Notes 30-35

The Group has revisited the classification of certain bank accounts during the period and as a result it has reclassified £21.7 million at 31 December 2006 from trade and other receivables to cash, and has reclassified £158.1 million borrowings drawn from the Group's revolving credit facility from Debt due within one year to Debt due after more than one year.

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Operating lease payments principally represent rentals payable by the Group for certain of its office properties. Leases are negotiated for an average term of 5.3 years and rentals are fixed for an average of 1.5 years.

The Group recognised a total expense of £9.1 million (2006: £6.9 million) in respect of all share-based payments in the year. Share-based payments include share options and conditional share awards.

Share options

The Group issues share options to certain employees. The grant price for share options is equal to the average quoted market price of the Company shares on the date of grant. The vesting period is typically three years. If share options remain unexercised after a period of ten years from the date of grant, the options expire. Share options are forfeited if the employee leaves the Group before the options vest and are subject to EPS and TSR performance conditions. Further details are provided in the Remuneration Report.

The weighted average share price at the date of exercise for share options exercised during the period was £0.98 (2006: £0.92). The options outstanding at 31 December 2007 had a weighted average exercise price of £1.04 (2006: £1.07), and a weighted average remaining contractual life of 4.9 years (2006: 5.4 years). The fair value per option granted (weighted average) in the year was £0.38 (2006: £0.36).

The fair value of share options was determined using a stochastic model and the following assumptions:

Expected volatility was determined by considering the historical volatility of the Group's share price over the previous five years, with certain periods where the share price was particularly volatile for specific reasons, being disregarded as these were not considered to be indicative of expected future volatility. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The Group recognised a total expense of £1.3 million (2006: £2.1 million) in respect of share options in the year.

Conditional share awards

The Group issues conditional share awards to certain employees. The vesting period is typically three years. The extent to which awards vest is determined partly by reference to the Company's Total Shareholder Return (TSR) performance relative to a group of similar businesses and partly by reference to the Company's EPS growth relative to RPI. Further details are provided in the Remuneration Report.

The fair value of conditional share awards was determined using a stochastic model using the assumptions given in the table above.

The Group recognised a total expense of £7.8 million (2006: £4.8 million) in respect of conditional share awards in the year.

Defined contribution schemes

Retirement benefits for employees are principally provided by defined contribution schemes which are funded by contributions from Group companies and employees. The amount charged to the profit and loss account of £9.5 million (2006: £6.2 million) represents contributions payable in the year to these schemes at rates specified in the rules of the plans. As at 31 December 2007, contributions of £nil (2006: £nil) due in respect of the current reporting period had not been paid over to the schemes.

Defined benefit schemes

The Group operates a number of defined benefit schemes for qualifying employees of its subsidiaries. The principal schemes are located in Germany, Italy, France and Norway. The numbers below are in respect of all material Group defined benefit schemes, unless otherwise stated.

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 31 December 2007. The present value of the defined benefit obligation, the related service cost and the past service cost were measured using the projected unit credit method.

The principal assumptions used are set out below.

The principal defined benefit schemes in Germany and Norway are funded. The assets of these schemes are held separately from those of the Group in independently administered funds, in accordance with scheme rules and statutory requirements. The unfunded defined benefit schemes are principally in Italy and France.

The table below shows the amount included in the balance sheet arising from the Group's obligations in respect of its defined benefit retirement schemes and the expected rates of return (net of administrative expenses) on the assets in the schemes.

The actual loss on scheme assets was £0.2 million (2006: £nil). The plan assets do not include any of the Group’s own financial assets, nor any property occupied by, or other assets used by, the Group.

The amounts charged to operating profit are as follows:

The amounts credited to investment income and charged to finance costs are as follows:

Actuarial gains and losses have been reported in the statement of recognised income and expense.

The amounts recognised in the statement of recognised income and expense are as follows:

Movements in the present value of defined benefit obligations were as follows:

Movements in the fair value of scheme assets were as follows:

History of experienced gains and losses:

The estimated amount of contributions to be paid to the scheme during 2008 is £0.6 million.

Since the year-end, the Group has acquired four companies: Oncology Inc. in the US, White Sheep in Finland, CIMA Group in Latin America and PS&A in the UK. The total maximum consideration in respect of these acquisitions is £12.5 million. The assessment of the purchases price allocation in respect of these acquisitions is currently being performed.

Remuneration of key management personnel

The following is the compensation of directors and key management. Further information about the remuneration of individual directors is provided in the audited part of the Directors' Remuneration Report.

Transactions with associated undertakings

In 2007, Group companies purchased media space from associated undertakings totalling £37.6 million (£006: £23.3 million).

The balance due from Group companies to associated undertakings at the end of 2007 was £8.1 million (2006: £0.1 million).

The balance due from associated undertakings to Group companies at the end of 2007 was £0.8 million (2006: £0.7 million).