Interim Results - Half Year to 25th September 1999
Marks & Spencer PLC
2 November 1999
INTERIM RESULTS ANNOUNCEMENT
26 WEEKS ENDED 25TH SEPTEMBER 1999
FINANCIAL SUMMARY
Group sales £3.7 billion (1998 - £3.8 billion)
Profit before tax and exceptional items £192.8 million (1998 - £337.4 million)
Interim dividend maintained at 3.7p
HIGHLIGHTS
Quantified savings from the radical overhaul of buying and distribution
estimated at £450 million per annum by 2002
The acceptance beginning next Spring of major credit cards in stores, through
Direct and over the Internet
Realisation of some £400 million from non-trading properties
Stronger customer focus through better values, improved service and
investment in display and presentation
Peter Salsbury, Chief Executive of Marks & Spencer said:
'The initiatives to drive change are beginning to create a more flexible,
responsive and customer-oriented operation. Market research shows that the
Marks & Spencer brand remains one of the strongest in the UK and that recent
customer feedback on quality, value and service have all improved.'
'The restructuring of our supply chain announced today will provide Marks &
Spencer with £450 million of annual savings by 2002. The savings will be
reinvested in delivering outstanding quality products at lower prices.'
'These actions are designed to improve radically the ability of our business
to compete with the world's best retailers without losing the qualities unique
to Marks & Spencer. The relevance of these changes is strongest in the UK,
but they are just as essential to the success of our overseas businesses.'
HALF YEAR REVIEW
UK Retail
Turnover figures were given on 27th September for the 26 week period to 25th
September, and are repeated below:
Actual Sales
% Change on last
year
Clothing, Footwear -10.0%
and Gifts
Home Furnishings -6.7%
General -9.8%
Foods -0.4%
TOTAL -6.1%
Like for Like
Sales *
% Change on last year
General -11.8%
Foods -1.6%
TOTAL -7.9%
* Like for like sales have been calculated by comparing total sales with new
and developed stores excluded, with sales deflected from existing stores added
back.
We reported earlier that sales remained depressed throughout the first half of
the year in our Clothing departments. Although there was a good reception to
the previews of our autumn ranges, this was not reflected in the September
sales performance, which was affected by the exceptionally warm weather. Gross
or 'buying in' margins on Clothing were slightly higher in the first half
year, with the net achieved margin being 0.5% lower.
The sales figures for Foods throughout this period have demonstrated more
resilience, and there has been an improvement in the trend, with market share
maintained. We have been able to deliver a guarantee that all Marks & Spencer
foods can be correctly labelled non GM, and we have also increased
significantly the amount of organically produced goods.
Operating expenses in the UK have risen by 3% in the first half year. Cost
savings have been more than offset by higher IT expenses (the second and final
year of the new tilling investment and Year 2000 expenditure), higher
marketing expenses (an increase of £9 million), and the operating costs of the
increased footage.
Average traded footage in the first half year was up by 8%, primarily as a
result of the new footage which came on stream in the second half in 1998/99.
Overseas
The operating loss before exceptional items was £20.1 million (1998 - a loss
of £3.6 million), during an active period of rationalisation for our overseas
businesses.
In Europe the loss before exceptional items of £17 million was as predicted,
as we continued to implement our plans to restore profitability.
In the Far East, we have reduced the loss to £1.9 million from £5.6 million
last year, helped by an increase in the proportion of goods sourced locally to
50% and lease re-negotiations in Hong Kong where our market share has also
increased.
At Brooks Brothers, sales measured at constant exchange rates rose by 8.2%,
which was less than expected. After the increased cost of promotional events
and investment in new footage and IT systems, the result for the six months is
an operating loss of £5.1 million.
The closure of our Canadian business announced earlier in the year has now
been completed at a cost of £21 million compared to a budget of £25 million.
We announced in September the intended sale of Kings Super Markets and are
encouraged by the level of interest shown in this business.
