2008/09 HALF-YEAR RESULTS



3 December 2008

DS SMITH PLC - 2008/09 HALF-YEAR RESULTS

DS Smith Plc, the international packaging and office products wholesaling company, announces its results for the six months to 31 October 2008.

Financial Summary

* excluding an exceptional deferred tax charge of £12.9mdue toamendments to theUKindustrial buildings allowance regime

** before dividends, acquisitions and disposals

Operational Highlights

• Packaging:operating profit£48.9m (H1 2007/08: £53.6m);arobust performancedue to businessmix

• Office Products Wholesaling - Spicers:operating profit£5.5m (H1 2007/08: £6.8m),reflectinga weakerandmorecompetitivemarketenvironment, especiallyintheUK

• Progressive slow-down in demand across our markets

• Firm action being taken to realign the cost base

• Strong free cash flow while investing in lightweightpaper; projectremainson schedule

Chairman,Peter Johnsonsaid:

"In adeteriorating trading environmentthe Groupproduced acreditableresult. The performance in Packaging wasassistedby our recycling business and ourcontinuedexpansion in themore defensivefast-moving consumer goods sector. Spicers' continental businesses performed relatively well. Our focus on maintainingthe Group'ssound financial position wasreflected in good cashgenerationand oursuccessfulextension of the Group'sfinancing facilities."

Group Chief Executive,Tony Thornesaid:

"We expect trading conditions to remain difficult as a result of lower demand across all our markets. We are taking concerted action tosupport our strong market positions andunderpin the Group's results. Cash generation will remain an area of key focus. We are confident that the actions we are taking will position the Groupfora robust performance going forward."

Enquiries

DS Smith Plc 020 7932 5000

Tony Thorne, Group Chief Executive

Steve Dryden, Group Finance Director

Peter Aubusson, Group Communications Manager

Financial Dynamics020 7269 7140

Andrew Dowler

A briefing for analysts and investors will take place today at 9.30am GMT at Financial Dynamics, Holborn Gate, 28 Southampton Buildings, London WC2A 1PB. This briefing may be heard live by dialling in on: +44 (0)1452 569393(call reference:75969348).

The presentation slides used at this briefing will be posted in the Investors/Presentations section of the Group's website (www.dssmith.uk.com) from 9.25am GMT.

A replay of the briefing will be available by telephone for fiveworkingdays, from 30 minutes after the meeting has ended, on: +44 (0)1452 550000(pin no.:75969348) and an audio recording of the briefing will be available on the website from approximately 2.00pm GMT today.

OVERVIEW

Financial Results

Group revenue for the half-year to 31 October 2008 increased by 17.0% to £1,102.8 millionwhile operating profit was 9.9% lower at £54.4 million. Return on sales was 4.9% (H1 2007/08: 6.4%) and return on average capital employed (ROACE) was 10.8% (H1 2007/08: 13.6%). Excluding the effects of the acquisitions of M-real New Thames Limited and Multigraphics Holdings Limited and foreign exchange translation, revenue increased by3.0% and operating profit was16.3% lower.

Net interest expense increased to £11.1 million (H1 2007/08: £10.6 million).The net interest expense includes a £0.2 million (H1 2007/08: £2.7 million) charge from an increase in the fair value of put options held by minority, non-controlling shareholders in a subsidiary of the Group. Net interest expensein the second half of the yearis expected to beslightly higher than in the first half. The employment benefit net finance income, which is a non-cash item, was £0.2 million (H1 2007/08: income of £4.3 million); thisreductionreflected thehigher discount rate usedto discount future liabilitiesand the higher opening deficit of the Group's defined benefit pension schemes.

Profit before tax was £44.1 million (H1 2007/08: £56.1 million).

Tax on profits has been charged at an underlying rate, before exceptional items and share of profits of associates, of 31.0% (half-year to 31 October 2007:27.8%; year to 30 April 2008: 29.2%), being the expected full-year underlying rate.The tax charge for the current period has been increased by an exceptional deferred tax charge of £12.9millionfollowing amendments to theUKindustrial buildings allowance regime which were substantively enacted in the Finance Act 2008.

