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Notes 11-15

For the half year ended 30 June 2008

12. Goodwill and acquisitions

Goodwill in relation to subsidiary undertakings increased by £351.2 million (30 June 2007: increase of £96.3 million) in the period. This movement includes both additional goodwill arising on acquisitions completed in the period and adjustments to goodwill relating to acquisitions completed in prior years, net of impairment charges and the effect of currency translation. Goodwill in relation to associate undertakings increased by £29.6 million (30 June 2007: increase of £29.3 million) in the period.

Future anticipated payments to vendors in respect of both deferred and earnout obligations totalled £313.8 million (period ended 30 June 2007: £284.5 million; year ended 31 December 2007: £319.0 million). Earnouts are based on the directors' best estimates of future obligations, which are dependent on the future performance of the interests acquired and assume the operating companies improve profits in line with directors' estimates.

The Group acquired a number of subsidiaries in the period. The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group. The fair value adjustments for certain acquisitions included in the table below have been determined provisionally at the balance sheet date.

Book value at
acquisition
£m
Fair value
adjustments
£m
Fair value
to Group
£m
Intangible assets 1.5 2.0 3.5
Property, plant and equipment 3.3 3.3
Current assets 120.2 120.2
Total assets 125.0 2.0 127.0
Current liabilities (85.3) (5.6) (90.9)
Trade and other payables due
after one year
(8.2) (4.9) (13.1)
Provisions (0.1) (0.1)
Total liabilities (93.5) (10.6) (104.1)
Net assets/(liabilities) 31.5 (8.6) 22.9
Minority interest (8.5)
Goodwill     64.0
Consideration 78.4
Considered satisfied by:      
Cash 67.4
Payments due to vendors 9.7
Capitalised acquisition costs 1.3

Fair value adjustments comprise adjustments to bring the book value of the assets and liabilities of acquisitions to fair value, principally through the recognition of intangible assets and provisions for certain contingent liabilities, including corporate tax liabilities, where the likelihood of settlement is considered probable at the acquisition date.

The contribution to revenue and operating profit of acquisitions completed in the period was not material. There were no material acquisitions completed between 30 June 2008 and the date the interim financial statements have been approved.

On 1 August 2008, the Group made a formal offer for the entire issued and to be issued share capital of Taylor Nelson Sofres plc (‘TNS’). For each TNS share the offer consisted of 173 pence in cash and 0.1889 of a WPP share, thus valuing the issued share capital of TNS at approximately £1.1 billion based on the closing price of 475.5 pence per WPP share on 21 August 2008. As at the date of approval of these interim financial statements, this offer was subject to TNS shareholders' acceptance.