property of £8.3m that arose in the half year to 25
       September 1999 related to European store closures. Including the
       restructuring costs for that period of £8.7m disclosed in note 4(ii)
       above, this gave rise to a total closure cost of £17.0m.

7. Foreign Currencies

The results of overseas subsidiaries have been translated using average rates
of exchange ruling during the period. The movements in exchange rates used for
translation, compared to the same period last year, have increased
international sales (excluding Canada) by £13.9m and reduced the operating
loss by £1.7m. When expressed at constant rates for translation, turnover
increases on last year become:
                                            Turnover increase %

                                 As reported                 At constant rates

Europe                                     0.3                5.8
The Americas
      Brooks Brothers (incl.Japan)        16.6                7.6
      Kings Super Markets                 13.8                6.3
Far East                                  11.7                7.1
Total International Retail excluding       8.8                6.5
Canada

8. Taxation

The taxation charge for the 26 weeks ended 30 September 2000 is based on an
estimated effective tax rate of 31.0% for the full year. Included in the
charge for last half year is a credit of £4.8m which is attributable to
exceptional charges (year to March 2000 £19.0m credit).
9. Earnings per share

The calculation of earnings per ordinary share is based on earnings after tax
and minority interests of £123.6m (last half year £60.2m), and on
2,874,622,000 ordinary shares (last half year 2,871,460,000), being the
weighted average number of ordinary shares in issue during the period ended 30
September 2000. The weighted average number of ordinary shares used in the
calculation of fully diluted earnings per ordinary share is 2,874,622,000
ordinary shares (last half year 2,879,110,000).

An adjusted earnings per share figure has been calculated in addition to the
earnings per share required by FRS 14 and is based on earnings excluding the
effect of exceptional items. It has been calculated to allow the shareholders
to gain a clearer understanding of the trading performance of the Group.
Details of the adjusted earnings per share are set out below:
                                          26 weeks                  Year ended
                                            ended
                                           30    25                   31 March
                                          Sept  Sept
                                          2000  1999                       2000
Earnings per share                        4.3   2.1                        9.0
                 Exceptional                -   1.0                        1.8
                 restructuring costs (net
                 of tax) *
                 Loss on termination of     -   1.6                        1.6
                 Canadian operation (net
                 of tax)
                 Loss on disposal of      0.1     -                        0.8
                 property
Adjusted earnings per share               4.4   4.7                       13.2
*                Incorporates losses arising on the disposal of European
                 properties disclosed in note 6 above. All other property
                 losses are included under the heading 'loss on disposal of
                 property'.


The IIMR earnings per share is 4.4p (last half year 4.0p). Under this measure
standard earnings are adjusted to eliminate certain capital items.


10. Dividend

The directors have declared an interim dividend of 3.7p per share compared with
3.7p last half year. This results in an interim dividend of £106.3m (last half
year £106.3m) which will be paid on 12 January 2001 to shareholders whose names
are on the Register of Members at the close of business on 17 November 2000.
The ordinary shares will become ex-dividend on 13 November 2000. Shareholders
may choose to take this dividend in shares or in cash.
11. Date of approval