Financial Services
Operating profits from retail financial services increased by 22% in the six
months. This was partly offset by lower asset values in the bond portfolios
of our Guernsey insurance company, compared to gains in the same period last
year, which resulted in a net increase of £1.2 million to £46.1 million for
Financial Services overall.
Outstanding balances with customers for personal loans have increased by 8%
over the period, and there was a small increase in Chargecard accounts. We
again lowered term assurance rates, with a near doubling in total annualised
premium income.
Group Finance
The consolidated cash flow statement shows an increase in net debt of £404
million. Net debt at the end of the period has risen to nearly £1.6 billion,
increasing Group gearing to 33%. However, excluding Financial Services,
gearing was only 1%.
The Year 2000 programme started in 1996 with the aim of ensuring that Marks &
Spencer will be able to trade in the Millennium without disruption. The
programme has been carried out according to plan and all work on critical
systems is now complete. The estimated final costs of this programme will be
in line with the £26 million quoted in the Annual Report for 1999.
Dividend
The interim dividend is maintained at 3.7p
CURRENT TRADING AND BALANCE OF THE YEAR
UK Retailing conditions continued to be difficult in October, but there has
been an improvement in the trend. We have traded aggressively on General
Merchandise using planned promotions to drive customer footfall. New ranges
and better availability are driving the improving sales in Foods. Sales for
the 5 weeks to 30th October are as follows:
Actual Sales
% Change on last year
Clothing, Footwear
and Gifts 0.7%
Home Furnishings 4.1%
General 1.0%
Foods 2.0%
TOTAL 1.3%
Like for Like
Sales
% Change on last year
General -0.4%
Foods 0.9%
TOTAL Level
The actions taken for the second half include:
Improved values: clothing prices are on average 5% below last year, as a
result of buying efficiencies.
The addition of nearly 2,500 staff (1,575 full-time equivalents) to the
sales floor and the re-training of all sales staff to ensure our service
represents the leading standard on the high street.
Refurbishment of a large number of our high street stores which is well
advanced with completion due at the end of November.
More attractive merchandise moving quicker from initial design to sales
floor: the external tracking studies we use to measure customers' perception
of our quality, value and service have all shown a positive trend since May.
Perceptions of the quality and safety of our food ranges remains high.
We have already opened our store at Braehead, outside Glasgow, and the new
Manchester store will open at the end of November. There are no other
significant new store openings in this financial year.
Overseas, we have reviewed the sizes and locations of our Continental European
stores with a concentration on capital cities and the key regional centres,
and will be evaluating options for new smaller format stores. We have already
reported the closure of 6 stores in Germany and France which were
inappropriate to our future needs. In the second half of the year, we
will be opening new stores in Frankfurt and Barcelona.
The creation of a specialised European buying team and the strengthening of
national management teams will make us more responsive to local customers. We
are confident that we are building a platform for future growth in Europe and
expect to make a significant improvement on last year in the second half.
In Financial Services, we have seen a trend towards lower new business volumes
both in lending and savings products, in line with the market. This is likely
to impact on our rate of new business growth for the balance of the year.
Sales of personal pensions have also remained slow under the shadow of the new
stakeholder proposals. We will announce our proposals for stakeholder
pensions before the end of this financial year.
Group capital expenditure for 1999/2000 is expected to be £425 million, after
European disposals but before the sale of Kings Super Markets and the property
measures announced today (1998/1999: £658 million) with a further reduction
next year to £350 million. The resulting additional UK footage will be
350,000 square feet this year and 300,000 square feet during 2000/2001.
We continue to review our balance sheet to ensure that we move towards a more
efficient capital structure. As part of this review, we plan to realise some
£400 million from a combination of the sale and securitised financing of non-
trading properties, including The Gyle.
THE FUTURE
Steps have already been taken to respond to customers' demands for better
value, better service and more attractive stores. These improvements are
driven by more competitive buying.
More competitive buying
A fundamental review of the buying operation is well under way so that we can
move to world class standards, capable of supporting a multi-national business
as well as the substantial scale of our home market.
