Cash flow statement

Net debt

Net debt fell by £350 million to £464 million (2010 – £814 million) driven by free cash flow of £190 million from the continuing businesses and £316 million relating to the sale of EU Sugars, Molasses and Fort Dodge. These inflows were partially offset by cash utilised by the discontinued businesses amounting to £105 million, principally the repayment of letters of credit ahead of disposal, and dividend payments of £70 million. In addition, the Group’s debt is primarily denominated in US dollars and euros to match the underlying currencies of the operational cash flows and net assets and, therefore, as sterling has strengthened against the US dollar and the euro, net debt reported in sterling has reduced by £27 million.

During the year, net debt peaked at £836 million in May 2010. The average net debt was £661 million, a reduction of £359 million from £1,020 million in the prior year.

Cash flow

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Year to
31 March

Year to
31 March

Adjusted operating profit from continuing businesses






Working capital



Share-based payments



Operating cash flow



Capital expenditure



Operating cash flow less capital expenditure



Net interest and tax paid



Free cashflow



Operating cash flow from continuing operations was £325 million, a decrease of £238 million compared with the prior year primarily due to increases in working capital of £101 million (2010 – reduction of £186 million) as we took the decision to increase US inventories (£126 million) in the second half of the year. This action was taken in response to the anticipated tight supply situation running up to the next corn harvest. We also made further progress to reduce working capital tied up in payables and receivables.

Net interest paid decreased by £13 million to £46 million principally as a result of a decrease in interest paid on our bank and other borrowings.

Income tax paid was £31 million.

Capital expenditure of £58 million was 64% of the depreciation charge, reflecting the transition to our new Group capital allocation process. Including the investments we will be making in growth and business transformation and the additional capital investment required to restart production at the McIntosh facility, we expect capital expenditure to be up to 1.4 times depreciation in the 2012 financial year.

Free cash inflow (representing cash generated from continuing operations after working capital, interest, taxation and capital expenditure) was £190 million, £224 million lower than the prior year principally as a result of the increases in working capital discussed earlier.

Cash outflow related to discontinued operations was £105 million compared with an inflow of £97 million in the prior year due to the timing of working capital flows ahead of the disposal of EU Sugars and Molasses. Net disposal proceeds from the sale of EU Sugars and Molasses were £280 million.

Equity dividends paid were £70 million, £33 million lower than the previous year due to the high take up of the scrip dividend.