Operating cash flow was £43.0 million (2008: £30 million), representing 93% of adjusted operating profit, despite an increase in stock and debtors commensurate with the growth of the business. Net debt for the year was reduced to £15.4 million (2008: £21.8 million) as operating cash flow was more than sufficient to fund acquisitions (including further investment in DB Power Electronics), capital expenditure, dividend payments, tax and interest.
. . . .
Net debt for the year was reduced to £15.4 million (2008: £21.8 million) as operating cash flow was more than sufficient to fund acquisitions (including further investment in DB Power Electronics), capital expenditure, dividend payments, tax and interest.

Financial review (extract)
Adjusted operating cash flow was again strong, nevertheless the strong growth in the business resulted in some investment in working capital. Good credit control was exercised (year-end debtor days were 76 [77 in 2008] and the level of overdue debtors remained constant at 15 days). This once again underpins the quality of the customer base and the related earnings. Management of the supply chain has been tightened further with inventory turns improving, although terms with key suppliers have been held or shortened in some cases to ensure quality and speed of delivery. Management remains committed to turning profits into cash to enable reinvestment in the businesses.

Adjusted operating profit The reported basic earnings £26.617m was increased by a gain of £2.341m described as ‘amortization of acquired intangibles’ to an adjusted profit of £28.958m.

Discussion points 

1 How does the discussion explain the company’s view on the cash invested in working capital?
2 Why might the company want to use cash flow to reduce net debt?