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Notes 6-10

For the half year ended 30 June 2008

10. Analysis of cash flows

The following tables analyse the items included within the main cash flow headings:

Net cash (outflow)/inflow from operating activities:

Six months
ended
30 June
2008
£m
Six months
ended
30 June
2007
£m
Year ended
31 December
2007
£m
Profit for the period 237.3 203.2 515.1
Taxation 101.2 90.9 204.3
Finance costs 130.1 102.6 266.1
Finance income (70.1) (57.7) (139.4)
Share of results of associates (20.7) (19.5) (41.4)
Operating profit 377.8 319.5 804.7
Adjustments for:      
Non-cash share-based incentive
plans (including share options)
30.2 33.3 62.4
Depreciation of property, plant
and equipment
68.6 60.7 126.3
Goodwill impairment 20.0 29.0 44.1
Goodwill write-down relating to
utilisation of pre-acquisition tax losses
0.7 1.0 1.7
Amortisation and impairment of
acquired intangible assets
25.5 17.1 40.3
Amortisation of other
intangible assets
9.9 8.7 18.1
Gains on disposal of investments (3.6) (3.0) (3.4)
Write-downs of investments 12.3
(Gains)/losses on sale of property,
plant and equipment
(0.1) (1.9) 1.0
Operating cash flow before
movements in working
capital and provisions
541.3 464.4 1,095.2
Movements in working capital
and provisions1
(572.5) (348.7) 25.4
Cash generated by operations (31.2) 115.7 1,120.6
Corporation and overseas tax paid (84.1) (76.2) (151.0)
Interest and similar charges paid (99.9) (84.3) (212.0)
Interest received 33.3 17.4 102.6
Investment income 1.7 4.0 3.1
Dividends from associates 14.8 16.2 28.0
(165.4) (7.2) 891.3

1The Group typically experiences an outflow of working capital in the first half of the financial year and an inflow in the second half. This is primarily due to the seasonal nature of working capital flows associated with its media buying activities on behalf of clients.

Acquisitions and disposals:

Six months
ended
30 June
2008
£m
Six months
ended
30 June
2007
£m
Year ended
31 December
2007
£m
Initial cash consideration (94.1) (80.3) (520.4)
(Overdraft)/cash and cash
equivalents acquired (net)
(9.9) 9.2 60.5
Earnout payments (30.4) (64.8) (93.9)
Loan note redemptions (2.6) (1.6) (2.1)
Purchase of other investments
(including associates)
(42.8) (73.5) (128.0)
Proceeds on disposal of
investments
3.8 3.0 9.1
(176.0) (208.0) (674.8)

Share repurchases and buy-backs:

Six months
ended
30 June
2008
£m
Six months
ended
30 June
2007
£m
Year ended
31 December
2007
£m
Share cancellations (excluding
brokerage fees)
(112.2) (209.2) (402.7)
Shares purchased into treasury (12.7)
(112.2) (209.2) (415.4)

Net increase/(decrease) in borrowings:

Six months
ended
30 June
2008
£m
Six months
ended
30 June
2007
£m
Year ended
31 December
2007
£m
Increase in drawings on bank loans 161.8
Repayment of €650 million
6.0% bonds
(515.1)
Proceeds from issue of €750 million
6.625% bonds due May 2016
594.6
Repayment of £450 million 2.0%
convertible bonds
(450.0) (450.0)
Proceeds from issue of £400 million
6.0% bonds due April 2017
400.0 400.0
Proceeds from issue of £200 million
6.375% bonds due November 2020
200.0
Proceeds from issue of €500 million
5.25% bonds due January 2015
348.9
79.5 111.8 498.9

Cash and cash equivalents:

Six months
ended
30 June
2008
£m
Six months
ended
30 June
2007
£m
Year ended
31 December
2007
£m
Cash at bank and in hand 1,193.8 638.1 1,957.4
Short-term bank deposits 83.1 117.4 82.8
Overdrafts1 (646.1) (175.3) (977.9)
630.8 580.2 1,062.3

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