Adjusted earnings per share, excluding the exceptional deferred tax charge, were 7.7 pence (H1 2007/08: 10.4 pence) and basic earnings per share were4.4pence(H1 2007/08: 10.4 pence).

Capital expenditureincreasedby£6.7millionto £44.4million as a result oftheinvestment to producelightweight CCMat Kemsley Mill. Despite thishighercapital expenditure,free cash flow before dividends, acquisitions and disposalsincreased to£19.9million (H1 2007/08: £18.5 million); this was achieved through good control of working capital.Net debt was £262.0 million at the end of first half 2008/09 (end of 2007/08: £251.8 million) resulting innet debt to EBITDA of1.5 times(end of 2007/08: 1.4 times before exceptional items).

Financing Facilities

In September 2008, as part of its ongoing funding programme, the Group successfully extended its financing facilities with the renewal of its 5-year syndicated revolving credit facility of £287.5 million (previously £250 million). This increased the Group's total borrowing facilities tocirca£550million and extended the weighted-average maturity of the Group's committed borrowing facilities to four years and seven months. This will increase the annual interest charge by circa £3 million.We are advised that the Group's covenants on its private placement facilities and the newsyndicatedrevolvingcreditfacility are at themore favourable endof marketnorms.

Pensions

As a result of the decline in global equity pricesduring the first half of 2008/09, partiallymitigated by an increase in the discount rateapplied to the liabilities,the gross pension deficitas at31 October 2008increased to£173.0million compared with£75.9million as at 30 April 2008.The triennial valuation of the Group's defined benefit pension scheme as at 30 April 2007 was finalised in July 2008. Following negotiations with the scheme's Trustee, the Group's contributions to the scheme with effect from 1 May 2008are£15.6million per annum (previously £14.6 million).

Energy Costs

In the first half of 2008/09, the Group's total energy costs increased to £59million (H1 2007/08: £41million). The underlying increase of £7million, after adjusting for the effects of the acquisition of New Thames Paper Mill in February 2008,was moderated bythe Group's strategy ofhedgingitsopen market purchases ofenergy. Approximately 40% of the Group's energy costs are incurred under supply contracts in which movements in our energy costs tend to lag the trends in market prices.Underlying energy costs for full year 2008/09 are expected to increase by circa £14million.

INTERIM DIVIDEND

The Board announces an interim dividend of 2.6 pence per share, which is unchanged from the previous year's interim dividend. It will be paid on3March 2009 to ordinary shareholders on the register at the close of business on30January2009.

ACTION PROGRAMME

As can be seen from the operating review below, all of our businesses are facing challenging trading conditions. In anticipationofthis we are implementing an action programme focused oncostreduction andcashgeneration. This programme willsupport our strong market positions andunderpin the Group's results. We envisage that the programme will have a cash cost inthe first half of calendar year 2009 in the range of £12 to 15 million and provide an annual cash payback of at least the same level, the majority of which will come through in financial year 2009/10.

The cost reduction programme has three elements:

• Lowering ourstructuralcost base;

• Establishinga cost base foreachmajor business which is appropriate for the tougher conditions forecastand which will bein place before the beginning of our next financial year;and

• Increasing productivity through a programmetoensure that we can meet customer demands from the lower structural cost base.

Our attention to cash generationencompassesboth working capital and capital expenditure. Plans are in place at all businesses tomanageworking capitaleven moretightly,including theadjustment ofworking capital usage to the changing trading conditions. Particular emphasis is being given to control of inventory and trade receivables in the more challenging environment.

Capital expenditureisbeingclosely controlledand targeted to ensure that we safeguardour strongmarket positions. We will concentrateour more limitedinvestmentprogrammeon our recycling and value-added converted packaging operations. In the second half of 2008/09, we will complete the expenditure on the lightweight CCM project while significantly curtailing other investment; capital expenditure for full year 2008/09 is expected to be circa £85 million. In 2009/10, capital expenditure will be limitedto£50 million,a level well below our depreciation charge of circa £70 million.

Clearly,there is considerable uncertainty in our markets. We will continue to monitor the external environment and will take further action if appropriate.

OUTLOOK

We expect trading conditions to remain difficult as a result of lower demand across all our markets. We are takingconcertedaction tosupport our strong market positions andunderpin the Group's results. Cash generation willremainan area of keyfocus. We are confident that the actions we are taking will position the Groupfora robust performance going forward.

