(Mark One) | ||
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
or | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
for the fiscal year ended December 31, | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
for the transition period from to | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report | ||
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12-b2 of the Exchange Act). Yeso Noo |
Title of Class | Name of Each Exchange on Which Registered | |
*Ordinary Shares, 25p par value | ||
American Depositary Shares, each Representing One Ordinary Share, 25p per Ordinary Share | New York Stock Exchange |
New York Stock Exchange |
Ordinary Shares, 25p par value |
þ Large accelerated filer | o Accelerated filer | o Non-accelerated filer |
International Accounting Standards Board | o |
Item 17o | Item 18o |
Yeso | Noþ |
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• | references to “sterling”, “pounds”, “pence” or “£” are to the lawful currency of the United Kingdom, | |
• | references to “euro” or | |
• | references to “US dollars”, “dollars”, “cents” or “$” are to the lawful currency of the United States. |
• | operations and prospects, | |
• | growth strategy, | |
• | funding needs and financing resources, | |
• | expected financial position, | |
• | market risk, | |
• | currency risk, | |
• | US federal and state spending patterns, | |
• | debt levels, and |
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• | general market and economic conditions. |
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ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
Year Ended December 31 | ||||||||||||||||||||||||
2007 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
$ | £ | £ | £ | £ | £ | |||||||||||||||||||
(In millions, except for per share amounts) | ||||||||||||||||||||||||
IFRS information: | ||||||||||||||||||||||||
Consolidated Income Statement data | ||||||||||||||||||||||||
Total sales | 8,241 | 4,162 | 3,990 | 3,662 | 3,340 | 3,510 | ||||||||||||||||||
Total operating profit | 1,137 | 574 | 522 | 497 | 359 | 386 | ||||||||||||||||||
Profit after taxation from continuing operations | 667 | 337 | 444 | 319 | 232 | 239 | ||||||||||||||||||
Profit for the financial year | 614 | 310 | 469 | 644 | 284 | 275 | ||||||||||||||||||
Consolidated Earnings data per share | ||||||||||||||||||||||||
Basic earnings per equity share(1) | $ | 0.70 | 35.6p | 55.9p | 78.2p | 32.9p | 31.7p | |||||||||||||||||
Diluted earnings per equity share(2) | $ | 0.70 | 35.6p | 55.8p | 78.1p | 32.9p | 31.7p | |||||||||||||||||
Basic earnings from continuing operations per equity share(1) | $ | 0.77 | 39.0p | 52.7p | 37.5p | 26.4p | 27.2p | |||||||||||||||||
Diluted earnings from continuing operations per equity shares | $ | 0.77 | 39.0p | 52.6p | 37.4p | 26.3p | 27.2p | |||||||||||||||||
Dividends per ordinary share | $ | 0.63 | 31.6p | 29.3p | 27.0p | 25.4p | 24.2p | |||||||||||||||||
Consolidated Balance Sheet data at period end | ||||||||||||||||||||||||
Total assets (non-current assets plus current assets) | 14,438 | 7,292 | 7,213 | 7,600 | 6,578 | 6,736 | ||||||||||||||||||
Net assets | 7,671 | 3,874 | 3,644 | 3,733 | 3,014 | 3,161 | ||||||||||||||||||
Long-term obligations(3) | (3,328 | ) | (1,681 | ) | (1,853 | ) | (2,500 | ) | (2,403 | ) | (1,982 | ) | ||||||||||||
Capital stock | 400 | 202 | 202 | 201 | 201 | 201 | ||||||||||||||||||
Number of equity shares outstanding (millions of ordinary shares) | 808 | 808 | 806 | 804 | 803 | 802 |
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Year Ended December 31 | ||||||||||||||||
2005 | 2005 | 2004 | 2003 | |||||||||||||
IFRS | IFRS | IFRS | ||||||||||||||
IFRS | £ | £ | £ | |||||||||||||
$ | ||||||||||||||||
(In millions, except for per share amounts) | ||||||||||||||||
IFRS Information: | ||||||||||||||||
Consolidated Profit and Loss Account Data | ||||||||||||||||
Statutory Measures | ||||||||||||||||
Total sales | 7,045 | 4,096 | 3,696 | 3,850 | ||||||||||||
Total operating profit/(loss) | 922 | 536 | 404 | 406 | ||||||||||||
Profit/(loss) after taxation from continuing operations | 588 | 342 | 262 | 252 | ||||||||||||
Profit/(loss) for the financial year | 1,108 | 644 | 284 | 275 | ||||||||||||
Basic earnings/(loss) per equity share(4) | $ | 1.35 | 78.2 | p | 32.9 | p | 31.7 | p | ||||||||
Diluted earnings/(loss) per equity share(5) | $ | 1.34 | 78.1 | p | 32.9 | p | 31.7 | p | ||||||||
Dividends per ordinary share | $ | 0.46 | 27.0 | p | 25.4 | p | 24.2 | p | ||||||||
Consolidated Balance Sheet Data | ||||||||||||||||
Total assets (Fixed assets plus Current assets) | 13,072 | 7,600 | 6,578 | 6,736 | ||||||||||||
Shareholders funds | 6,130 | 3,564 | 2,800 | 2,969 | ||||||||||||
Long-term obligations(6) | (4,300 | ) | (2,500 | ) | (2,403 | ) | (1,982 | ) | ||||||||
Capital stock(1) | 346 | 201 | 201 | 201 | ||||||||||||
Number of equity shares outstanding (millions of ordinary shares) | 804 | 804 | 803 | 802 |
Year Ended December 31 | ||||||||||||||||||||||||
2005 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
£ | £ | £ | £ | £ | ||||||||||||||||||||
$ | ||||||||||||||||||||||||
(In m | illions, except for per share amounts) | |||||||||||||||||||||||
US GAAP Information(7): | ||||||||||||||||||||||||
Consolidated Profit and Loss Account Data | ||||||||||||||||||||||||
Statutory Measures | ||||||||||||||||||||||||
Total sales | 7,045 | 4,096 | 3,696 | 3,879 | 4,320 | 4,225 | ||||||||||||||||||
Total operating profit/(loss)(2) | 746 | 434 | 260 | 364 | 453 | (389 | ) | |||||||||||||||||
Profit/(loss) after taxation from continuing operations | 330 | 192 | 203 | 198 | 219 | (1,483 | ) | |||||||||||||||||
Profit/(loss) for the financial year(8) | 707 | 411 | 182 | 173 | 189 | (1,500 | ) | |||||||||||||||||
Profit/(loss) from continuing operations for the financial year(3) | 299 | 174 | 166 | 160 | 221 | (424 | ) | |||||||||||||||||
(Loss)/profit from discontinued operations(3) | (3 | ) | (2 | ) | 16 | 16 | (10 | ) | (91 | ) | ||||||||||||||
Profit/(loss) on disposal of discontinued operations(3) | 411 | 239 | — | (3 | ) | (1 | ) | (985 | ) | |||||||||||||||
Basic earnings/(loss) per equity share(4) | $ | 0.89 | 51.5 | p | 22.9 | p | 21.8 | p | 23.7 | p | (188.6 | )p | ||||||||||||
Diluted earnings/(loss) per equity share(5) | $ | 0.88 | 51.4 | p | 22.8 | p | 21.8 | p | 23.7 | p | (188.6 | )p | ||||||||||||
Basic earnings/(loss) from continuing operations per equity share(1)(4) | $ | 0.37 | 21.8 | p | 20.9 | p | 20.1 | p | 27.8 | p | (53.3 | )p | ||||||||||||
Diluted earnings/(loss) from continuing operations per equity shares(3)(5) | $ | 0.37 | 21.7 | p | 20.8 | p | 20.1 | p | 27.8 | p | (53.3 | )p | ||||||||||||
Basic (loss)/earnings per share from discontinued operations(3)(4) | $ | 0.51 | 29.7 | p | 2.0 | p | 1.7 | p | (4.1 | )p | (135.3 | )p | ||||||||||||
Diluted (loss)/earnings per share from discontinued operations(3)(5) | $ | 0.51 | 29.7 | p | 2.0 | p | 1.7 | p | (4.1 | )p | (135.3 | )p | ||||||||||||
Dividends per ordinary share | $ | 0.46 | 27.0 | p | 25.4 | p | 24.2 | p | 22.7 | p | 21.9 | p | ||||||||||||
Consolidated Balance Sheet Data | ||||||||||||||||||||||||
Total assets | 13,416 | 7,800 | 7,040 | 7,101 | 6,767 | 8,280 | ||||||||||||||||||
Shareholders’ funds | 6,601 | 3,838 | 3,218 | 3,333 | 4,155 | 4,155 | ||||||||||||||||||
Long-term obligations(6) | (4,123 | ) | (2,397 | ) | (2,392 | ) | (1,951 | ) | (2,026 | ) | (2,829 | ) |
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(1) | ||
Basic | ||
Diluted | ||
Long-term obligations comprise any liabilities with a maturity of more than one year, including medium and long-term borrowings, derivative financial instruments, pension obligations and deferred income tax liabilities. | ||
The results of Government Solutions (disposed in February 2007), Les Echos (disposed in December 2007) and Data Management (disposed in February 2008) have been included in | ||
Fiscal Year | Interim | Final | Total | Interim | Final | Total | ||||||||||||||||||
(Pence per ordinary share) | (Cents per ordinary share) | |||||||||||||||||||||||
2005 | 10.0 | 17.0 | 27.0 | 17.2 | 29.2 | 46.4 | ||||||||||||||||||
2004 | 9.7 | 15.7 | 25.4 | 18.6 | 30.2 | 48.8 | ||||||||||||||||||
