Summary consolidated cash flow statement

Notes

1. This measure is the formal (loss) profit before tax measure under IFRS but is not the result attributable to shareholders.
2. The adjusting items to profit before tax include changes in operating assets and liabilities, and other items comprising adjustments in respect of non-cash items, including operational interest receipts and payments, dividend receipts, and tax paid. The figure of £(325) million for other items at half year 2008 includes tax paid of £(325) million with other items netting to nil. The most significant elements of the adjusting items within changes in operating assets and liabilities are as follows:

   	2008 £m	2007 £m	2007 £m
   	Half year	Half year	Full year
   Deferred acquisition costs (excluding changes taken directly to equity)	(464)	(277)	(353)
   Other non-investment and non-cash assets	(742)	(644)	(122)
   Investments	9,166	(7,189)	(11,730)
   Policyholder liabilities (including unallocated surplus)	(9,194)	7,040	11,845
   Other liabilities (including operational borrowings)	2,470	1,436	911
   Changes in operating assets and liabilities	1,236	366	551

3. Acquisitions and disposals of subsidiaries shown above for 2007 include venture fund and other investment subsidiaries of the PAC with-profits fund.
4. The amount of £(538) million in respect of the disposal of Egg in 2007, net of cash balances, represents the net sale proceeds of £527 million less cash and cash equivalents of £1,065 million held by Egg and transferred on disposal.
5. In November 2007, the Company sold its venture fund management subsidiary, PPM Capital. As a result of the arrangements attaching to the sale, it is no longer appropriate to consolidate the holdings managed by that company.
6. Structural borrowings of shareholder-financed operations consist of the core debt of the holding company and Jackson surplus notes. Core debt excludes borrowings to support short-term fixed income securities programmes and non-recourse borrowings of investment subsidiaries of shareholder-financed operations. Cash flows in respect of these borrowings are included within cash flows from operating activities.
7. Structural borrowings of with-profits operations relate solely to the £100 million 8.5 per cent undated subordinated guaranteed bonds which contribute to the solvency base of the Scottish Amicable Insurance Fund (SAIF), a ring-fenced sub-fund of the PAC with-profits fund. Cash flows on other borrowings of with-profits funds, which principally relate to venture fund investment subsidiaries and other consolidated investment vehicles, are categorised as operating activities in the presentation above.
8. Cash movements in equity capital exclude scrip dividends.
9. Of the cash and cash equivalents amounts reported above, £361 million (half year 2007: £377 million, full year 2007: £339 million) represents cash and cash equivalents of the holding company and central finance subsidiaries.