Consolidated Cash Flow Statement

For the year ended 31 December 2008

 
Notes		 2008
£m		 2007
£m
Cash generated from operations
 33 222.4 70.5
Income taxes paid
   (47.6) (53.8)
Net cash flows from operations
   174.8 16.7
     
Cash flows from investing activities
      
Interest received
   97.5 99.0
Dividends received
   11.9 12.5
Acquisition of subsidiary, net of cash acquired
 35 (31.6) (3.3)
Deferred payment for acquired subsidary
   (2.1) –
Investment in jointly owned entity
 34 (1.5) –
Purchase of property and equipment
 20 (5.9) (2.7)
Purchase of intangible assets
 21 (2.5) –
Net cash flows from investing activities
   65.8 105.5
     
Cash flows used in financing activities
      
Proceeds from issue of ordinary shares
   3.8 4.5
Dividends paid to shareholders
 29 (75.6) (111.1)
Dividend paid to minority interest
   (0.2) –
Interest paid
   (20.0) (19.1)
Purchase of treasury shares
 22 (28.0) (1.5)
Return of capital
 22 (119.2) –
Net cash flows used in financing activities
   (239.2) (127.2)
     
Net increase/(decrease) in cash and cash equivalents
   1.4 (5.0)
Cash and cash equivalents at beginning of year
   11.6 16.5
Effect of exchange rate changes on cash and cash equivalents
   1.1 0.1
Cash and cash equivalents at end of year
 16 14.1 11.6

The attached notes form an integral part of these consolidated financial statements.

The Group classifies cash flows from purchase and disposal of financial assets in its operating cash flows as these transactions are generated by the cash flows associated with the origination and settlement of insurance contract liabilities or capital requirements to support underwriting. Cash of £155.4 million from net sales of financial investments was utilised in operations during the period (2007: £232.1 million net purchases of financial investments generated from operations).

Cash flows relating to participations on syndicates not managed by the Group are included only to the extent that cash is transferred between the Premium Trust Funds and the Group.