2003 | 9.4 | 14.8 | 24.2 | 16.7 | 26.4 | 43.1 | ||||||||||||||||||
2002 | 9.1 | 14.3 | 23.4 | 14.7 | 23.0 | 37.7 | ||||||||||||||||||
2001 | 8.7 | 13.6 | 22.3 | 12.6 | 19.7 | 32.3 |
Fiscal year | Interim | Final | Total | Interim | Final | Total | ||||||||||||||||||
(Pence per ordinary share) | (Cents per ordinary share) | |||||||||||||||||||||||
2007 | 11.1 | 20.5 | 31.6 | 22.4 | 40.6 | * | 63.0 | |||||||||||||||||
2006 | 10.5 | 18.8 | 29.3 | 20.0 | 31.4 | 51.4 | ||||||||||||||||||
2005 | 10.0 | 17.0 | 27.0 | 17.8 | 29.8 | 47.6 | ||||||||||||||||||
2004 | 9.7 | 15.7 | 25.4 | 17.4 | 26.4 | 43.8 | ||||||||||||||||||
2003 | 9.4 | 14.8 | 24.2 | 15.6 | 25.5 | 41.1 |
* | As the 2007 final dividend had not been paid by the filing date, the dividend was translated into cents using the noon buying rate for sterling at December 31, 2007. |
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Month | High | Low | ||||||
April 2006 | $ | 1.82 | $ | 1.74 | ||||
March 2006 | $ | 1.76 | $ | 1.73 | ||||
February 2006 | $ | 1.78 | $ | 1.73 | ||||
January 2006 | $ | 1.79 | $ | 1.74 | ||||
December 2005 | $ | 1.77 | $ | 1.72 | ||||
November 2005 | $ | 1.78 | $ | 1.71 |
Year Ended December 31 | Average Rate | |||
2005 | $ | 1.81 | ||
2004 | $ | 1.84 | ||
2003 | $ | 1.63 | ||
2002 | $ | 1.51 | ||
2001 | $ | 1.45 |
Month | High | Low | ||||||
March 2008 | $ | 2.03 | $ | 1.98 | ||||
February 2008 | $ | 1.99 | $ | 1.94 | ||||
January 2008 | $ | 1.99 | $ | 1.95 | ||||
December 2007 | $ | 2.07 | $ | 1.98 | ||||
November 2007 | $ | 2.11 | $ | 2.05 | ||||
October 2007 | $ | 2.08 | $ | 2.03 |
Year Ended December 31 | Average rate | |||
2007 | $ | 2.01 | ||
2006 | $ | 1.84 | ||
2005 | $ | 1.81 | ||
2004 | $ | 1.83 | ||
2003 | $ | 1.63 |
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Students seeking cheaper sources of content, e.g. online, used books or re-imported textbooks. | ||
— | Competition from major publishers and other educational material and service providers, including not for profit organizations, in our US educational textbook and assessment businesses. | |
— | Penguin: authors’ advances in consumer publishing. We compete with other publishing businesses to purchase the rights to author manuscripts. Our competitors may bid to a level at which we could not generate a sufficient return on our investment, and so, typically, we would not purchase these rights. | |
— | FT: we face competitive threats both from large media players and from smaller businesses, online portals and news redistributors operating in the digital arena and providing alternative sources of news and information. | |
— | People: the investments we make in our employees, combined with our |
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We |
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ITEM 4. | INFORMATION ON THE COMPANY |
• | FT Publishing |
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• | Interactive Data |
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• | ||
• | ||
• |
• | ||
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United | ||||
31 | % | |||
29 | % | |||
US | 30 | % | ||
Asia | % |
• | 50% interest in The Economist Group, publisher of one of the world’s leading weekly business and current affairs magazines. | |
• | 50% interest in FTSE International, a joint venture with the London Stock Exchange, which publishes a wide range of global indices, including the FTSE index. | |
• | 50% interest in
| |
• | 33% interest inVedomosti,a leading Russian business newspaper. |
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• | 14% interest inBusiness Standard, |
• | The School market is primarily driven by an
| |
• | The Higher Education market has a similar pattern, with colleges and professors typically refreshing their courses and selecting revised programs on a regular basis, often in |
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Allowances and benefits |
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Fees payable from | ||||
July 1, 2007 (£) | ||||
Non-executive director fee | 60,000 | |||
Chairmanship of audit committee | 20,000 | |||
Chairmanship of personnel committee | 15,000 | |||
Membership of audit committee | 10,000 | |||
Membership of personnel committee | 5,000 | |||
Senior independent director | 15,000 |
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Salaries/Fees | Bonus(1) | Other(2) | Total | |||||||||||||
£’000 | £’000 | £’000 | £’000 | |||||||||||||
Chairman | ||||||||||||||||
Dennis Stevenson (retired 1 October 2005) | 281 | — | — | 281 | ||||||||||||
Glen Moreno (appointed 1 October 2005) | 106 | — | — | 106 | ||||||||||||
Executive directors | ||||||||||||||||
Marjorie Scardino | 710 | 1,038 | 62 | 1,810 | ||||||||||||
David Bell | 395 | 560 | 17 | 972 | ||||||||||||
Rona Fairhead | 420 | 608 | 16 | 1,044 | ||||||||||||
Peter Jovanovich | 41 | — | 373 | 414 | ||||||||||||
John Makinson | 475 | 564 | 211 | 1,250 | ||||||||||||
Senior management as a group | 2,428 | 2,770 | 679 | 5,877 | ||||||||||||
Salaries/ | Annual | |||||||||||||||||||
Fees | incentive | Allowances(1) | Benefits(2) | Total(3) | ||||||||||||||||
£000 | £000 | £000 | £000 | £000 | ||||||||||||||||
Chairman | ||||||||||||||||||||
Glen Moreno | 450 | — | — | — | 450 | |||||||||||||||
Executive directors | ||||||||||||||||||||
Marjorie Scardino | 900 | 1,341 | 52 | 39 | 2,332 | |||||||||||||||
David Bell | 442 | 650 | — | 19 | 1,111 | |||||||||||||||
Rona Fairhead | 487 | 693 | — | 27 | 1,207 | |||||||||||||||
Robin Freestone | 405 | 597 | — | 15 | 1,017 | |||||||||||||||
John Makinson | 507 | 743 | 169 | 29 | 1,448 | |||||||||||||||
Senior management as a group | 3,191 | 4,024 | 221 | 129 | 7,565 | |||||||||||||||
(1) | Allowances for Marjorie Scardino |
(2) | Benefits include company car, car allowance, health care and, for Marjorie Scardino, pension planning and financial advice. Marjorie Scardino, Rona Fairhead, David Bell and John Makinson have the use of a chauffeur. | |
(3) | No amounts as compensation for loss of office and no expense allowances chargeable to UK income tax were paid during the |
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Number of | Earliest | |||||||||||||||||||||
Director | Options | (1) | Price | Exercise Date | Expiry Date | |||||||||||||||||
Marjorie Scardino(2) | 176,556 | a | * | 973.3p | 09/14/01 | 09/14/08 | ||||||||||||||||
* | 1090.0p | |||||||||||||||||||||
37,583 | * | 1372.4p | 06/08/02 | 06/08/09 | ||||||||||||||||||
37,583 | c | * | 1647.5p | 06/08/02 | 06/08/09 | |||||||||||||||||
41,550 | d | * | 1421.0p | 05/09/02 | 05/09/11 | |||||||||||||||||
41,550 | d | * | 1421.0p | 05/09/03 | 05/09/11 | |||||||||||||||||
41,550 | d | * | 1421.0p | 05/09/04 | 05/09/11 | |||||||||||||||||
41,550 | d | * | 1421.0p | 05/09/05 | 05/09/11 | |||||||||||||||||
Total | — | |||||||||||||||||||||
David Bell | 20,496 | a | * | 973.3p | 09/14/ | 09/14/ | ||||||||||||||||
b | 08/01/ | 02/01/ | ||||||||||||||||||||
b | 629.6p | 08/01/09 | 02/01/10 | |||||||||||||||||||
821 | b | 690.4p | 08/01/10 | 02/01/11 | ||||||||||||||||||
18,705 | c | * | 1372.4p | 06/08/ | 06/08/ | |||||||||||||||||
c | * | 1647.5p | 06/08/ | 06/08/ | ||||||||||||||||||
d | * | 1421.0p | 05/09/ | 05/09/ | ||||||||||||||||||
d | * | 1421.0p | 05/09/ | 05/09/ | ||||||||||||||||||
d | * | 1421.0p | 05/09/ | 05/09/ | ||||||||||||||||||
d | * | 1421.0p | 05/09/ | 05/09/ | ||||||||||||||||||
Total | — | |||||||||||||||||||||
Rona Fairhead | 1,904 | b | * | |||||||||||||||||||
b | 08/01/ | 02/01/ | ||||||||||||||||||||
d | * | |||||||||||||||||||||
d | * | |||||||||||||||||||||
d | * | |||||||||||||||||||||
Total | — | |||||||||||||||||||||
Robin Freestone | 1,866 | b | 08/01/ | 02/01/ | ||||||||||||||||||
Total | — | |||||||||||||||||||||
John Makinson | 30,576 | a | * | 973.3p | 09/14/01 | 09/14/08 | ||||||||||||||||
4,178 | b | 424.8p | 08/01/10 | 02/01/11 | ||||||||||||||||||
21,477 | c | * | 1372.4p | 06/08/02 | 06/08/09 | |||||||||||||||||
21,477 | c | * | 1647.5p | 06/08/02 | 06/08/09 | |||||||||||||||||
19,785 | d | * | 1421.0p | 05/09/02 | 05/09/11 | |||||||||||||||||
19,785 | d | * | 1421.0p | 05/09/03 | 05/09/11 | |||||||||||||||||
19,785 | d | * | 1421.0p | 05/09/04 | 05/09/11 | |||||||||||||||||
