Menu Links
31 Cash generated from operations
| All figures in £ millions | Notes | 2006 | 2005 |
|---|---|---|---|
| Net profit | 469 | 644 | |
| Adjustments for: | |||
| Tax | 19 | 125 | |
| Depreciation | 11 | 77 | 80 |
| Amortisation of purchased intangible assets | 12 | 28 | 11 |
| Adjustment on recognition of pre-acquisition deferred tax | 12 | 7 | – |
| Amortisation of other intangible assets | 12 | 23 | 18 |
| Investment in pre-publication assets | 17 | (213) | (222) |
| Amortisation of pre-publication assets | 17 | 210 | 192 |
| Loss on sale of property, plant and equipment | 2 | – | |
| Net finance costs | 7 | 74 | 70 |
| Share of results of joint ventures and associates | 13 | (24) | (14) |
| Profit on sale of subsidiaries and associates | 3, 4 | – | (346) |
| Net foreign exchange (losses)/gains from transactions | (37) | 39 | |
| Share-based payment costs | 24 | 25 | 23 |
| Inventories | (16) | (17) | |
| Trade and other receivables | (60) | (4) | |
| Trade and other liabilities | 54 | 71 | |
| Provisions | (17) | (17) | |
| Cash generated from operations | 621 | 653 | |
| Dividends from joint ventures and associates | 13 | 45 | 14 |
| Purchase of property, plant and equipment | (68) | (76) | |
| Purchase of intangible assets | (29) | (24) | |
| Finance lease principal payments | (3) | (3) | |
| Proceeds from sale of property, plant and equipment | 8 | 3 | |
| Add back: Non-operating property, plant and equipment | – | 1 | |
| Add back: Cash spent against integration and fair value provisions | 1 | 2 | |
| Operating cash flow | 575 | 570 | |
| Operating tax paid | (59) | (65) | |
| Net operating finance costs paid | (82) | (65) | |
| Operating free cash flow | 434 | 440 | |
| Non-operating finance costs paid | – | (7) | |
| Cash spent against integration and fair value provisions | (1) | (2) | |
| Total free cash flow | 433 | 431 | |
| Dividends paid (including to minorities) | (235) | (222) | |
| Net movement of funds from operations | 198 | 209 |
Following a review of accounting presentation in 2006, the Group has chosen to reclassify investment in pre-publication assets as cash generated from operations. This aligns the classification in the cash flow with the treatment of comparable items in other industries and provides more relevant information on the Group cash flow. The comparative has been reclassified accordingly.
In the cash flow statement, proceeds from sale of property, plant and equipment comprise:
| All figures in £ millions | 2006 | 2005 |
|---|---|---|
| Net book amount | 10 | 3 |
| Loss on sale of property, plant and equipment | (2) | – |
| Proceeds from sale of property, plant and equipment | 8 | 3 |
The principal non-cash transactions are movements in finance lease obligations of £4m (2005: £nil).