The interim financial statements for the 26 weeks ended 30 September 2000 were
approved by the Directors on 6 November 2000.
Consolidated balance sheet
                                                     As at   As at        As at
                                                   30 Sept 25 Sept     31 March
                                                      2000    1999         2000
                                                        £m      £m           £m
Fixed assets
 Goodwill                                              1.2       -          1.3
 Tangible assets                                   4,281.5 4,522.6      4,242.1
 Investments                                          66.9    55.7         55.0
                                                   4,349.6 4,578.3      4,298.4
Current assets
 Stocks                                              493.9   489.5        474.4
 Debtors                                           2,620.7 2,424.3      2,555.2
 Cash and investments                                419.1   448.8        687.5
                                                   3,533.7 3,362.6      3,717.1
Current liabilities
 Creditors: amounts falling due within one year    2,012.0 2,173.3      2,162.8
Net current assets                                 1,521.7 1,189.3      1,554.3
Total assets less current liabilities              5,871.3 5,767.6      5,852.7
 Creditors: amounts falling due after more than      820.4   791.7        804.3
 one year
 Provisions for liabilities and charges              102.1   106.7        126.6
Net assets                                         4,948.8 4,869.2      4,921.8
Capital and reserves
 Called up share capital                             719.3   717.9        718.6
 Share premium account                               374.3   362.7        369.4
 Revaluation reserve                                 457.9   530.3        457.9
 Profit and loss account                           3,380.4 3,244.2      3,359.4
Shareholders' funds (all equity)                   4,931.9 4,855.1      4,905.3
 Minority interests (all equity)                      16.9    14.1         16.5
Total capital employed                             4,948.8 4,869.2      4,921.8
Reconciliation of movements in shareholders' funds
                                                     As at   As at        As at
                                                   30 Sept 25 Sept     31 March
                                                      2000    1999         2000
                                                        £m      £m           £m
Profit attributable to shareholders                  123.6    60.2        258.7
 Dividends                                         (106.3) (106.3)      (258.6)
                                                      17.3  (46.1)          0.1
 Other recognised gains and losses relating to         3.7  (10.4)       (13.8)
 the period
 New share capital subscribed                          5.6     4.4         11.8
 Amounts added back to profit and loss account           -   (1.1)        (1.1)
 reserve in respect of shares issued to QUEST
 Goodwill transferred to the profit and loss             -    24.4         24.4
 account in respect of the closure of Canada
Net additions to shareholders' funds                  26.6  (28.8)         21.4
 Shareholders' funds at 1 April                    4,905.3 4,883.9      4,883.9
Shareholders' funds at end of period               4,931.9 4,855.1      4,905.3
Consolidated cash flow statement
                                                  26 weeks ended     Year ended
                                                   30 Sept 25 Sept     31 March
                                                      2000    1999         2000
                                                        £m      £m           £m
Operating activities
 Operating profit                                    173.3   162.3        471.0
 Exceptional operating items                             -    24.7         72.0
 Operating profit before exceptional items           173.3   187.0        543.0
 Depreciation                                        132.5   125.1        261.6
 Increase in working capital (see note (i))         (85.9)   (8.1)      (113.9)
 Net cash inflow before exceptional items            219.9   304.0        690.7

 Exceptional operating cash outflow                 (23.8)  (24.5)       (49.2)

Cash inflow from operating activities                196.1   279.5        641.5
 Returns on investments and servicing of              11.7     9.6         15.2
 finance
 Taxation                                           (50.1)  (30.5)      (145.7)
 Capital expenditure and financial investment      (122.2) (345.0)      (167.0)
 (see note (ii))
 Acquisitions and disposals (see note (iii))         (0.4)  (18.4)       (21.1)
 Equity dividends paid                             (152.3) (307.3)      (413.5)
Cash outflow before management of liquid           (117.2) (412.1)       (90.6)

resources and financing
 Management of liquid resources                      225.2    81.8      (162.5)
 Financing (see note (iv))                         (127.2)   296.1        260.3
(Decrease) / increase in cash                       (19.2)  (34.2)          7.2
Notes
                                                   26 weeks ended    Year ended
                                                   30 Sept 25 Sept     31 March
                                                      2000    1999         2000
                                                        £m      £m           £m
(i)      Increase in working capital
         (Increase)/decrease in stock                (9.5)    23.6         40.3
         Increase in customer advances              (57.7)  (76.5)      (206.2)
         (Decrease)/increase in creditors           (15.7)    36.5         51.1
         Other working capital movements             (3.0)     8.3          0.9
                                                    (85.9)   (8.1)      (113.9)
(ii)      Capital expenditure and financial
          investment
          Purchase of tangible fixed assets        (114.8) (355.0)      (447.5)
          Sale of tangible fixed assets                0.2     4.7        266.0
          Net (purchase)/sale of fixed asset         (7.6)     5.3         14.5
          investments
                                                   (122.2) (345.0)      (167.0)
(iii)     Acquisitions and disposals
          Closure of Canadian operations             (0.4)  (13.5)       (15.4)
          Repayment of loan by joint venture             -     0.5          0.5
          Acquisition of minority interest               -   (5.4)        (6.2)
                                                     (0.4)  (18.4)       (21.1)
(iv)      Financing
          Debt financing as shown in movement of   (127.2)   292.7        250.9
          net debt
          Shares issued under employees' share           -     3.4          9.4
          schemes
                                                   (127.2)   296.1        260.3


Reconciliation of net cash flow to movement in net debt
                                                   26 weeks ended    Year ended
                                                   30 Sept   25 Sept   31 March
                                                      2000      1999       2000
                                                        £m        £m         £m
(Decrease)/increase in cash                         (19.2)    (34.2)        7.2
 Cash (inflow)/outflow from (decrease)/increase    (225.2)    (81.8)      162.5
 in liquid resources
 Cash outflow/(inflow) from decrease/(increase)      127.2   (292.7)    (250.9)
 in debt financing (see note (iv))
 Exchange movements                                    2.8       4.8       11.4
Movement in net debt                               (114.4)   (403.9)     (69.8)
 Net debt at beginning of the period             (1,251.4) (1,181.6)  (1,181.6)
Net debt at end of the period                    (1,365.8) (1,585.5)  (1,251.4)