19,785 | d | * | 1421.0p | 05/09/05 | 05/09/11 | |||||||||||||||||
Total | 156,848 | — | ||||||||||||||||||||
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Number of | Exercise | Earliest | ||||||||||||||||||
Director | Options | (1) | Price | Exercise Date | Expiry Date | |||||||||||||||
Peter Jovanovich | 8,250 | a | * | 757.5p | 12/09/00 | 12/09/07 | ||||||||||||||
102,520 | a | * | 676.4p | 12/09/00 | 12/09/07 | |||||||||||||||
32,406 | c | * | 1372.4p | 08/06/02 | 08/06/09 | |||||||||||||||
32,406 | c | * | 1647.5p | 08/06/02 | 08/06/09 | |||||||||||||||
32,406 | c | 1921.6p | 08/06/02 | 08/06/09 | ||||||||||||||||
33,528 | c | 3224.3p | 03/05/03 | 03/05/10 | ||||||||||||||||
31,170 | d | * | $ | 21.00 | 09/05/02 | 09/05/11 | ||||||||||||||
31,170 | d | * | $ | 21.00 | 09/05/03 | 09/05/11 | ||||||||||||||
31,170 | d | * | $ | 21.00 | 09/05/04 | 09/05/11 | ||||||||||||||
31,170 | d | * | $ | 21.00 | 09/05/05 | 09/05/11 | ||||||||||||||
20,000 | d | * | $ | 11.97 | 01/11/02 | 01/11/11 | ||||||||||||||
20,000 | d | * | $ | 11.97 | 01/11/03 | 01/11/11 | ||||||||||||||
20,000 | d | * | $ | 11.97 | 01/11/04 | 01/11/11 | ||||||||||||||
Total | 426,196 | — | ||||||||||||||||||
John Makinson | 36,736 | a | * | 584.0p | 08/08/99 | 08/08/06 | ||||||||||||||
73,920 | a | * | 676.4p | 12/09/00 | 12/09/07 | |||||||||||||||
30,576 | a | * | 973.3p | 14/09/01 | 14/09/08 | |||||||||||||||
4,178 | b | 424.8p | 01/08/10 | 01/02/11 | ||||||||||||||||
21,477 | c | * | 1372.4p | 08/06/02 | 08/06/09 | |||||||||||||||
21,477 | c | * | 1647.5p | 08/06/02 | 08/06/09 | |||||||||||||||
21,477 | c | 1921.6p | 08/06/02 | 08/06/09 | ||||||||||||||||
21,356 | c | 3224.3p | 03/05/03 | 03/05/10 | ||||||||||||||||
19,785 | d | * | 1421.0p | 09/05/02 | 09/05/11 | |||||||||||||||
19,785 | d | * | 1421.0p | 09/05/03 | 09/05/11 | |||||||||||||||
19,785 | d | * | 1421.0p | 09/05/04 | 09/05/11 | |||||||||||||||
19,785 | d | * | 1421.0p | 09/05/05 | 09/05/11 | |||||||||||||||
Total | 310,337 | — | ||||||||||||||||||
(1) | Shares under option are designated as:aexecutive;bworldwide save for shares;cpremium priced; anddlong-term incentive; and*where options are exercisable. |
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a | Executive |
b | Worldwide save for shares |
c | Premium priced |
d | Long-term incentive |
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(2) | In addition, Marjorie Scardino contributes US$1,000 per month (the maximum allowed) to the |
As at March 31, 2006 | Ordinary Shares(1) | Restricted Shares(2) | ||||||
Glen Moreno | 100,000 | — | ||||||
Marjorie Scardino | 184,889 | 1,336,015 | ||||||
David Bell | 103,158 | 587,829 | ||||||
Terry Burns | 5,717 | — | ||||||
Patrick Cescau | — | — | ||||||
Rona Fairhead | 43,209 | 637,936 | ||||||
Susan Fuhrman | 2,681 | — | ||||||
John Makinson | 149,466 | 642,756 | ||||||
Reuben Mark | 16,908 | — | ||||||
Vernon Sankey | 5,563 | — | ||||||
Rana Talwar | 14,561 | — |
Ordinary | Restricted | |||||||
As at March 31, 2008 | shares(1) | shares(2) | ||||||
Glen Moreno | 180,000 | — | ||||||
Marjorie Scardino | 400,886 | 1,825,384 | ||||||
David Arculus | 10,545 | — | ||||||
David Bell | 172,896 | 631,408 | ||||||
Terry Burns | 8,792 | — | ||||||
Patrick Cescau | 3,079 | — | ||||||
Rona Fairhead | 123,460 | 742,896 | ||||||
Robin Freestone | 7,930 | 278,143 | ||||||
Susan Fuhrman | 5,726 | — | ||||||
Ken Hydon | 7,494 | — | ||||||
John Makinson | 306,592 | 696,012 | ||||||
Rana Talwar (resigned April 27, 2007) | 18,683 | — |
(1) | Amounts include shares acquired by individuals under the annual bonus share matching plan and amounts purchased in the market by individuals. |
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(2) | Restricted shares comprise awards made under the |
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• | ||
• | ||
• |
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Average number employed | 2005 | 2004 | 2003 | |||||||||
School | 10,133 | 10,403 | 9,348 | |||||||||
Higher Education | 4,196 | 4,087 | 3,912 | |||||||||
Professional | 8,342 | 7,491 | 6,434 | |||||||||
Penguin | 4,051 | 4,085 | 4,318 | |||||||||
FT Publishing | 1,952 | 1,989 | 2,283 | |||||||||
IDC | 1,956 | 1,826 | 1,628 | |||||||||
Other | 1,573 | 1,365 | 928 | |||||||||
Continuing operations | 32,203 | 31,246 | 28,851 | |||||||||
Discontinued operations | — | 1,840 | 1,733 | |||||||||
Total | 32,203 | 33,086 | 30,584 | |||||||||
Average number employed | 2007 | 2006 | 2005 | |||||||||
School | 12,906 | 11,064 | 10,133 | |||||||||
Higher Education | 5,098 | 4,368 | 4,196 | |||||||||
Professional | 3,458 | 3,204 | 3,259 | |||||||||
Penguin | 4,163 | 3,943 | 4,051 | |||||||||
FT Publishing | 2,083 | 1,766 | 1,434 | |||||||||
Interactive Data | 2,300 | 2,200 | 1,956 | |||||||||
Other | 1,614 | 1,669 | 1,573 | |||||||||
Continuing operations | 31,622 | 28,214 | 26,602 | |||||||||
Discontinued operations | 1,070 | 6,127 | 5,601 | |||||||||
Total | 32,692 | 34,341 | 32,203 | |||||||||
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
ITEM 8. | FINANCIAL INFORMATION |
52
ITEM 9. | THE OFFER AND LISTING |
53
• | on an annual basis for our five most recent fiscal years, | |
• | on a quarterly basis for our most recent quarter and two most recent fiscal years, and | |
• | on a monthly basis for the six most recent months. |
Ordinary Shares | |||||||||||||
Average Daily | |||||||||||||
Reference Period | High | Low | Trading Volume | ||||||||||
(Ordinary | |||||||||||||
(In pence) | shares) | ||||||||||||
Five Most Recent Fiscal Years | |||||||||||||
2005 | 695 | 608 | 5,296,700 | ||||||||||
2004 | 682 | 579 | 6,219,200 | ||||||||||
2003 | 680 | 430 | 6,631,800 | ||||||||||
2002 | 922 | 505 | 6,164,500 | ||||||||||
2001 | 1,726 | 645 | 5,245,000 | ||||||||||
Most Recent Quarter and Two Most Recent Fiscal Years | |||||||||||||
2006 First quarter | 811 | 671 | 6,395,400 | ||||||||||
2005 Fourth quarter | 692 | 616 | 4,947,900 | ||||||||||
Third quarter | 695 | 652 | 4,860,700 | ||||||||||
Second quarter | 668 | 628 | 5,823,300 | ||||||||||
First quarter | 662 | 608 | 5,626,100 | ||||||||||
2004 Fourth quarter | 640 | 590 | 5,020,800 | ||||||||||
Third quarter | 657 | 579 | 5,864,300 | ||||||||||
Second quarter | 682 | 623 | 6,993,900 | ||||||||||
First quarter | 657 | 584 | 7,039,600 | ||||||||||
Most Recent Six Months | |||||||||||||
April 2006 | 798 | 756 | 7,614,100 | ||||||||||
March 2006 | 811 | 720 | 7,055,300 | ||||||||||
February 2006 | 737 | 706 | 4,336,400 | ||||||||||
January 2006 | 734 | 671 | 7,577,400 | ||||||||||
December 2005 | 692 | 674 | 3,912,900 | ||||||||||
November 2005 | 673 | 636 | 6,524,000 |
53
Ordinary shares | Average daily | |||||||||||
Reference period | High | Low | trading volume | |||||||||
(In pence) | (Ordinary shares) | |||||||||||
Five most recent fiscal years | ||||||||||||
2007 | 915 | 695 | 6,405,600 | |||||||||
2006 | 811 | 671 | 5,004,500 | |||||||||
2005 | 695 | 608 | 5,296,700 | |||||||||
2004 | 682 | 579 | 6,219,200 | |||||||||
2003 | 680 | 430 | 6,631,800 | |||||||||
Most recent quarter and two most recent fiscal years | ||||||||||||
2008 First quarter | 733 | 682 | 5,083,300 | |||||||||
2007 Fourth quarter | 798 | 695 | 5,156,300 | |||||||||
Third quarter | 843 | 729 | 6,481,400 | |||||||||
Second quarter | 915 | 825 | 7,390,600 | |||||||||
First quarter | 872 | 762 | 6,632,100 | |||||||||
2006 Fourth quarter | 796 | 742 | 3,979,500 | |||||||||
Third quarter | 767 | 689 | 3,900,700 | |||||||||
Second quarter | 798 | 688 | 5,728,800 | |||||||||
First quarter | 812 | 671 | 6,395,400 | |||||||||
Most recent six months | ||||||||||||
March 2008 | 700 | 648 | 5,124,400 | |||||||||
February 2008 | 696 | 636 | 3,831,400 | |||||||||
January 2008 | 733 | 621 | 6,110,700 | |||||||||
December 2007 | 755 | 695 | 3,917,200 | |||||||||
November 2007 | 792 | 712 | 3,714,700 | |||||||||
October 2007 | 798 | 742 | 7,540,100 |
ITEM 10. | ADDITIONAL INFORMATION |
54
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• | the giving of any guarantee, security or indemnity in respect of money lent or obligations incurred by him or her or by any other person at the request of or for the benefit of us or any of our subsidiaries; | |
