Notes 26-31

31. Reconciliation to non-GAAP measures of performance

Reconciliation of profit before interest and taxation to headline PBIT:

2008
£m
2007
£m
2006
£m
Profit before interest and taxation 922.0 846.1 782.7
Gains on disposal of investments (3.4) (3.4) (7.3)
Goodwill impairment 84.1 44.1 35.5
Goodwill write-down relating to utilisation of
pre-acquisition tax losses
1.5 1.7 8.8
Amortisation and impairment of acquired intangible assets 78.4 40.3 43.3
Share of exceptional losses/(gains) of associates 0.5 (0.8) (4.0)
Investment write-downs 30.5
Cost of changes to corporate structure 4.6
Headline PBIT 1,118.2 928.0 859.0
Finance income 169.6 139.4 111.0
Finance charges (excluding revaluation of
financial instruments)
(319.4) (250.1) (203.7)
  (149.8) (110.7) (92.7)
Interest cover on headline PBIT 7.5 times 8.4 times 9.3 times
Reconciliation of profit before taxation to headline PBT and headline earnings:
  2008
£m
2007
£m
2006
£m
Profit before taxation 746.8 719.4 682.0
Gains on disposal of investments (3.4) (3.4) (7.3)
Goodwill impairment 84.1 44.1 35.5
Goodwill write-down relating to utilisation of
pre-acquisition tax losses
1.5 1.7 8.8
Investment write-downs 30.5
Amortisation and impairment of acquired intangible assets 78.4 40.3 43.3
Costs of changes to corporate structure 4.6
Share of exceptional losses/(gains) of associates 0.5 (0.8) (4.0)
Revaluation of financial instruments 25.4 16.0 8.0
Headline PBT 968.4 817.3 766.3
Taxation1 (245.3) (207.1) (208.5)
Minority interests (74.8) (49.2) (46.8)
Headline earnings 648.3 561.0 511.0
Ordinary dividends paid 161.8 138.9 118.9
Dividend cover on headline earnings 4.0 times 4.0 times 4.4 times

Note

1
Excluding net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items.
Calculation of headline EBITDA:

2008
£m
2007
£m
2006
£m
Headline PBIT (as above) 1,118.2 928.0 859.0
Depreciation of property, plant and equipment 149.6 126.3 129.1
Amortisation of other intangible assets 23.4 18.1 13.5
Headline EBITDA 1,291.2 1,072.4 1,001.6
Headline PBIT margins before and after share of results of associates:

Margin
%
2008
£m
Margin
%
2007
£m
Margin
%
2006
£m
Revenue   7,476.9   6,185.9   5,907.8
Headline PBIT 15.0% 1,118.2 15.0% 928.0 14.5% 859.0
Share of results of associates
(excluding exceptional losses/gains)
  (46.5)   (40.6)   (37.1)
Headline operating profit 14.3% 1,071.7 14.3% 887.4 13.9% 821.9
Calculation of effective tax rate on headline PBT1:

2008
£m
2007
£m
2006
£m
Taxation (note 7) (232.9) (204.3) (199.4)
Net deferred tax credit in relation to the amortisation
of acquired intangible assets and other goodwill items
(12.4) (2.8) (9.1)
Taxation1 (245.3) (207.1) (208.5)
Headline PBT 968.4 817.3 766.3
Effective tax rate on headline PBT1 25.3% 25.3% 27.2%

Note

1
Excluding net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items.
Headline diluted earnings per ordinary share:

 
2008
£m
2007
£m
2006
£m
Headline earnings 648.3 561.0 520.1
Earnings adjustment:
Dilutive effect of convertible bonds 0.8 0.9 1.1
Weighted average number of
ordinary shares
1,169,602,949 1,227,016,974 1,242,232,290
Headline diluted earnings
per ordinary share
55.5p 45.8p 41.2p
Reconciliation of free cash flow:

2008
£m
2007
£m
2006
£m
Cash generated by operations 1,195.0 1,120.6 860.6
Plus:
Interest received 133.0 102.6 75.2
Investment income 1.8 3.1 2.4
Movement in working capital and provisions 109.3 (25.4) 171.1
Dividends from associates 44.6 28.0 20.3
Issue of shares 10.6 34.8 70.9
Proceeds on disposal of treasury shares 6.9
Proceeds on disposal of property, plant and equipment 11.5 8.3 22.4
Less:
Interest and similar charges paid (269.2) (212.0) (135.1)
Purchases of property, plant and equipment (196.8) (151.1) (167.8)
Purchases of other intangible assets
(including capitalised computer software)
(23.8) (19.7) (16.7)
Corporation and overseas tax paid (182.5) (151.0) (162.0)
Dividends paid to minority shareholders
in subsidiary undertakings
(63.5) (38.9) (28.8)
Free cash flow 776.9 699.3 712.5

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