Cash flow

Cash flows from operating activities (before incurring outflows related to interest, tax, investing and financing activities) were £373.3m in the half (2006: £409.2m). The principal drivers of the strong cash generation have been the growth in profits together with continued good management of working capital.

Net capital expenditure in the half was £70.5m (2006: £88.0m), with a further £6.8m of investment spend in relation to the HomeStore&More acquisition (2006: nil). Tax paid was £57.2m (2006: £31.2m).

Other cash flows in the half were £4.5m of net interest received, £78.1m of dividends paid, £1.5m outflow from other financing activities and a £1.0m outflow in relation to the effect of foreign exchange rate changes. These other cash flows in the first half last year are non-comparable due to impacts of the demerger.

The Group’s net cash position at 1 September 2007 was therefore £222.9m, an increase of £162.7m on the opening net cash position at 3 March 2007 of £60.2m. During the period the Group used cash balances to repay in full a £225m borrowing arrangement inherited from GUS plc on demerger.

Post the half-year balance sheet date, a cash payment of £40m was made to purchase 27 Focus DIY leasehold store properties. There will be a further approximate £30m of capital expenditure in the second half of the financial year to refit these properties.