• | the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation of ours or any of our subsidiaries for which he or she has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security; | |
• | any proposal relating to us or any of our subsidiaries where we are offering securities in which a director is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which a director is to participate; | |
• | any proposal relating to an arrangement for the benefit of our employees or any of our subsidiaries that does not award him or her any privilege or benefit not generally awarded to the employees to whom such arrangement relates; and | |
• | any proposal concerning insurance that we propose to maintain or purchase for the benefit of directors or for the benefit of persons, including directors. |
55
55
• | ||
• | consideration of the accounts and balance sheet; | |
• | ordinary reports of the board of directors and auditors and any other documents required to be annexed to the balance sheet; | |
• | as holders of ordinary shares vote for the election of one-third of the members of the board of directors at every annual general meeting, the appointment or election of directors in the place of those retiring by rotation or otherwise; | |
• | appointment or reappointment of, and determination of the remuneration of, the auditors; and | |
• | the renewal, limitation, extension, variation or grant of any authority of or to the board, pursuant to the Companies Act 1985, to allot securities. |
56
56
• | consolidate and divide our share capital into shares of a larger amount than its existing shares; or | |
• | sub-divide all of or any of our existing shares into shares of smaller amounts than is fixed by the Memorandum of Association, subject to the Companies Act | |
• | cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person and diminish the amount of our share capital by the amount of the shares so cancelled. |
• | the chairman of the meeting; | |
• | at least three shareholders present in person or by proxy and entitled to vote; | |
• | any shareholder or shareholders present in person or by proxy representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; or | |
• | any shareholder or shareholders present in person or by proxy holding shares conferring a right to vote at the meeting being shares on which the aggregate sum paid up is equal to not less than one-tenth of the total sum paid up on all shares conferring that right. |
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• | we will not pay dividends (or issue shares in lieu of dividends); and | |
• | we will not register transfers of shares unless the shareholder is not himself in default as regards supplying the information requested and the transfer, when presented for registration, is in such form as the board of directors may require to the effect that after due and careful inquiry, the shareholder is satisfied that no person in default is interested in any of the ordinary shares which are being transferred or the transfer is an approved transfer, as defined in our articles of association. |
• | a material interest in our voting share capital equal to or in excess of 3%; or | |
• | a non-material interest equal to or in excess of 10%, |
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• | an individual citizen or resident of the US, or | |
• | a corporation created or organized in or under the laws of the | |
• | an estate or trust the income of which is subject to US federal income taxation regardless of its source. |
• | dealers or traders in securities or currencies, | |
• | financial institutions or other US holders that treat income in respect of the ordinary shares or ADSs as financial services income, |
59
• | insurance companies, | |
• | tax-exempt entities, | |
• | US holders that hold the ordinary shares or ADSs as a part of a straddle or conversion transaction or other arrangement involving more than one position, | |
• | US holders that own, or are deemed for US tax purposes to own, 10% or more of the total combined voting power of all classes of our voting stock, | |
• | US holders that have a principal place of business or “tax home” outside the United States, or | |
• | US holders whose “functional currency” is not the US dollar. |
59
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60
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ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
61
62
62
63
ITEM |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
63
ITEM 15. | CONTROLS AND PROCEDURES |
64
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
64
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Auditors’ Remuneration | 2005 | 2004 | 2003 | |||||||||
£m | £m | £m | ||||||||||
Statutory audit | 4 | 3 | 3 | |||||||||
Audit-related regulatory reporting services | 1 | 1 | — | |||||||||
Non-audit services | 2 | 2 | 2 | |||||||||
Non-audit services are analysed as follows: | ||||||||||||
Tax compliance services | 1 | 1 | 1 | |||||||||
Tax advisory services | — | 1 | 1 | |||||||||
Other non-audit services | 1 | — | — |
Auditors’ Remuneration | 2007 | 2006 | ||||||
£m | £m | |||||||
Audit fees | 3 | 5 | ||||||
Audit-related fees | 1 | 4 | ||||||
Tax fees | 2 | 1 | ||||||
All other fees | 1 | 1 |
65
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES |
Maximum | |||||||||||||||||
number | |||||||||||||||||
of shares that | |||||||||||||||||
units purchased | |||||||||||||||||
may yet be | |||||||||||||||||
as part of publicly | purchased under | ||||||||||||||||
Total number of | |||||||||||||||||
the plans or | |||||||||||||||||
Period | shares purchased | paid per share | or programs | programs | |||||||||||||
February 1, 2007 - February 28, 2007 | 1,000,000 | £ | N/A | N/A | |||||||||||||
June 1, 2007 - June 30, 2007 | 2,500,000 | £8.39 | N/A | N/A | |||||||||||||
December 1, 2007 - December 31, 2007 | 1,400,000 | £7.31 | N/A | N/A |
65
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
ITEM 19. | EXHIBITS |
1.1 | Memorandum and Articles of Association of Pearson plc. | |
8.1 | List of Significant Subsidiaries. | |
12.1 | Certification of Chief Executive Officer. | |
12.2 | Certification of Chief Financial Officer. | |
13.1 | Certification of Chief Executive Officer. | |
13.2 | Certification of Chief Financial Officer. | |
15 | Consent of PricewaterhouseCoopers LLP. |
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Page | ||||
F-2 | ||||
F-4 | ||||
F-5 | ||||
F-5 | ||||
F-7 | ||||
F-8 |
F-1
F-1
F-2
F-3
F-2
Notes | 2005 | 2004 | 2003 | |||||||||||||
Continuing operations | ||||||||||||||||
Sales | 2 | 4,096 | 3,696 | 3,850 | ||||||||||||
Cost of goods sold | (2,022 | ) | (1,789 | ) | (1,846 | ) | ||||||||||
Gross profit | 2,074 | 1,907 | 2,004 | |||||||||||||
Operating expenses | 5 | (1,592 | ) | (1,520 | ) | (1,594 | ) | |||||||||
Other net gains and losses | 4 | 40 | 9 | (6 | ) | |||||||||||
Share of results of joint ventures and associates | 14 | 8 | 2 | |||||||||||||
Operating profit | 2 | 536 | 404 | 406 | ||||||||||||
Finance costs | 7 | (132 | ) | (96 | ) | (100 | ) | |||||||||
Finance income | 7 | 62 | 17 | 7 | ||||||||||||
Profit before tax | 466 | 325 | 313 | |||||||||||||
Income tax | 8 | (124 | ) | (63 | ) | (61 | ) | |||||||||
Profit for the year from continuing operations | 342 | 262 | 252 | |||||||||||||
Profit for the year from discontinued operations | 3 | 302 | 22 | 23 | ||||||||||||
Profit for the year | 644 | 284 | 275 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 624 | 262 | 252 | |||||||||||||
Minority interest | 20 | 22 | 23 | |||||||||||||
Earnings per share for profit from continuing and discontinued operations attributable to the equity holders of the Company during the year (expressed in pence per share) | ||||||||||||||||
— basic | 9 | 78.2 | p | 32.9 | p | 31.7 | p | |||||||||
— diluted | 9 | 78.1 | p | 32.9 | p | 31.7 | p | |||||||||
Earnings per share for profit from continuing operations attributable to the equity holders of the Company during the year (expressed in pence per share) | ||||||||||||||||
— basic | 9 | 40.4 | p | 30.8 | p | 29.4 | p | |||||||||
— diluted | 9 | 40.3 | p | 30.8 | p | 29.4 | p | |||||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
Continuing operations | ||||||||||||||||