There are four parts to this programme:
(a) The Group is continuing its policy of long-term relationships with
key UK suppliers. However, we are reducing our proportion of UK
manufacture in order to benefit from the values obtained abroad and
gain global access to ideas and processes.
(b) A concentration of buying, with a smaller number of suppliers,
who are leaders in their field, to obtain economies of scale. At
the same time, we are liberalising the sourcing policies governing
fabric and components, enabling our major suppliers to deliver
better value and quality.
(c) Review of internal processes, to reduce the level of duplication
between us and our supply base, achieving significant savings
without compromising quality.
(d) An opportunity to improve the efficiency of logistics, made possible
by the higher volumes of overseas merchandise and the commitment to
retailing overseas.
The benefits of these measures are expected to emerge over the next two to
three years in substantial savings in procurement costs, already quantified in
the case of Clothing and Home Furnishings as rising to £400 million per annum
by 2002.
In Foods, supply chain improvements are estimated to save £50 million per
annum in the same timescale.
The savings from these programmes will be reinvested in delivering outstanding
quality products at lower prices.
Better service and more attractive stores:
A full review of store processes is well under way which will eliminate non-
value added activities, freeing further staff for the more important priority
of customer service.
We will accept major credit cards in stores, through Direct and over the
Internet beginning next Spring, in response to the clear message from
customers.
The slower rate of expansion in the store base allows us to switch the focus
to improving the existing chain. Store refurbishment will be a priority with
a focus on lighting, fascias, windows and equipment to provide clear displays
and ease of shopping.
Increased emphasis on marketing:
The Group is changing its marketing approach to establish a more rapid
understanding of its customers and their different needs and habits.
We have set up a marketing function, to be represented at board level by Alan
McWalter. We already benefit from a very large database of customer
information, which will be invaluable in shaping buying decisions and our
approach to the customer.
New channels of distribution - Direct Selling and e-commerce - will have
exciting consequences for all parts of our operations. We will be increasing
significantly the numbers of lines available through the Internet.
We have established a separate operating unit which will research and develop
opportunities in this and other areas.
Consolidated profit and loss account
26 weeks ended Year ended
25.Sept 25.Sept 25.Sept 26.Sept 31.March
1999 1999 1999 1998 1999
Before After As
except- Except- except- Rest-
ional ional ional ated
items items items
£m £m £m £m £m
Turnover (see note 2)
Continuing operations 3,667.7 - 3,667.7 3,791.5 8,185.9
Discontinued operations 22.2 - 22.2 17.5 38.1
Total turnover 3,689.9 - 3,689.9 3,809.0 8,224.0
Operating profit(see note 3)
Continuing operations 187.0 - 187.0 319.2 605.2
Discontinued operations - - - (2.7) (4.7)
187.0 - 187.0 316.5 600.5
Exceptional operating
charges - continuing
operations(see note 5) - (24.7) (24.7) (64.0) (88.5)
Total operating profit 187.0 (24.7) 162.3 252.5 512.0
Loss on termination of Canadian operation(see note 8):
Losses arising on closure - (21.0) (21.0) - -
Goodwill previously written - (24.4) (24.4) - -
off to reserves
- (45.4) (45.4) - -
(Loss)/profit on sale of
property and other fixed
assets(see note 6) - (8.3) (8.3) 4.7 6.2
Net interest income
(see note 4) 5.8 - 5.8 16.2 27.9
Profit on ordinary
activities before taxation 192.8 (78.4) 114.4 273.4 546.1
Taxation on ordinary
activities (see note 9) (59.2) 4.8 (54.4) (104.5) (176.1)
Profit on ordinary activities
after taxation 133.6 (73.6) 60.0 168.9 370.0
Minority interests
(all equity) 0.2 - 0.2 0.8 2.1
Profit attributable to
shareholders 133.8 (73.6) 60.2 169.7 372.1
Dividends (see note 11) (106.3) - (106.3) (105.9) (413.3)
Retained (loss)/profit for
the period 27.5 (73.6) (46.1) 63.8 (41.2)
Earnings per share (see
note 10) 2.1p 5.9p 13.0p
Fully diluted
earnings per share (see
note 10) 2.1p 5.9p 12.9p
Adjusted earnings per share
(see note 10) 4.7p 8.1p 15.8p
Fully diluted adjusted
earnings per share (see note 10) 4.7p 8.1p 15.7p
Dividend per share (see
note 11) 3.7p 3.7p 14.4p
Consolidated statement of total recognised gains and losses
26 weeks ended Year ended
25 Sept 26 Sept 31
1999 1998 March
As 1999
restated
£m £m £m
Profit attributable to shareholders 60.2 169.7 372.1
Exchange differences on
foreign currency translation (10.4) 20.0 15.0
Unrealised surpluses on revaluation of
investment properties* - - 34.1
Total recognised gains and
losses relating to the period 49.8 189.7 421.2
*revalued annually in March
Notes
1 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 1999 Annual Report and Financial Statements.
