Financial review
Funding
As a business we lend short and borrow long. The average period of outstanding receivables was 5.3 months with 96.1% of receivables due in less than one year whereas the average maturity period of our borrowings was 2.3 years with 94.2% of borrowings due in over one year.
Type and maturity profile of the Group’s facilities
| Less than one year £m |
One to two years £m |
Two to five years £m |
Total £m |
|
|---|---|---|---|---|
| Short-term facilities | 38.2 | – | – | 38.2 |
| Syndicated multi-currency facilities | – | 172.2 | 357.0 | 529.2 |
| Other bilateral facilities | – | 15.0 | 81.4 | 96.4 |
| 38.2 | 187.2 | 438.4 | 663.8 | |
| Borrowings | 434.3 | |||
| Headroom | 229.5 |
The core funding of the Group is in place to October 2011 and this is sufficient to fund our planned growth of existing operations until then.
We also have good headroom on our bank covenants. An analysis of performance compared with the covenants attached to the Group’s borrowing facilities is set out below:
| 2008 | 2007 | |
|---|---|---|
| Net assets must exceed £125m* | £273.0m | £201.9m |
| Gearing must not exceed 3.75 times* | 1.6 | 1.8 |
| Receivables must exceed 1.1 times borrowings | 1.3 | 1.2 |
| Interest cover must exceed 2 times | 3.5 | 3.4 |
*Adjusted for derivative and pension liabilities.
Cash flows
The Group’s cash flow statement is included in the financial statements. An analysis of the cash generated from operations and the net cash used in operating and investing activities is presented below:
| 2008 £m |
2007 £m |
|
|---|---|---|
| Cash generated from operations | ||
| Established businesses | 105.5 | 71.2 |
| Start-up businesses | (39.8) | (22.2) |
| Exceptional demerger costs | – | (3.9) |
| 65.7 | 45.1 | |
Net cash used in operating and investing activities |
||
| Established businesses | 45.9 | 7.3 |
| Start-up businesses | (51.2) | (34.7) |
| Exceptional demerger costs | – | (3.9) |
| (5.3) | (31.3) |
The Group generated £65.7 million of cash from its operational activities with £105.5 million being generated by our established businesses. After taking into account the cost of financing, tax paid and the cost of investing in property, plant and equipment, our established businesses generated £45.9 million of cash which, combined with some utilisation of the cash balance at 2007, was used to fund our start-up businesses, dividend payments, share purchases and repayment of borrowings.