Sales | 2 | 4,162 | 3,990 | 3,662 | ||||||||||||
Cost of goods sold | 4 | (1,910 | ) | (1,841 | ) | (1,713 | ) | |||||||||
Gross profit | 2,252 | 2,149 | 1,949 | |||||||||||||
Operating expenses | 4 | (1,701 | ) | (1,651 | ) | (1,506 | ) | |||||||||
Other net gains and losses | 5 | — | — | 40 | ||||||||||||
Share of results of joint ventures and associates | 13 | 23 | 24 | 14 | ||||||||||||
Operating profit | 2 | 574 | 522 | 497 | ||||||||||||
Finance costs | 7 | (150 | ) | (133 | ) | (132 | ) | |||||||||
Finance income | 7 | 44 | 59 | 62 | ||||||||||||
Profit before tax | 468 | 448 | 427 | |||||||||||||
Income tax | 8 | (131 | ) | (4 | ) | (108 | ) | |||||||||
Profit for the year from continuing operations | 337 | 444 | 319 | |||||||||||||
(Loss)/profit for the year from discontinued operations | 3 | (27 | ) | 25 | 325 | |||||||||||
Profit for the year | 310 | 469 | 644 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 284 | 446 | 624 | |||||||||||||
Minority interest | 26 | 23 | 20 | |||||||||||||
Earnings per share for profit from continuing and discontinued operations attributable to the equity holders of the Company during the year(expressed in pence per share) | ||||||||||||||||
— basic | 9 | 35.6p | 55.9p | 78.2p | ||||||||||||
— diluted | 9 | 35.6p | 55.8p | 78.1p | ||||||||||||
Earnings per share for profit from continuing operations attributable to the equity holders of the Company during the year(expressed in pence per share) | ||||||||||||||||
— basic | 9 | 39.0p | 52.7p | 37.5p | ||||||||||||
— diluted | 9 | 39.0p | 52.6p | 37.4p | ||||||||||||
F-4
F-3
Notes | 2005 | 2004 | 2003 | |||||||||||||
Net exchange differences on translation of foreign operations | 26 | 327 | (203 | ) | (288 | ) | ||||||||||
Actuarial gains/(losses)on defined benefit pension and post-retirement medical schemes | 24 | 26 | (61 | ) | (28 | ) | ||||||||||
Taxation on items taken directly to equity | 8 | 12 | 9 | — | ||||||||||||
Net income/(expense) recognised directly in equity | 365 | (255 | ) | (316 | ) | |||||||||||
Profit for the year | 644 | 284 | 275 | |||||||||||||
Total recognised income and expense for the year | 1,009 | 29 | (41 | ) | ||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 989 | 7 | (64 | ) | ||||||||||||
Minority interest | 20 | 22 | 23 | |||||||||||||
Effect of transition adjustment on adoption of IAS 39 | ||||||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 34 | (12 | ) | |||||||||||||
F-4
Notes | 2007 | 2006 | 2005 | |||||||||||||
Net exchange differences on translation of foreign operations | 29 | 25 | (417 | ) | 327 | |||||||||||
Actuarial gains on retirement benefit obligations | 25 | 80 | 107 | 26 | ||||||||||||
Taxation on items charged to equity | 8 | 29 | 12 | 12 | ||||||||||||
Net income/(expense) recognised directly in equity | 134 | (298 | ) | 365 | ||||||||||||
Profit for the year | 310 | 469 | 644 | |||||||||||||
Total recognised income and expense for the year | 444 | 171 | 1,009 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 418 | 148 | 989 | |||||||||||||
Minority interest | 26 | 23 | 20 | |||||||||||||
Effect of transition adjustment on adoption of IAS 39 | ||||||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | — | — | (12 | ) |
Notes | 2005 | 2004 | 2003 | |||||||||||||
Assets | ||||||||||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment | 11 | 384 | 355 | 402 | ||||||||||||
Intangible assets | 12 | 3,854 | 3,278 | 3,550 | ||||||||||||
Investments in joint ventures and associates | 13 | 36 | 47 | 64 | ||||||||||||
Deferred income tax assets | 14 | 385 | 359 | 342 | ||||||||||||
Financial assets — Derivative financial instruments | 16 | 79 | — | — | ||||||||||||
Other financial assets | 15 | 18 | 15 | 21 | ||||||||||||
Other receivables | 19 | 108 | 102 | 100 | ||||||||||||
4,864 | 4,156 | 4,479 | ||||||||||||||
Current assets | ||||||||||||||||
Intangible assets — pre-publication | 17 | 426 | 356 | 362 | ||||||||||||
Inventories | 18 | 373 | 314 | 319 | ||||||||||||
Trade and other receivables | 19 | 1,031 | 933 | 1,025 | ||||||||||||
Financial assets — Derivative financial instruments | 16 | 4 | — | — | ||||||||||||
Cash and cash equivalents (excluding overdrafts) | 20 | 902 | 461 | 551 | ||||||||||||
2,736 | 2,064 | 2,257 | ||||||||||||||
Non-current assets classified as held for sale | — | 358 | — | |||||||||||||
2,736 | 2,422 | 2,257 | ||||||||||||||
Total assets | 7,600 | 6,578 | 6,736 | |||||||||||||
Notes | 2007 | 2006 | ||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 11 | 355 | 348 | |||||||||
Intangible assets | 12 | 3,814 | 3,581 | |||||||||
Investments in joint ventures and associates | 13 | 20 | 20 | |||||||||
Deferred income tax assets | 14 | 328 | 417 | |||||||||
Financial assets — Derivative financial instruments | 17 | 23 | 36 | |||||||||
Retirement benefit assets | 25 | 62 | — | |||||||||
Other financial assets | 16 | 52 | 17 | |||||||||
Other receivables | 20 | 129 | 124 | |||||||||
4,783 | 4,543 | |||||||||||
Current assets | ||||||||||||
Intangible assets — Pre-publication | 18 | 450 | 402 | |||||||||
Inventories | 19 | 368 | 354 | |||||||||
Trade and other receivables | 20 | 946 | 953 | |||||||||
Financial assets — Derivative financial instruments | 17 | 28 | 50 | |||||||||
Financial assets — Marketable securities | 40 | 25 | ||||||||||
Cash and cash equivalents (excluding overdrafts) | 21 | 560 | 592 | |||||||||
2,392 | 2,376 | |||||||||||
Non-current assets classified as held for sale | 31 | 117 | 294 | |||||||||
2,509 | 2,670 | |||||||||||
Total assets | 7,292 | 7,213 | ||||||||||
F-5
F-5
Notes | 2005 | 2004 | 2003 | |||||||||||||
Liabilities | ||||||||||||||||
Non-current liabilities | ||||||||||||||||
Financial liabilities—Borrowings | 21 | (1,703 | ) | (1,714 | ) | (1,349 | ) | |||||||||
Financial liabilities—Derivative financial instruments | 16 | (22 | ) | — | — | |||||||||||
Deferred income tax liabilities | 14 | (204 | ) | (139 | ) | (140 | ) | |||||||||
Retirement benefit obligations | 24 | (389 | ) | (408 | ) | (364 | ) | |||||||||
Provisions for other liabilities and charges | 22 | (31 | ) | (43 | ) | (59 | ) | |||||||||
Other liabilities | 23 | (151 | ) | (99 | ) | (70 | ) | |||||||||
(2,500 | ) | (2,403 | ) | (1,982 | ) | |||||||||||
Current liabilities | ||||||||||||||||
Trade and other liabilities | 23 | (974 | ) | (868 | ) | (943 | ) | |||||||||
Financial liabilities — Borrowings | 21 | (256 | ) | (109 | ) | (578 | ) | |||||||||
Current income tax liabilities | (104 | ) | (89 | ) | (54 | ) | ||||||||||
Provisions for other liabilities and charges | 22 | (33 | ) | (14 | ) | (18 | ) | |||||||||
(1,367 | ) | (1,080 | ) | (1,593 | ) | |||||||||||
Liabilities directly associated with non-current assets classified as held for sale | — | (81 | ) | — | ||||||||||||
Total liabilities | (3,867 | ) | (3,564 | ) | (3,575 | ) | ||||||||||
Net assets | 3,733 | 3,014 | 3,161 | |||||||||||||
Equity | ||||||||||||||||
Share capital | 25 | 201 | 201 | 201 | ||||||||||||
Share premium | 25 | 2,477 | 2,473 | 2,469 | ||||||||||||
Other reserves | 26 | (328 | ) | (623 | ) | (410 | ) | |||||||||
Retained earnings | 26 | 1,214 | 749 | 709 | ||||||||||||
Total equity attributable to equity holders of the Company | 3,564 | 2,800 | 2,969 | |||||||||||||
Minority interest | 169 | 214 | 192 | |||||||||||||
Total equity | 3,733 | 3,014 | 3,161 | |||||||||||||
Notes | 2007 | 2006 | ||||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Financial liabilities — Borrowings | 22 | (1,049 | ) | (1,148 | ) | |||||||
Financial liabilities — Derivative financial instruments | 17 | (16 | ) | (19 | ) | |||||||
Deferred income tax liabilities | 14 | (287 | ) | (245 | ) | |||||||
Retirement benefit obligations | 25 | (95 | ) | (250 | ) | |||||||
Provisions for other liabilities and charges | 23 | (44 | ) | (29 | ) | |||||||
Other liabilities | 24 | (190 | ) | (162 | ) | |||||||
(1,681 | ) | (1,853 | ) | |||||||||
Current liabilities | ||||||||||||
Trade and other liabilities | 24 | (1,050 | ) | (998 | ) | |||||||
Financial liabilities — Borrowings | 22 | (559 | ) | (595 | ) | |||||||
Current income tax liabilities | (96 | ) | (74 | ) | ||||||||
Provisions for other liabilities and charges | 23 | (23 | ) | (23 | ) | |||||||
(1,728 | ) | (1,690 | ) | |||||||||