The summary of results for the year ended 31 March 1999 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.
Financial Reporting Standard 15, 'Tangible Fixed Assets', was
published in February 1999 and adopted by the Group for the year ended
31 March 1999. As a result, the Group's accounting policy in respect
of buildings and major items of fixed plant and equipment ('Fit Out')
was amended as follows:
(i) Freehold and long-leasehold buildings are now depreciated
down to their estimated residual value on a straight line basis
over their estimated useful economic lives.
(ii) Fit Out, which had previously been accounted for on a
replacement basis, is now identified as a separate category of
fixed assets and depreciated over 10 to 25 years on a straight
line basis.
The effect of the above changes was to increase the depreciation
charge for the first half of last year by £19.8m and reduce the charge
for repairs and renewals by £9m. The net effect was to reduce
operating profit by £10.8m for the 26 weeks ended 26 September 1998 and
to reduce tangible assets and debtors at 26 September 1998 by £221.7m
and £1.2m respectively.
Prior year comparatives have been restated accordingly.
2 Turnover (excluding sales taxes for overseas operations) is
analysed as follows:
26 weeks ended Year ended
25 Sept 26 Sept Inc/ 31
1999 1998 (Dec) March
1999
£m £m % £m
UK Retail (incl. VAT)
Clothing, Footwear and Gifts 1,735.7 1,929.4 (10.0) 4,196.0
Home Furnishings 136.2 145.9 (6.7) 308.0
Foods 1,310.0 1,315.0 (0.4) 2,787.6
3,181.9 3,390.3 (6.1) 7,291.6
Less: United Kingdom VAT (289.7) (314.9) (8.0) (690.5)
2,892.2 3,075.4 (6.0) 6,601.1
Overseas Retail
Europe (excl. UK) 252.3 242.8 3.9 554.0
The Americas
Brooks Brothers (incl. Japan) 174.9 152.9 14.4 345.9
Kings Supermarkets 130.0 119.2 9.1 245.5
304.9 272.1 12.1 591.4
Far East 48.6 45.0 8.0 90.8
Total Overseas (see note 7) 605.8 559.9 8.2 1,236.2
Financial Services (UK) 169.7 156.2 8.6 348.6
Total turnover - continuing
operations 3,667.7 3,791.5 (3.3) 8,185.9
Discontinued operations
(see note 8) 22.2 17.5 26.9 38.1
Total turnover 3,689.9 3,809.0 (3.1) 8,224.0
Turnover from continuing operations is analysed as follows:
United Kingdom 3,061.9 3,231.6 (5.2) 6,949.7
Overseas 605.8 559.9 8.2 1,236.2
3,667.7 3,791.5 (3.3) 8,185.9
The value of goods exported from the UK, including shipments to
overseas subsidiaries, amounted to £208.6m (last half year £193.4m).
Financial Services consists of the Group's financial services companies
and its Captive insurance company. These operations are carried out
wholly within the UK and the Channel Islands.