OPERATING REVIEW

Paper and Corrugated Packaging Overview

In the first nine months of calendar year 2008, the European market for corrugated packaging(boxes), measured in square metres1,was1% lower than in the same period of 2007, within which theUKmarketfell by3%.However,in the third quarterthe market weakened significantly, with Europe as a whole being 3% lower and theUKdeclining by 4%. The markethas continued to soften since the end of September. Demand for the fast-moving consumer goods (FMCG) sector of the market, which accounts for approximately two-thirds of theboxmarket, has been stronger than that for the industrial or consumer durables sectors. Corrugated case material (CCM) demand has been correspondingly lower and European industry recycled CCM stocks have been at a high level throughout the year to date. A number of CCM producers, including two in theUK,have recently announced their intention to close capacity. Demand for high-quality lightweight CCMhas remained strong and continues to be limited by the available supply.

Boxprices have remained firm in theUKthroughout 2008 although on the continenttheyhave recently started to softenwhere they are linked to the price of CCM. The lower box demand has resulted in CCM prices reducing substantially in continentalEurope. Although CCM prices in theUKhave been largely supported until recently by the strength of the euro, pricesarenow starting to beeroded, reflecting the ongoing reduction in demand and also the recent lowering of waste paper prices.The price of waste paper, the principal raw material for recycled CCM, remained high untilmid-October since whenthe price hasfallen sharply due to the reduction in demand forwaste, particularly fromAsia. Although there has recently been a softening in the market prices for energy, they remain athigh levels and continue to exert pressure on margins throughout the industry.

Despite the more difficult trading conditions, the Group's UK and Continental European Paper and Corrugated Packaging segments combined delivered a robust result in the first half of the year with total operating profit of £44.9 million being6.3% lower than the previous year's strong first half result.

1 Source: Federation of European Corrugated Board Manufacturers

UKPaper and Corrugated Packaging

Revenue in UK Paper and Corrugated Packaging, advanced by 19.0% due toa £57.9million contribution fromthe tolling revenues associated with New Thames Paper Mill (NTPM), acquired in February 2008, increased external revenue at Severnside Recyclingand raised corrugated packaging prices to recover the higher input costs. The segment's operating profit was 27.8% lower as a result of reduced sales volumesand higher input costs.

Severnside Recycling further increased its contribution to the segment's result. It continued to develop its waste paper collection business, particularly in preparation for supplying St Regis's increased requirements for waste to produce CCM on the converted machine at NTPM, and developed further its value-added waste management services.

Results at St Regis, ourUKpaper business, were substantially affected by weakerthan expectedsales volumes of both CCM and plasterboard liner, the latter being affected bythe slow-down in the construction industry. We tookdowntimeto adjust production tothe level of demand,holdingstocks atthe levels of the prior year.Selling pricesdid not reduce significantly in the first half butmargins were eroded bythehigherenergy and raw material costs. The project to modify the recently acquired NTPM at Kemsley is on schedule to begin production in January 2009. This investment will strengthen the competitiveness of the Group by giving us a significant capability in the growth segment of high-quality lightweight CCM.

DS Smith Packaging, ourUKbox business,achieved a solid result despite sales volumes being lower due to the weaker overall demand; it continued to outperform theUKmarket. We are benefiting from the actions taken to expand and strengthen our position in the FMCG sector of the market - predominantly for food and beverages. A further price increase was implemented on corrugated products to recover the most recent rises innon-waste paperinput costs. Capacity levels and costsarebeingadjusted at a number of plants to mitigate the effects of lower demand.

The strongmarket positionswe have built in this segment provide a good base from whichto weather theeffects of the further weakening in demandwe expect in the second half of the year. The strength of the euro remains a positive factor and in the latter months of this financial year we will begin to benefit from our newly established lightweight CCM capability.

Continental European Corrugated Packaging

The Continental European Corrugated Packaging segment, which is a net buyer of CCM, performedverystrongly, doubling its operating profitonrevenuewhich was15.9%higher. Excluding the effects of foreign exchange rates,operating profit increased by 61.0% on broadly flat revenue. The result benefited substantially fromouractionsto raise prices to recover the higher input costsand to maintaingood cost control; together theseactions enabled us tooffset the effects of lower sales volumes. We had good results in all countries, with the exception ofTurkeywhere market conditions remain particularly poor.