Liabilities directly associated with non-current assets classified as held for sale | 31 | (9 | ) | (26 | ) | |||||||
Total liabilities | (3,418 | ) | (3,569 | ) | ||||||||
Net assets | 3,874 | 3,644 | ||||||||||
Equity | ||||||||||||
Share capital | 27 | 202 | 202 | |||||||||
Share premium | 27 | 2,499 | 2,487 | |||||||||
Treasury shares | 28 | (216 | ) | (189 | ) | |||||||
Other reserves | 29 | (514 | ) | (592 | ) | |||||||
Retained earnings | 29 | 1,724 | 1,568 | |||||||||
Total equity attributable to equity holders of the Company | 3,695 | 3,476 | ||||||||||
Minority interest | 179 | 168 | ||||||||||
Total equity | 3,874 | 3,644 | ||||||||||
F-6
Notes | 2005 | 2004 | 2003 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Cash generated from operations | 29 | 875 | 705 | 531 | ||||||||||||
Interest paid | (101 | ) | (98 | ) | (87 | ) | ||||||||||
Tax paid | (65 | ) | (45 | ) | (44 | ) | ||||||||||
Net cash generated from operating activities | 709 | 562 | 400 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisition of subsidiaries, net of cash acquired | 27 | (246 | ) | (41 | ) | (60 | ) | |||||||||
Acquisition of joint ventures and associates | (7 | ) | (10 | ) | (5 | ) | ||||||||||
Purchase of property, plant and equipment (PPE) | (76 | ) | (101 | ) | (79 | ) | ||||||||||
Proceeds from sale of PPE | 29 | 3 | 4 | 8 | ||||||||||||
Purchase of intangible assets | (24 | ) | (24 | ) | (26 | ) | ||||||||||
Investment in pre-publication | (222 | ) | (181 | ) | (173 | ) | ||||||||||
Purchase of other financial assets | (2 | ) | (1 | ) | (3 | ) | ||||||||||
Disposal of subsidiaries, net of cash disposed | 28 | 376 | 7 | (3 | ) | |||||||||||
Disposal of joint ventures and associates | 54 | 24 | 57 | |||||||||||||
Disposal of other financial assets | — | 17 | — | |||||||||||||
Interest received | 29 | 13 | 11 | |||||||||||||
Dividends received from joint ventures and associates | 14 | 12 | 10 | |||||||||||||
Net cash used in investing activities | (101 | ) | (281 | ) | (263 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from issue of ordinary shares | 25 | 4 | 4 | 5 | ||||||||||||
Purchase of treasury shares | (21 | ) | (10 | ) | (1 | ) | ||||||||||
Proceeds from borrowings | — | 414 | 235 | |||||||||||||
Short-term investments (acquired)/repaid | — | (5 | ) | 1 | ||||||||||||
Other borrowings | — | 59 | (13 | ) | ||||||||||||
Repayments of borrowings | (79 | ) | (524 | ) | (159 | ) | ||||||||||
Finance lease principal payments | (3 | ) | (2 | ) | (3 | ) | ||||||||||
Dividends paid to Company’s shareholders | 10 | (205 | ) | (195 | ) | (188 | ) | |||||||||
Dividends paid to minority interests | (17 | ) | (2 | ) | (19 | ) | ||||||||||
Net cash used in financing activities | (321 | ) | (261 | ) | (142 | ) | ||||||||||
Effects of exchange rate changes on cash and cash equivalents | 13 | (4 | ) | 45 | ||||||||||||
Net increase in cash and cash equivalents | 300 | 16 | 40 | |||||||||||||
Cash and cash equivalents at beginning of year | 544 | 528 | 488 | |||||||||||||
Cash and cash equivalents at end of year | 20 | 844 | 544 | 528 | ||||||||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net cash generated from operations | 33 | 659 | 621 | 653 | ||||||||||||
Interest paid | (109 | ) | (106 | ) | (101 | ) | ||||||||||
Tax paid | (87 | ) | (59 | ) | (65 | ) | ||||||||||
Net cash generated from operating activities | 463 | 456 | 487 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisition of subsidiaries, net of cash acquired | 30 | (472 | ) | (363 | ) | (246 | ) | |||||||||
Acquisition of joint ventures and associates | (4 | ) | (4 | ) | (7 | ) | ||||||||||
Purchase of property, plant and equipment (PPE) | (86 | ) | (68 | ) | (76 | ) | ||||||||||
Proceeds from sale of PPE | 33 | 14 | 8 | 3 | ||||||||||||
Purchase of intangible assets | (33 | ) | (29 | ) | (24 | ) | ||||||||||
Purchase of other financial assets | — | — | (2 | ) | ||||||||||||
Disposal of subsidiaries, net of cash disposed | 32 | 469 | 10 | 376 | ||||||||||||
Disposal of joint ventures and associates | — | — | 54 | |||||||||||||
Interest received | 19 | 24 | 29 | |||||||||||||
Dividends received from joint ventures and associates | 32 | 45 | 14 | |||||||||||||
Net cash used in investing activities | (61 | ) | (377 | ) | 121 | |||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from issue of ordinary shares | 27 | 12 | 11 | 4 | ||||||||||||
Purchase of treasury shares | (72 | ) | (36 | ) | (21 | ) | ||||||||||
Proceeds from borrowings | 272 | 84 | — | |||||||||||||
Liquid resources acquired | (15 | ) | (24 | ) | — | |||||||||||
Repayment of borrowings | (391 | ) | (145 | ) | (79 | ) | ||||||||||
Finance lease principal payments | (2 | ) | (3 | ) | (3 | ) | ||||||||||
Dividends paid to Company’s shareholders | 10 | (238 | ) | (220 | ) | (205 | ) | |||||||||
Dividends paid to minority interests | (10 | ) | (15 | ) | (17 | ) | ||||||||||
Net cash used in financing activities | (444 | ) | (348 | ) | (321 | ) | ||||||||||
Effects of exchange rate changes on cash and cash equivalents | 3 | (44 | ) | 13 | ||||||||||||
Net decrease in cash and cash equivalents | (39 | ) | (313 | ) | 300 | |||||||||||
Cash and cash equivalents at beginning of year | 531 | 844 | 544 | |||||||||||||
Cash and cash equivalents at end of year | 21 | 492 | 531 | 844 | ||||||||||||
F-7
F-7
Accounting policies |
a. | Basis of preparation |
• | IFRS 8 ‘Operating Segments’ (effective for annual reporting periods beginning on or after 1 January 2009). IFRS 8 requires an entity to adopt the ‘management approach’ to reporting on the financial performance of its operating segments, revise explanations of the basis on which the segment information is prepared and provide reconciliations to the amounts recognised in the income statement and balance sheet; | |
• | Amendment to IAS 23 ‘Borrowing Costs’ (effective for annual reporting periods beginning on or after 1 January 2009). The amendment to IAS 23 requires capitalisation of borrowing costs that relate to assets |
F-8
that take a substantial period of time to get ready for use or sale, with the exception of assets measured at fair value or inventories manufactured or produced in large quantities on a repetitive basis; |
• | IFRIC 11 ‘Group and Treasury Share Transactions’ (effective for annual reporting periods beginning on or after 1 March 2007). IFRIC 11 addresses how to apply IFRS 2 Share-based Payment to share-based payment arrangements involving an entity’s own equity instruments or equity instruments of another entity in the same group. |
• | IFRIC 13 ‘Customer Loyalty Programmes’ (effective for annual reporting periods beginning on or after 1 July 2008). IFRIC 13 explains how entities that grant loyalty award credits to customers should account for their obligations to provide free or discounted goods or services to customers who redeem award credits. As none of the Group entities operate a customer loyalty programme, IFRIC 13 is not relevant to the Group’s operations; | |
• | IFRIC 12 ‘Service Concession Arrangements’ (effective for annual reporting periods beginning on or after 1 January 2008). IFRIC 12 addresses the accounting by private-sector entities that, by contract with a government, participate in developing, financing, operating, and maintaining infrastructure assets relating to public services traditionally provided by governments. As none of the Group entities participate in these activities, IFRIC 12 is not relevant to the Group. |
F-8
• Intangible assets: | Goodwill | |
• Intangible assets: | Pre-publication assets | |
• Royalty advances | ||
• Taxation |
• Employee benefits: | ||
• Revenue recognition | ||
b. | Consolidation |
F-9
F-9
c. | Foreign currency translation |
i) assets and liabilities are translated at the closing rate at the date of the balance sheet; | |
F-10
F-10
d. | Property, plant and equipment |
e. | |
Intangible assets |
F-11
F-11
f. | Other financial assets |
g. | Inventories |
h. | Royalty advances |
i. | Newspaper development costs |
F-12
j. | Cash and cash equivalents |
k. | Share capital |
F-12
l. | Borrowings |
m. | Derivative financial instruments |
F-13
n. | Taxation |
F-13
F-14
F-15
F-16
o. | Employee benefits |
F-14
p. | Provisions |
q. | Revenue recognition |
F-15
