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Notes 11-15

11. Analysis of cash flows

The following tables analyse the items included within the main cash flow headings in the Consolidated cash flow statement.

Net cash from operating activities:

  2007
£m
2006
£m
2005
£m
Profit for the year 515.1 482.6 398.0
Taxation 204.3 199.4 194.0
Finance costs 266.1 211.7 182.3
Finance income (139.4) (111.0) (87.6)
Share of results of associates (41.4) (41.1) (33.9)
Operating profit 804.7 741.6 652.8
Adjustments for:
Non-cash share-based incentive plans
(including share options)
62.4 70.9 68.6
Depreciation of property, plant and equipment 126.3 129.1 111.4
Impairment of goodwill 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
Amortisation of other intangible assets 18.1 13.5 10.7
Gains on disposal of investments (3.4) (7.3) (4.3)
Losses/(Gains) on sale of property, plant and equipment 1.0 (3.7) 1.1
Operating cash flow before movements
in working capital and provisions
1,095.2 1,031.7 912.7
Decrease/(increase) in inventories and work in progress 29.4 (83.0) 39.5
Increase in receivables (886.7) (489.1) (618.5)
Increase in payables – short term 897.6 433.4 710.4
Increase/(decrease) in payables – long term 7.6 17.6 (33.8)
(Decrease)/increase in provisions (22.5) (50.0) 10.0
Cash generated by operations 1,120.6 860.6 1,020.3
Corporation and overseas tax paid (151.0) (162.0) (136.0)
Interest and similar charges paid (212.0) (135.1) (128.2)
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
Net cash inflow from operating activities 891.3 661.4 837.5

Acquisitions and disposals:

  2007
£m
2006
£m
2005
£m
Initial cash consideration (520.4) (120.5) (561.2)
Cash and cash equivalents acquired (net) 60.5 21.4 173.9
Earnout payments (93.9) (91.6) (96.7)
Loan note redemptions (2.1) (11.7) (33.0)
Purchase of other investments (including associates) (128.0) (28.7) (29.0)
Proceeds on disposal of investments 9.1 15.5 38.3
Net cash outflow (674.8) (215.6) (507.7)

Share repurchases and buy-backs:

  2007
£m
2006
£m
2005
£m
Share cancellations (excluding brokerage fees) (402.7) (218.8) (123.3)
Purchase of own shares by ESOP trust (38.9) (29.0)
Shares purchased into treasury (12.7)
Net cash outflow (415.4) (257.7) (152.3)

Net increase/(decrease) in borrowings:

  2007
£m
2006
£m
2005
£m
Repayment of £450 million bonds (450.0)
Proceeds from issue of £400 million bonds 400.0
Proceeds from issue of £200 million bonds 200.0
Proceeds from issue of €500 million bonds 348.9
Increase in drawings on bank loans (21.8) 17.1
Proceeds from issue of €600 million Eurobonds 403.9
Repayment of $287.5 million convertible bonds (154.5)
Repayment of $125 million Grey debt (65.3)
Repayment of working capital facility (277.2)
Repayment of $200 million bonds (115.3)
Net cash inflow/(outflow) 498.9 382.1 (595.2)

Cash and cash equivalents:

  2007
£m
2006
£m
2005
£m
Cash at bank and in hand 1,957.4 1,476.8 1,029.0
Short-term bank deposits 82.8 186.9 86.2
Overdrafts1 (977.9) (706.8) (435.6)
Cash and cash equivalents at end of year 1,062.3 956.9 679.6

Note

1 Bank overdrafts are included in cash and cash equivalents because they form an integral part of the Group's cash management.

The Group considers that the carrying amount of cash and cash equivalents approximates their fair value.