3 Operating profit arises as follows:-
26 weeks ended Year ended
25 Sept 26 Sept 31 March
1999 1998 1999
As
restated
£m £m £m
UK Retail
Before exceptional operating charges 161.0 261.8 478.9
Less: exceptional operating
charges (see note 5) (16.0) - (24.5)
145.0 261.8 454.4
Financial Services 46.1 44.9 110.7
Overseas Retail
Europe (excl. UK) (16.5) 1.0 (12.4)
Less: pre-opening costs (0.5) (7.3) (14.4)
(17.0) (6.3) (26.8)
Less: exceptional operating
charges (see note 5) (8.7) (64.0) (64.0)
(25.7) (70.3) (90.8)
The Americas
Brooks Brothers (incl. Japan) (5.1) 0.9 12.4
Kings Super Markets 4.5 4.0 10.0
Corporate Expenses (0.5) (1.0) (2.0)
(1.1) 3.9 20.4
Far East (1.9) (5.5) (14.4)
Less: pre-opening costs - (0.1) (0.1)
(1.9) (5.6) (14.5)
Other (0.1) 4.4 11.0
(2.0) (1.2) (3.5)
Total Overseas - analysed between:
Loss before exceptional
operating charges (20.1) (3.6) (9.9)
Exceptional operating
charges (see note 5) (8.7) (64.0) (64.0)
(28.8) (67.6) (73.9)
Total segmental operating
profit from continuing operations 162.3 239.1 491.2
Add: excess interest charged to cost of sales of
Financial Services (see note 4) - 16.1 25.5
Total operating profit from
continuing operations 162.3 255.2 516.7
Discontinued operations (see note 8) - (2.7) (4.7)
Total operating profit 162.3 252.5 512.0
Analysis of operating profit from continuing operations
Total segmental operating
profit before exceptional items 187.0 303.1 579.7
Exceptional operating charges (24.7) (64.0) (88.5)
Excess interest charged to cost of
sales of Financial Services - 16.1 25.5
162.3 255.2 516.7
Retailing before exceptional items 140.9 258.2 469.0
Exceptional operating charges (24.7) (64.0) (88.5)
Retailing after exceptional items 116.2 194.2 380.5
Financial Services 46.1 44.9 110.7
Excess interest charged to cost
of sales of Financial Services - 16.1 25.5
162.3 255.2 516.7
The geographical segments disclose turnover and operating profit by
destination and reflect management responsibility. Following the closure of
the Canadian operations and a realignment of management responsibility,
franchise turnover and operating profit previously included within The
Americas are now included within Europe. Comparatives have been restated
accordingly.
The profits generated from sourcing merchandise and technological services
in Hong Kong, together with the costs of research into new markets in the
region, are grouped within Far East under 'Other'.
4 Financial Services operating profit is stated after charging £47.8m (last
half year £47.4m) of interest to cost of sales. This interest represents
the cost of funding the Financial Services business as a separate segment,
including both intra group interest and third party funding. The amount of
third party interest payable by the Group during the period was £48.3m (last
half year £31.3m). Intra group interest of £nil (last half year £16.1m),
being the excess over third party interest payable, has been added back in
the segmental analysis to arrive at total operating profit.
5 Exceptional operating charges
26 weeks ended Year ended
25 Sept 26 Sept 31 March
1999 1998 1999
£m £m £m
UK redundancy costs (i) 16.0 - 24.5
European redundancy costs (ii) 8.7 - -
Provision for impairment (iii) - 64.0 64.0
Total 24.7 64.0 88.5
(i) The £16.0m charge in the 26 weeks to 25 September 1999 is in respect of
the previously announced rationalisation of UK store management
and the closure of a distribution centre. The £24.5m charge in the
year to 31 March 1999 represents the cost of rationalising the Group's
head office functions.
(ii) The European redundancy costs are in respect of store closures in
France and Germany announced during the period.
(iii) The £64m charge in the half year to 26 September 1998 was in respect of
the provision made to adjust the carrying value of our European fixed
assets in accordance with FRS 11 'Impairment of Fixed Assets and
Goodwill'.