r. | Leases |
F-17
s. | Dividends |
t. | Non-current assets held for sale and discontinued operations |
u. | Trade receivables |
2. | Segment information |
F-16
Higher | FT | 2005 | ||||||||||||||||||||||||||||||
School | Education | Professional | Penguin | Publishing | IDC | Corporate | Group | |||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||
Sales (external) | 1,295 | 779 | 589 | 804 | 332 | 297 | — | 4,096 | ||||||||||||||||||||||||
Sales (inter-segment) | — | — | — | 16 | — | — | — | 16 | ||||||||||||||||||||||||
Operating profit before joint ventures and associates | 138 | 156 | 44 | 60 | 49 | 75 | — | 522 | ||||||||||||||||||||||||
Share of results of joint ventures and associates | 4 | — | 1 | — | 9 | — | — | 14 | ||||||||||||||||||||||||
Operating profit | 142 | 156 | 45 | 60 | 58 | 75 | — | 536 | ||||||||||||||||||||||||
Finance costs | (132 | ) | ||||||||||||||||||||||||||||||
Finance income | �� | 62 | ||||||||||||||||||||||||||||||
Profit before tax | 466 | |||||||||||||||||||||||||||||||
Income tax | (124 | ) | ||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 342 | |||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||
Operating profit | 142 | 156 | 45 | 60 | 58 | 75 | — | 536 | ||||||||||||||||||||||||
Amortisation of acquired intangibles | 5 | — | — | — | 1 | 5 | — | 11 | ||||||||||||||||||||||||
Other net gains and losses | — | — | — | — | (40 | ) | — | — | (40 | ) | ||||||||||||||||||||||
Other net finance costs of associates | — | — | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 147 | 156 | 45 | 60 | 21 | 80 | — | 509 | ||||||||||||||||||||||||
Segment assets | 2,067 | 1,402 | 1,705 | 960 | 154 | 291 | 985 | 7,564 | ||||||||||||||||||||||||
Joint ventures | 6 | — | — | 2 | 4 | — | — | 12 | ||||||||||||||||||||||||
Associates | 6 | — | — | — | 18 | — | — | 24 | ||||||||||||||||||||||||
Total assets | 2,079 | 1,402 | 1,705 | 962 | 176 | 291 | 985 | 7,600 | ||||||||||||||||||||||||
Total liabilities | (557 | ) | (341 | ) | (263 | ) | (280 | ) | (336 | ) | (109 | ) | (1,981 | ) | (3,867 | ) | ||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||
Capital expenditure (notes 11, 12 and 17) | 114 | 96 | 43 | 34 | 14 | 19 | — | 320 | ||||||||||||||||||||||||
Depreciation (note 11) | 26 | 8 | 17 | 7 | 11 | 11 | — | 80 | ||||||||||||||||||||||||
Amortisation (notes 12 and 17) | 91 | 78 | 20 | 24 | 3 | 5 | — | 221 | ||||||||||||||||||||||||
2007 | ||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | ||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Publishing | Data | Penguin | Corporate | Group | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,537 | 793 | 298 | 344 | 344 | 846 | — | 4,162 | ||||||||||||||||||||||||||||
Sales (inter-segment) | 1 | — | — | — | — | 19 | — | 20 | ||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 169 | 159 | 26 | 34 | 90 | 73 | — | 551 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 6 | — | 1 | 16 | — | — | — | 23 | ||||||||||||||||||||||||||||
Operating profit | 175 | 159 | 27 | 50 | 90 | 73 | — | 574 | ||||||||||||||||||||||||||||
Finance costs | 7 | (150 | ) | |||||||||||||||||||||||||||||||||
Finance income | 7 | 44 | ||||||||||||||||||||||||||||||||||
Profit before tax | 468 | |||||||||||||||||||||||||||||||||||
Income tax | 8 | (131 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 337 | |||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||
Operating profit | 175 | 159 | 27 | 50 | 90 | 73 | — | 574 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 28 | 2 | 1 | 6 | 7 | 1 | — | 45 | ||||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 203 | 161 | 28 | 56 | 97 | 74 | — | 619 | ||||||||||||||||||||||||||||
Segment assets | 2,780 | 1,742 | 318 | 397 | 330 | 937 | 651 | 7,155 | ||||||||||||||||||||||||||||
Joint ventures | 13 | 5 | — | — | 4 | — | 2 | — | 11 | |||||||||||||||||||||||||||
Associates | 13 | 3 | 1 | — | 5 | — | — | — | 9 | |||||||||||||||||||||||||||
Assets — continuing operations | 2,788 | 1,743 | 318 | 406 | 330 | 939 | 651 | 7,175 | ||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 117 | — | — | — | — | 117 | ||||||||||||||||||||||||||||
Total assets | 2,788 | 1,743 | 435 | 406 | 330 | 939 | 651 | 7,292 | ||||||||||||||||||||||||||||
Total liabilities | (798 | ) | (266 | ) | (130 | ) | (251 | ) | (129 | ) | (220 | ) | (1,624 | ) | (3,418 | ) | ||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Capital expenditure | 11, 12, 18 | 147 | 98 | 20 | 28 | 19 | 44 | — | 356 | |||||||||||||||||||||||||||
Depreciation | 11 | 22 | 11 | 9 | 9 | 10 | 7 | — | 68 | |||||||||||||||||||||||||||
Amortisation | 12, 18 | 124 | 80 | 11 | 9 | 8 | 30 | — | 262 | |||||||||||||||||||||||||||
F-17
F-18
Higher | FT | 2004 | ||||||||||||||||||||||||||||||
School | Education | Professional | Penguin | Publishing | IDC | Corporate | Group | |||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||
Sales (external) | 1,087 | 729 | 507 | 786 | 318 | 269 | — | 3,696 | ||||||||||||||||||||||||
Sales (inter-segment) | — | — | — | 15 | — | — | — | 15 | ||||||||||||||||||||||||
Operating profit before joint ventures and associates | 109 | 133 | 42 | 46 | 4 | 62 | — | 396 | ||||||||||||||||||||||||
Share of results of joint ventures and associates | 3 | — | — | 1 | 4 | — | — | 8 | ||||||||||||||||||||||||
Operating profit | 112 | 133 | 42 | 47 | 8 | 62 | — | 404 | ||||||||||||||||||||||||
Finance costs | (96 | ) | ||||||||||||||||||||||||||||||
Finance income | 17 | |||||||||||||||||||||||||||||||
Profit before tax | 325 | |||||||||||||||||||||||||||||||
Income tax | (63 | ) | ||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 262 | |||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||
Operating profit | 112 | 133 | 42 | 47 | 8 | 62 | — | 404 | ||||||||||||||||||||||||
Amortisation of acquired intangibles | — | — | — | — | — | 5 | — | 5 | ||||||||||||||||||||||||
Other net gains and losses | (4 | ) | (4 | ) | (2 | ) | 5 | (4 | ) | — | — | (9 | ) | |||||||||||||||||||
Adjusted operating profit — continuing operations | 108 | 129 | 40 | 52 | 4 | 67 | — | 400 | ||||||||||||||||||||||||
Segment assets | 1,860 | 1,224 | 1,345 | 892 | 502 | 247 | 461 | 6,531 | ||||||||||||||||||||||||
Joint ventures | 7 | — | — | 5 | 2 | — | — | 14 | ||||||||||||||||||||||||
Associates | 5 | — | — | — | 28 | — | — | 33 | ||||||||||||||||||||||||
Total assets | 1,872 | 1,224 | 1,345 | 897 | 532 | 247 | 461 | 6,578 | ||||||||||||||||||||||||
Total liabilities | (439 | ) | (286 | ) | (212 | ) | (259 | ) | (435 | ) | (110 | ) | (1,823 | ) | (3,564 | ) | ||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||
Capital expenditure (notes 11,12 and 17) | 104 | 79 | 62 | 36 | 15 | 12 | — | 308 | ||||||||||||||||||||||||
Depreciation (note 11) | 25 | 9 | 16 | 9 | 16 | 9 | — | 84 | ||||||||||||||||||||||||
Amortisation (notes 12 and 17) | 74 | 65 | 18 | 29 | 2 | 5 | — | 193 | ||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | ||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Publishing | Data | Penguin | Corporate | Group | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,455 | 795 | 280 | 280 | 332 | 848 | — | 3,990 | ||||||||||||||||||||||||||||
Sales (inter-segment) | 1 | — | — | — | — | 18 | — | 19 | ||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 161 | 161 | 23 | 13 | 82 | 58 | — | 498 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 6 | — | 1 | 17 | — | — | — | 24 | ||||||||||||||||||||||||||||
Operating profit | 167 | 161 | 24 | 30 | 82 | 58 | — | 522 | ||||||||||||||||||||||||||||
Finance costs | 7 | (133 | ) | |||||||||||||||||||||||||||||||||
Finance income | 7 | 59 | ||||||||||||||||||||||||||||||||||
Profit before tax | 448 | |||||||||||||||||||||||||||||||||||
Income tax | 8 | (4 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 444 | |||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||
Operating profit | 167 | 161 | 24 | 30 | 82 | 58 | — | 522 | ||||||||||||||||||||||||||||
Adjustment to goodwill on recognition of pre-acquisition deferred tax | — | — | — | — | — | 7 | — | 7 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 17 | — | 1 | 2 | 7 | 1 | — | 28 | ||||||||||||||||||||||||||||
