The accounts
Cash flow statements
| Group | Company | |||
|---|---|---|---|---|
| 2007 £m |
2006 £m |
2007 £m |
2006 £m |
|
| Cash flows from operating activities | ||||
| Profit for the financial year | 93.2 | 177.7 | 38.2 | 151.4 |
| Adjustments to reconcile net profit to cash flow from/(used in) operating activities | ||||
 - Income tax expense |
32.8 | 69.0 | 2.6 | 37.1 |
| - Depreciation and amortisation |
22.6 | 18.0 | 12.2 | 9.6 |
| - Loan impairment loss |
29.3 | 14.9 | 4.6 | 4.1 |
| - Investment impairment loss |
94.4 | - | 94.4 | - |
| - Recoveries of loans and advances previously written off |
(6.8) | (7.5) | (4.5) | (5.0) |
| - Loss on sale of assets |
58.0 | - | 58.0 | - |
| - Interest on subordinated liabilities and other capital instruments |
91.7 | 89.6 | 102.4 | 98.6 |
| - Net profit on sale of property, plant and equipment and intangible assets |
(4.3) | (5.5) | (4.5) | (5.7) |
| - Gains less losses on sale of debt securities |
(3.4) | (2.1) | (3.4) | (2.1) |
| Cash flows from operating activities before changes in operating assets and liabilities | 407.5 | 354.1 | 300.0 | 288.0 |
| Net (increase)/decrease in operating assets | ||||
| - Loans and advances to banks and customers |
(3,395.3) | (2,782.6) | (12,774.0) | (9,541.7) |
| - Net proceeds from sale of assets |
3,294.8 | - | 3,294.8 | - |
| - Acquisitions of mortgage portfolios |
(4,337.9) | (2,540.6) | - | - |
| - Debt securities |
(119.3) | 426.3 | (1,063.3) | 296.8 |
| - Derivative financial instruments |
(884.4) | (28.2) | (190.4) | (78.2) |
| - Prepayments and accrued income |
(3.5) | 8.6 | (1.7) | 20.2 |
| - Other assets |
(632.4) | 94.0 | (632.4) | 84.7 |
| Net increase/(decrease) in operating liabilities | ||||
| - Deposits by banks and customer accounts |
2,396.0 | 898.2 | 7,299.7 | 5,185.4 |
| - Derivative financial instruments |
5.2 | 162.3 | 74.4 | 67.4 |
| - Debt securities in issue |
(701.5) | (1,811.8) | 329.0 | (1,738.8) |
| - Other liabilities |
(35.6) | (54.2) | (41.0) | (50.9) |
| - Accruals and deferred income |
210.1 | 61.0 | 171.9 | 54.3 |
| - Provisions |
(35.1) | 59.9 | (35.1) | 59.9 |
| - Income taxes (paid)/received |
(80.4) | (27.0) | (61.8) | 6.0 |
| - Other non-cash items |
(165.9) | 198.5 | (165.6) | 198.2 |
| Net cash used in operating activities | (4,077.7) | (4,981.5) | (3,495.5) | (5,148.7) |
| Cash flows from investing activities | ||||
| - Purchase of property, plant and equipment and intangible assets |
(34.3) | (26.6) | (26.9) | (17.4) |
| - Proceeds from sale of property, plant and equipment |
14.5 | 8.5 | 12.2 | 7.1 |
| - Proceeds from sale of shares in Group undertakings |
- | - | - | 13.9 |
| Net cash (used in)/from investing activities | (19.8) | (18.1) | (14.7) | 3.6 |
| Cash flows from financing activities | ||||
| - Purchase of own shares held to satisfy employee share plans |
(18.7) | - | (18.7) | - |
| - Purchase of own shares for cancellation |
(58.6) | - | (58.6) | - |
| - Proceeds from disposal of own shares |
5.2 | 7.8 | 5.2 | 7.8 |
| - Net proceeds from issue of subordinated liabilities |
- | 250.0 | - | 250.0 |
| - Repayments of subordinated liabilities |
- | (125.0) | - | (125.0) |
| - Net proceeds from secured funding |
6,437.7 | 6,178.4 | 6,437.7 | 6,178.4 |
| - Repayments of secured funding |
(1,374.2) | (1,164.8) | (1,254.6) | (1,000.0) |
| - Interest paid on subordinated liabilities and other capital instruments |
(79.7) | (89.0) | (90.5) | (97.5) |
| - Dividends paid |
(126.5) | (119.2) | (126.5) | (119.2) |
| Net cash from financing activities | 4,785.2 | 4,938.2 | 4,894.0 | 5,094.5 |
| Net increase/(decrease) in cash and cash equivalents | 687.7 | (61.4) | 1,383.8 | (50.6) |
| Cash and cash equivalents at beginning of year | 3,647.6 | 3,709.0 | 2,684.6 | 2,735.2 |
| Cash and cash equivalents at end of year | 4,335.3 | 3,647.6 | 4,068.4 | 2,684.6 |
| Represented by cash and assets with original maturity of three months or less within | ||||
| - Cash and balances at central banks |
21.0 | 17.8 | 21.0 | 17.8 |
| - Treasury bills |
185.0 | - | 185.0 | - |
| - Loans and advances to banks |
2,137.5 | 3,088.5 | 1,901.9 | 2,291.3 |
| - Debt securities |
1,991.8 | 541.3 | 1,960.5 | 375.5 |
| 4,335.3 | 3,647.6 | 4,068.4 | 2,684.6 | |
| Balances maintained with the Bank of England | 188.2 | 184.8 | 188.2 | 184.8 |
The Group is required to maintain balances with the Bank of England as shown above. These balances are not included in cash and cash equivalents for the purposes of the Cash Flow Statement.