6 The loss on sale of property arising in the period of £8.3m relates to
the European store closures announced during the period. Including
the redundancy costs of £8.7m disclosed in note 5(ii) above, this gives
rise to a total closure cost of £17m.
7 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 overseas sales from continuing operations by £10.3m
and had a negligible effect on overseas results. When expressed
at constant rates for translation, turnover increases on last year
become:
Turnover increase %
As At
reported constant
rates
Europe 3.9 5.7
The Americas
Brooks Brothers (incl. Japan) 14.4 8.2
Kings Super Markets 9.1 5.5
Far East 8.0 5.6
Total Overseas Retail 8.2 6.4
8 On 28 April 1999, the Group announced the closure of its
Canadian operations. As a consequence, its subsidiary, Marks and
Spencer Canada Inc., ceased to trade during the 26 weeks to 25 September
1999. The loss on closure of operations of £45.4m arises as follows:
£m
Trading losses since 28 April 1999 0.6
Net closure costs 20.4
Loss before goodwill previously
written off to reserves 21.0
Goodwill previously written
off to reserves 24.4
Loss on termination of operations 45.4
9 The taxation charge for the 26 weeks ended 25 September 1999 is based on
an estimated effective tax rate of 30.7% for the full year. This rate
excludes the effect of exceptional items. The tax effect of exceptional
items is shown separately in the profit and loss account.
10 The calculation of earnings per ordinary share is based on earnings
after tax and minority interests of £60.2m (last half year £169.7m),
and on 2,871,460,000 ordinary shares (last half year 2,862,998,000),
being the weighted average number of ordinary shares in issue during the
period ended 25 September 1999. The weighted average number of ordinary
shares used in the calculation of fully diluted earnings per
ordinary share is 2,879,110,000 ordinary shares (last half year
2,883,740,000).
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 the exceptional items charged against operating
profit. 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 ended Year ended
25 Sept 26 Sept 31 March
As
restated
1999 1998 1999
Earnings per share 2.1p 5.9p 13.0p
Exceptional restructuring costs
(net of tax)* 1.0p - 0.6p
Loss on termination of 1.6p - -
Canadian operation (net of tax)
Exceptional fixed asset provision
(net of tax) - 2.2p 2.2p
Adjusted earnings per share 4.7p 8.1p 15.8p
* Incorporates losses arising on the disposal of European properties
disclosed in note 6 above.
The IIMR earnings per share is 4.0p (last half year 5.8p). Under this
measure standard earnings are adjusted to eliminate certain capital
items.
11 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 £105.9m) which will be paid on 14 January 2000 to
shareholders whose names are on the Register of Members at the close of
business on 12 November 1999. The ordinary shares will become
ex-dividend on 8 November 1999. Shareholders may choose to take this
dividend in shares or in cash.
12 The interim financial statements for the 26 weeks ended 25 September
1999 were approved by the Directors on 1 November 1999.