In our French businesses, sales volumes for solid board and boxes were significantly lower. Despite this,our French box operations made good progress, assisted by better prices and operational improvements at the main facilities. Our Italian business performed well on the back of its strongmarketpositions in the FMCG sector.InPoland, where we are benefiting from the investments we have made over a number of years, weachieveda further substantial advance, assisted by stronggrowthin higher value-added products.

Despite the continuing softening of its markets, we expect the Continental European Corrugated Packaging segment to perform satisfactorily in the second half of the year.

Our Ukrainian associate business, Rubezhansk, which is reported under associates, wasaffected byhigher input costs and lower volumes. Theprofit wasfurther reducedbyanexchange loss incurred as a result of therecentdevaluation of the Ukrainian Hryvnia against the US dollar. Rubezhansk hasaUS dollar denominated loanof $87 millionrelated to its investment project to increase its paper capacityand develop a capability to produce plasterboard liner. We are working with our partner toaddressthe issues relating to the material devaluation of the Ukrainian Hryvnia.

Plastic Packaging

Revenue in Plastic Packagingincreased by 13.0%, almost entirely due to the effects of foreign exchange translation. Althoughwe achieved improvedresults in liquid packaging and dispensing(LP&D)this was more than offset by reduced profits in the other sectors, resulting in the segment's operating profit being£1.7 millionlower. We raised prices to recover the further increases in polymer costs which occurred during the first quarter of the financial year; polymer prices haverecentlyfallen back.

Demand in returnable transit packaging (RTP) was weaker and more variable. Sales to the construction and automotive sectorshave fallen sharplyand ourbeverage cratebusiness was significantly affected byanticipatedcrate replacement programmesbeing deferred by customers. Results in LP&D benefited from better sales volumes and particularly from a continued good performance in theUSA, partly based on the development of new market sectors for bag-in-box packaging. Results at the smaller packaging management and modified atmosphere packagingbusinesseswere lower, especially due to reduced levels of activity at a number of their key customers.

We are taking action to improve results in this segment. Ouraim istomaintain the improved performance in LP&Dwhilemitigatingthe effects oftheweaker demand for RTP. We expect our actions to lower the cost basesubstantially.

Office Products Wholesaling

The Office Products Wholesaling segment - Spicers - achieved a16.5% advance in revenue despitea slow-down in the major markets we serve. Operating profit was£1.3 millionlower as a result of the effects of the tougher trading environment on our established businesses in theUK,FranceandBenelux; thismore than offset the further progress of our continental European development businesses. Excluding the effects of foreign exchange translation,revenue was £25.6 million higher and operating profit was £2.1 million lower than in the first half of 2007/08.

SpicersUKcontinued to grow its revenue well. All of this increase was in electronic office supplies (EOS),in line with our plans to develop sales and provide good support for our dealers in this product sector. We continue to make progress, extending our product range, improving our offer, winning accounts andraising efficiency. However,thehighlycompetitive environmenthasprevented us fromconverting this improved operational performance intothe planned profit growth.

On the continent, results at our two well-established businesses inFranceand theBeneluxwere affected bylower demand and a more competitive environment which has affected unit gross margins. InFrance, our two branded dealer groups have grown market share. InGermany, we continued tobuildsales and profits while the Spanish business achieved a solid performance in especially weak market conditions. The Italian business continued to grow sales strongly andremains on course to move into profit by the end of the financial year.

The second half of the year isseasonally strongerforSpicers. We have programmes in place to reduce costs in our established businesses with the objective of improving profitability and enteringthenext financial year in a stronger position. We are reviewing further steps for improving the competitiveness of our UK network of distribution centres and maintaining our drive towards our financial goalfor the overall businessof generating a return on average capital employedin excess of 20%.

RISKS AND UNCERTAINTIES

The Board has considered the principal risks and uncertainties affecting the Group in the second half of the year. Theprincipalrisks and uncertainties discussed in theBusiness Review on pages 1 to 37 of the2008 Annual Report, whichis available on the Group's website atwww.dssmith.uk.com,remain relevant.

