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Notes 26-31

31. Reconciliation to non-GAAP measures of performance

Reconciliation of profit before interest and taxation to Headline PBIT:

  2007
£m
2006
£m
2005
£m
Profit before interest and taxation 846.1 782.7 686.7
Gains on disposal of investments (3.4) (7.3) (4.3)
Goodwill impairment 44.1 35.5 46.0
Goodwill write-down relating to utilisation of
pre-acquisition tax losses
1.7 8.8 1.1
Amortisation and impairment of acquired intangible assets 40.3 43.3 25.3
Share of exceptional gains of associates (0.8) (4.0)
Headline PBIT 928.0 859.0 754.8
Finance income 139.4 111.0 87.6
Finance charges (excluding revaluation of
financial instruments)
(250.1) (203.7) (173.4)
  (110.7) (92.7) (85.8)
Interest cover on Headline PBIT 8.4 times 9.3 times 8.8 times

Reconciliation of profit before taxation to Headline PBT and Headline earnings:

  2007
£m
2006
£m
2005
£m
Profit before taxation 719.4 682.0 592.0
Gains on disposal of investments (3.4) (7.3) (4.3)
Goodwill impairment 44.1 35.5 46.0
Goodwill write-down relating to utilisation of
pre-acquisition tax losses
1.7 8.8 1.1
Amortisation and impairment of acquired intangible assets 40.3 43.3 25.3
Share of exceptional gains of associates (0.8) (4.0)
Revaluation of financial instruments 16.0 8.0 8.9
Headline PBT 817.3 766.3 669.0
Taxation (204.3) (199.4) (194.0)
Minority interests (49.2) (46.8) (34.1)
Headline earnings 563.8 520.1 440.9
Ordinary dividends 138.9 118.9 100.2
Dividend cover on Headline earnings 4.1 times 4.4 times 4.4 times

Calculation of Headline EBITDA:

  2007
£m
2006
£m
2005
£m
Headline PBIT (as above) 928.0 859.0 754.8
Depreciation of property, plant and equipment 126.3 129.1 111.4
Amortisation of other intangible assets 18.1 13.5 10.7
Headline EBITDA 1,072.4 1,001.6 876.9

Headline PBIT margins before and after share of results of associates:

  Margin
%
2007
£m
Margin
%
2006
£m
Margin
%
2005
£m
Revenue   6,185.9   5,907.8   5,373.7
Headline PBIT 15.0% 928.0 14.5% 859.0 14.0% 754.8
Share of results of associates
(excluding exceptional gains)
  (40.6)   (37.1)   (33.9)
Headline PBIT excluding share
of results of associates
14.3% 887.4 13.9% 821.9 13.4% 720.9

Calculation of effective tax rate on Headline PBT:

  2007
£m
2006
£m
2005
£m
Taxation (204.3) (199.4) (194.0)
Headline PBT 817.3 766.3 669.0
Effective tax rate on Headline PBT 25.0% 26.0% 29.0%

Headline diluted earnings per ordinary share:

  2007
£m
2006
£m
2005
£m
Headline earnings 563.8 520.1 440.9
Earnings adjustment:
Dilutive effect of convertible bonds 0.9 1.1
Weighted average number of
ordinary shares
1,227,016,974 1,242,232,290 1,224,804,570
Headline diluted earnings
per ordinary share
46.0p 42.0p 36.0p

Reconciliation of free cash flow:

  2007
£m
2006
£m
2005
£m
Cash generated by operations 1,120.6 860.6 1,020.3
Plus:
Interest received 102.6 75.2 62.4
Investment income 3.1 2.4 5.6
Dividends from associates 28.0 20.3 13.4
Issue of shares 34.8 70.9 20.3
Proceeds on disposal of property, plant and equipment 8.3 22.4 6.7
Less:
Movements in working capital and provisions (25.4) 171.1 (107.6)
(Losses)/gains on sale of property, plant and equipment (1.0) 3.7 (1.1)
Interest and similar charges paid (212.0) (135.1) (128.2)
Purchases of property, plant and equipment (151.1) (167.8) (160.5)
Purchases of other intangible assets
(including capitalised computer software)
(19.7) (16.7) (10.8)
Corporation and overseas tax paid (151.0) (162.0) (136.0)
Dividends paid to minority shareholders
in subsidiary undertakings
(38.9) (28.8) (24.0)
Free cash flow 698.3 716.2 560.5