Consolidated balance sheet
As at As at As at
25 Sept 26 Sept 31
1999 1998 March
As re- 1999
stated
£m £m £m
Fixed Assets
Tangible Assets 4,522.6 4,172.4 4,387.5
Investments 55.7 69.8 61.2
4,578.3 4,242.2 4,448.7
Current Assets
Stocks 489.5 538.0 514.7
Debtors 2,424.3 2,324.9 2,355.7
Cash and Investments 448.8 437.3 485.5
3,362.6 3,300.2 3,355.9
Current Liabilities
Creditors: amounts falling
due within one year 2,173.3 2,229.8 2,029.8
Net current assets 1,189.3 1,070.4 1,326.1
Total assets less current liabilities 5,767.6 5,312.6 5,774.8
Creditors: amounts falling due after
more than one year 791.7 324.3 772.6
Provisions for liabilities and charges 56.4 30.5 54.4
Deferred taxation 50.3 - 50.6
Net assets 4,869.2 4,957.8 4,897.2
Capital and reserves
Called up share capital 717.9 715.8 717.7
Share premium account 362.7 330.5 358.5
Revaluation reserve 530.3 501.7 531.0
Profit and loss account 3,244.2 3,391.8 3,276.7
Shareholders' funds (all equity) 4,855.1 4,939.8 4,883.9
Minority interests (all equity) 14.1 18.0 13.3
Total capital employed 4,869.2 4,957.8 4,897.2
Reconciliation of movements in shareholders' funds
As at As at As at
26 Sept 26 Sept 31
1999 1998 March
As re- 1999
stated
£m £m £m
Profit attributable to shareholders 60.2 169.7 372.1
Dividends (106.3) (105.9) (413.3)
(46.1) 63.8 (41.2)
Other recognised gains and losses
relating to the period (10.4) 20.0 49.1
New share capital subscribed 4.4 2.3 34.9
Amounts added back to profit and loss
reserve in respect of shares issued
to QUEST (1.1) - (12.6)
Goodwill transferred to the profit and
loss account in respect of the closure of
Canada 24.4 - -
Net additions to shareholders' funds (28.8) 86.1 30.2
Shareholders' funds at 1 April 4,883.9 4,853.7 4,853.7
Shareholders' funds at end of period 4,855.1 4,939.8 4,883.9
Consolidated cash flow statement
26 26 Year
weeks weeks ended
ended ended 31
25 Sept 26 Sept March
1999 1998 1999
As re-
stated
£m £m £m
Operating activities
Operating profit 162.3 252.5 512.0
Exceptional operating items 24.7 64.0 88.5
Operating profit before
exceptional items 187.0 316.5 600.5
Depreciation 125.1 109.3 236.4
Increase in working capital (8.1) (240.1) (364.0)
Net cash inflow before
exceptional items 304.0 185.7 472.9
Exceptional operating cash outflow (24.5) - (0.6)
Cash inflow from operating activities 279.5 185.7 472.3
Returns on investments and
servicing of finance 9.6 20.5 29.0
Taxation (30.5) (27.5) (345.9)
Capital expenditure and
financial investment (see note (i)) (345.0) (418.8) (628.1)
Acquisitions and Disposals (see note (ii)) (18.4) - 1.0
Equity Dividends paid (307.3) (306.5) (412.6)
Cash outflow before management
of liquid resources and financing (412.1) (546.6) (884.3)
Management of liquid resources 81.8 256.6 180.6
Financing (see note (iii)) 296.1 58.8 505.0
Decrease in cash (34.2) (231.2) (198.7)
NOTES
26 26 Year
weeks weeks ended
ended ended 31
25 Sept 26 Sept March
1999 1998 1999
As re-
stated
£m £m £m
(i) Capital expenditure and financial investment
Net purchase of tangible fixed assets (350.3) (418.9) (637.5)
Net sale of fixed asset investments 5.3 0.1 9.4
(345.0) (418.8) (628.1)
(ii) Acquisitions and disposals
Closure of Canadian operations (13.5) - -
Repayment of loan by joint venture 0.5 - 1.0
Acquisition of minority interest (5.4) - -
(18.4) - 1.0
(iii) Financing
Debt financing as shown in movement
of net debt 292.7 56.4 482.8
Shares issued under
employees' share schemes 3.4 2.4 22.2
296.1 58.8 505.0
Reconciliation of net cash flow to movement in net debt
26 26 Year
weeks weeks ended
ended ended 31
25 Sept 26 Sept March
1999 1998 1999
As re-
stated
£m £m £m
Decrease in cash (34.2) (231.2) (198.7)
Cash inflow from decrease
in liquid resources (81.8) (256.6) (180.6)
Cash inflow from increase
in debt financing (see note (iii)) (292.7) (56.4) (482.8)
Exchange movements 4.8 (3.8) (0.2)
Movement in net debt (403.9) (548.0) (862.3)
Net debt at beginning of the period (1,181.6) (319.3) (319.3)
Net debt at the end of the period (1,585.5) (867.3) (1,181.6)
G OAKLEY
Company Secretary
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