In summary, the Group's principal risks and uncertainties are:

• Changes to the demand for, or pricing of, the Group's products and services as a result of general economic conditions or market-specific factors;

• Movements in foreign exchange rates and interest rates;

• The funding position of the Group'sUKdefined benefit pension scheme;

• The continuing availability of borrowing facilities, including compliance with borrowing covenants;

• Serious breaches of the law or other regulations;

• Political instability, particularly in relation to the Group'sUkraineassociate;

• Volatility and increases in pricing of energy;

• Volatility of pricing and availability of globally traded raw materials;

• Increasing costs in the medium-term related to climate change and carbon dioxide emissions;

• Changes in packaging demand as a result of environmental concerns;and

• Product liability.

The commentaryin theabovesections ofthis half-year report detailsthechanges to therisks and uncertainties for the second half of the financial year. In particular, the currentglobaleconomic conditionshave heightened the risks thatlower and unpredictable demandmay affectthe Group's cash generationandthatforeign exchange movementsmay affect the Group's results,especiallyin relationtothe Group's associate business inUkraine.

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

(a)the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim

Financial Reporting';

(b)the interim management report includes a fair review of the information required by DTR 4.2.7R

(indication of important events during the first six months and description of principal risks and

uncertainties for the remaining six months of the year); and

(c)the half-year report also includes a fair review of the information required by DTR4.2.8R (disclosure of

related party transactions and changes therein).

Tony Thorne Steve Dryden

Group Chief ExecutiveGroup Finance Director

2 December 2008

INDEPENDENT REVIEW REPORT TO DS SMITH PLC

We havebeen engaged by theCompany to review the condensed set of financial statements in the half-yearly financial report for the six months ended31 October 2008which comprises theincome statement, the balance sheet, the statement of recognised income and expense, the cash flow statement and related notes 1 to 15.We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to theCompany in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to theCompany those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than theCompany, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, theDirectors. TheDirectors are responsible for preparing the half-yearly financial report in accordance withthe Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of theCompany are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting",as adopted by the European Union.

Our responsibility

Our responsibility is to expressto the Company a conclusion on the condensed set of financial statements in the half-yearlyfinancialreportbased on our review.

Scope ofreview

We conducted our review in accordance with International Standard on ReviewEngagements(UKandIreland)

2410,"Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in theUnited Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing(UKandIreland)and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe thatthe condensed set of financial statements in the half-yearly financial report for the six months endedis not prepared, in all material respects, in accordance withInternational Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Registered Auditor

London,United Kingdom

2 December 2008

Condensed Consolidated Income Statement

CondensedConsolidated Statement of Recognised Income and Expense

CondensedConsolidated Balance Sheet

CondensedConsolidated Cash Flow Statement

Notes to the Accounts

1Basis of preparation

The half year report has been prepared in accordance with IAS 34 'Interim Financial Reporting', International Financial Reporting standards and the Disclosure and Transparency rules of the Financial Services Authority. The interim financial information has been prepared using the same accounting policies as those adopted in the annual financial statements for the year-ended 30 April 2008, which are prepared in accordance with IFRS as adopted by the European Union. Those accounts were reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain an adverse statement under section 237 (2) or (3) of the Companies Act 1985.

The Interim Financial Statements do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information is unaudited but has been reviewed by Deloitte LLP, the Group's auditors, and a copy of their review report appears on page 9 of this half-year report.

2Segmental reporting

¹ before exceptional items, as described in note 3

² capital employed is defined below

³ average capital employed is defined below

The Group's primary format for segment reporting is business segments based on the Group's management and internal reporting structure. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Central administration costs are allocated to the individual segments on a consistent basis year-on-year. Assets and liabilities have been analysed by segment at a capital employed level. Capital employed excludes items of a financing nature, taxation balances, net pension liabilities and fixed asset investments; segmental capital employed comprises identifiable segment assets less segmental liabilities. Average capital employed is the average monthly capital employed. The adjusted return on average capital employed is calculated as twice the operating profit before exceptional items divided by the average capital employed in the reporting period.

3. Pre-tax exceptional items

Items are presented as 'exceptional' in the financial statements where they are significant items of financial performance that the Directors consider should be separately disclosed, to assist in the understanding of the underlying trading and financial results achieved by the Group.

In the half-year ended 31 October 2008, the Group recorded no pre-tax exceptional items (half-year to 31 October 2007: none). An exceptional charge of £1.9m was recorded in the year to 30 April 2008. The charge related to the restructuring of our European liquid packaging and dispensing operations within Plastic Packaging.

4. Post-retirement benefits

The table above is the aggregate value of all Group pension schemes.

As a consequence of the decline in global equity prices since 30 April 2008 the gross pension deficit has increased to £173.0m from £75.9m. The decrease in asset values has been partially mitigated by an increase in the discount rate based on the AA rated corporate bond. The rate has increased from 5.9% at 30 April 2008 to 6.4% at 31 October 2008.

5. Finance costs

Finance costs for the half-year ended 31 October 2008 of £14.7m (half-year to 31 October 2007: £12.5m; year to 30 April 2008: £24.1m) include a charge of £0.2m (half-year to 31 October 2007: £2.7m; year to 30 April 2008: £3.1m) relating to an increase in the fair value of put options, in accordance with IAS 32/39, held by minority, non-controlling shareholders in a subsidiary of the Group. Excluding this impact finance costs increased by £4.7m.

6. Taxation

Tax on profits has been charged at an underlying rate, before exceptional items and share of profits of associates, of 31.0% (half-year to 31 October 2007: 27.8% (32.1%, excluding a one-off release of deferred tax of £2.4m following the change in the UK tax rate from 30% to 28%); year to 30 April 2008: 29.2%), being the expected full-year underlying rate. The tax charge for the current period has been increased by an exceptional deferred tax charge of £12.9m following amendments to theUKindustrial buildings allowance regime which were substantively enacted in the Finance Act 2008, which was effective from 21 July 2008.

The tax charge on profit before exceptional items and share of profits of associates for the period of £13.5m (half-year to 31 October 2007: £15.0m; year to 30 April 2008: £31.6m) consists of UK taxation of £4.2m (half-year to 31 October 2007: £7.0m; year to 30 April 2008: £15.1m) and overseas taxation of £9.3m (half-year to 31 October 2007: £8.0m; year to 30 April 2008: £16.5m).

7. Earnings per share

The basic earnings per share has been calculated on the profit for the period attributable to equity holders of the parent company of £17.3m (half-year to 31 October 2007: £40.7m; year to 30 April 2008: £76.6m) and on 391.0m ordinary shares (half-year to 31 October 2007: 391.7m; year to 30 April 2008: 391.5m), being the weighted average number in issue and fully paid during the period.

Diluted earnings per share is calculated assuming the conversion of potentially dilutive shares issued under share option schemes. These adjustments give rise to an increase in the weighted average number of ordinary shares to 392.3m (half-year to 31 October 2007: 397.5m; year to 30 April 2008: 393.9m).

Adjusted earnings per share

The Directors believe that the presentation of an adjusted earnings per share amount, being the basic earnings per share adjusted for exceptional items and the exceptional tax charge, helps to explain the underlying performance of the Group. A reconciliation of basic to adjusted earnings per share is as follows:

8. Dividends

The following dividends were paid by the Group:

The Directors have proposed an interim dividend for the 2008/09 year of 2.6 pence per share, totalling £10.2m.

9. Reconciliation of profit for the period to cash generated from operations

10. Analysis of net debt

Net debt analysed in the table below comprises the book amount of cash, other investments in current assets (which are treated as cash equivalents), overdrafts, interest-bearing loans and borrowings together with the fair value of derivative financial instruments that hedge the Group's borrowings.

Other non-cash movements in the period relate to the effect of movements in foreign exchange and interest rates on borrowings and related derivative financial instruments, and the entering into of finance leases.

Derivative financial instrument amounts in the table above relate to interest rate and cross-currency swaps hedging the Group's borrowings. The difference between the amounts shown above and the total derivative financial instrument assets and liabilities in the Group's balance sheet relates to derivative financial instruments that hedge forecast foreign currency transactions and the Group's purchases of energy.

11. Reconciliation of movements in shareholders' equity

12. Reconciliation of net cash flow to movement in net debt