Other net gains and losses of associates | — | — | — | (4 | ) | — | — | — | (4 | ) | ||||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | (1 | ) | — | — | — | (1 | ) | ||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 184 | 161 | 25 | 27 | 89 | 66 | — | 552 | ||||||||||||||||||||||||||||
Segment assets | 2,684 | 1,347 | 580 | 317 | 314 | 954 | 703 | 6,899 | ||||||||||||||||||||||||||||
Joint ventures | 13 | 5 | — | — | 4 | — | 3 | — | 12 | |||||||||||||||||||||||||||
Associates | 13 | 4 | — | — | 4 | — | — | — | 8 | |||||||||||||||||||||||||||
Assets — continuing operations | 2,693 | 1,347 | 580 | 325 | 314 | 957 | 703 | 6,919 | ||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 294 | — | — | — | — | 294 | ||||||||||||||||||||||||||||
Total assets | 2,693 | 1,347 | 874 | 325 | 314 | 957 | 703 | 7,213 | ||||||||||||||||||||||||||||
Total liabilities | (662 | ) | (268 | ) | (177 | ) | (300 | ) | (131 | ) | (269 | ) | (1,762 | ) | (3,569 | ) | ||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Capital expenditure | 11, 12, 18 | 124 | 88 | 30 | 19 | 20 | 38 | — | 319 | |||||||||||||||||||||||||||
Depreciation | 11 | 21 | 8 | 19 | 9 | 13 | 7 | — | 77 | |||||||||||||||||||||||||||
Amortisation | 12, 18 | 117 | 78 | 21 | 4 | 7 | 34 | — | 261 | |||||||||||||||||||||||||||
F-18
F-19
Higher | FT | 2003 | ||||||||||||||||||||||||||||||
School | Education | Professional | Penguin | Publishing | IDC | Corporate | Group | |||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||
Sales (external) | 1,149 | 770 | 503 | 840 | 315 | 273 | — | 3,850 | ||||||||||||||||||||||||
Sales (inter-segment) | — | — | 1 | 15 | — | — | — | 16 | ||||||||||||||||||||||||
Operating profit before joint ventures and associates | 112 | 140 | 33 | 81 | (28 | ) | 66 | — | 404 | |||||||||||||||||||||||
Share of results of joint ventures and associates | 2 | — | — | 1 | (1 | ) | — | — | 2 | |||||||||||||||||||||||
Operating profit | 114 | 140 | 33 | 82 | (29 | ) | 66 | — | 406 | |||||||||||||||||||||||
Finance costs | (100 | ) | ||||||||||||||||||||||||||||||
Finance income | 7 | |||||||||||||||||||||||||||||||
Profit before tax | 313 | |||||||||||||||||||||||||||||||
Income tax | (61 | ) | ||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 252 | |||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||
Operating profit | 114 | 140 | 33 | 82 | (29 | ) | 66 | — | 406 | |||||||||||||||||||||||
Amortisation of acquired intangibles | — | — | — | — | — | 4 | — | 4 | ||||||||||||||||||||||||
Other net gains and losses | 2 | 2 | 1 | 1 | — | — | — | 6 | ||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 116 | 142 | 34 | 83 | (29 | ) | 70 | — | 416 | |||||||||||||||||||||||
Segment assets | 2,072 | 1,157 | 1,387 | 907 | 358 | 240 | 551 | 6,672 | ||||||||||||||||||||||||
Joint ventures | 6 | — | — | 4 | 2 | — | — | 12 | ||||||||||||||||||||||||
Associates | 5 | — | — | — | 47 | — | — | 52 | ||||||||||||||||||||||||
Total assets | 2,083 | 1,157 | 1,387 | 911 | 407 | 240 | 551 | 6,736 | ||||||||||||||||||||||||
Total liabilities | (458 | ) | (318 | ) | (158 | ) | (398 | ) | (203 | ) | (113 | ) | (1,927 | ) | (3,575 | ) | ||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||
Capital expenditure (notes 11, 12 and 17) | 101 | 65 | 21 | 47 | 26 | 17 | — | 277 | ||||||||||||||||||||||||
Depreciation (note 11) | 26 | 9 | 13 | 6 | 19 | 12 | — | 85 | ||||||||||||||||||||||||
Amortisation (notes 12 and 17) | 68 | 58 | 18 | 39 | 2 | 5 | — | 190 | ||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | ||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Publishing | Data | Penguin | Corporate | Group | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,295 | 779 | 238 | 249 | 297 | 804 | — | 3,662 | ||||||||||||||||||||||||||||
Sales (inter-segment) | — | — | — | — | — | 16 | — | 16 | ||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 138 | 156 | 9 | 45 | 75 | 60 | — | 483 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 4 | — | 1 | 9 | — | — | — | 14 | ||||||||||||||||||||||||||||
Operating profit | 142 | 156 | 10 | 54 | 75 | 60 | — | 497 | ||||||||||||||||||||||||||||
Finance costs | 7 | (132 | ) | |||||||||||||||||||||||||||||||||
Finance income | 7 | 62 | ||||||||||||||||||||||||||||||||||
Profit before tax | 427 | |||||||||||||||||||||||||||||||||||
Income tax | 8 | (108 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 319 | |||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||
Operating profit | 142 | 156 | 10 | 54 | 75 | 60 | — | 497 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 5 | — | — | 1 | 5 | — | — | 11 | ||||||||||||||||||||||||||||
Other net gains and losses | 5 | — | — | — | (40 | ) | — | — | — | (40 | ) | |||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | 2 | — | — | — | 2 | ||||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 147 | 156 | 10 | 17 | 80 | 60 | — | 470 | ||||||||||||||||||||||||||||
Segment assets | 2,347 | 1,648 | 1,179 | 154 | 291 | 960 | 985 | 7,564 | ||||||||||||||||||||||||||||
Joint ventures | 6 | — | — | 4 | — | 2 | — | 12 | ||||||||||||||||||||||||||||
Associates | 6 | — | — | 18 | — | — | — | 24 | ||||||||||||||||||||||||||||
Total assets | 2,359 | 1,648 | 1,179 | 176 | 291 | 962 | 985 | 7,600 | ||||||||||||||||||||||||||||
Total liabilities | (557 | ) | (341 | ) | (263 | ) | (336 | ) | (109 | ) | (280 | ) | (1,981 | ) | (3,867 | ) | ||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Capital expenditure | 114 | 96 | 43 | 14 | 19 | 34 | — | 320 | ||||||||||||||||||||||||||||
Depreciation | 26 | 8 | 17 | 11 | 11 | 7 | — | 80 | ||||||||||||||||||||||||||||
Amortisation | 91 | 78 | 20 | 3 | 5 | 24 | — | 221 | ||||||||||||||||||||||||||||
F-19
F-20
Sales | Total assets | Capital expenditure | ||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
European countries | 963 | 835 | 768 | 1,711 | 1,112 | 1,003 | 60 | 79 | 63 | |||||||||||||||||||||||||||
North America | 2,717 | 2,504 | 2,742 | 5,476 | 4,716 | 5,015 | 242 | 208 | 188 | |||||||||||||||||||||||||||
Asia Pacific | 300 | 263 | 255 | 325 | 302 | 301 | 13 | 10 | 11 | |||||||||||||||||||||||||||
Other countries | 116 | 94 | 85 | 52 | 43 | 37 | 2 | 3 | 4 | |||||||||||||||||||||||||||
Total | 4,096 | 3,696 | 3,850 | 7,564 | 6,173 | 6,356 | 317 | 300 | 266 | |||||||||||||||||||||||||||
Discontinued operations (European countries) | 27 | 190 | 169 | — | 358 | 316 | 3 | 8 | 11 | |||||||||||||||||||||||||||
Joint ventures and associates | — | — | — | 36 | 47 | 64 | — | — | — | |||||||||||||||||||||||||||
Total | 4,123 | 3,886 | 4,019 | 7,600 | 6,578 | 6,736 | 320 | 308 | 277 | |||||||||||||||||||||||||||
Sales | Total assets | Capital expenditure | ||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
European countries | 1,102 | 1,003 | 868 | 1,827 | 1,608 | 1,711 | 90 | 70 | 63 | |||||||||||||||||||||||||||
North America | 2,591 | 2,585 | 2,388 | 4,867 | 4,908 | 5,476 | 248 | 231 | 242 | |||||||||||||||||||||||||||
Asia Pacific | 351 | 295 | 300 | 365 | 327 | 325 | 14 | 12 | 13 | |||||||||||||||||||||||||||
Other countries | 118 | 107 | 106 | 96 | 56 | 52 | 2 | 2 | 2 | |||||||||||||||||||||||||||
Total | 4,162 | 3,990 | 3,662 | 7,155 | 6,899 | 7,564 | 354 | 315 | 320 | |||||||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||||||||||||
European countries | 83 | 103 | 122 | — | 9 | — | 1 | 1 | — | |||||||||||||||||||||||||||
North America | 78 | 314 | 329 | 117 | 281 | — | 1 | 2 | — | |||||||||||||||||||||||||||
Other countries | 6 | 16 | 10 | — | 4 | — | — | 1 | — | |||||||||||||||||||||||||||
Total | 167 | �� | 433 | 461 | 117 | 294 | — | 2 | 4 | — | ||||||||||||||||||||||||||
Joint ventures and associates | — | — | — | 20 | 20 | 36 | — | — | — | |||||||||||||||||||||||||||
Total | 4,329 | 4,423 | 4,123 | 7,292 | 7,213 | 7,600 | 356 | 319 | 320 | |||||||||||||||||||||||||||
F-21
Discontinued operations |
• | Government Solutions (sold 15 February 2007) | |
• | Datamark (acquired with eCollege and subsequently sold on 31 July 2007) | |
• | Les Echos (sold 24 December 2007) |
F-20
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Sales | 27 | 190 | 169 | |||||||||
Operating (loss)/profit | (3 | ) | 26 | 43 | ||||||||
Net finance income | — | 3 | 3 | |||||||||
(Loss)/profit before tax | (3 | ) | 29 | 46 | ||||||||
Attributable tax benefit/(expense) | 1 | (7 | ) | (23 | ) | |||||||
(Loss)/profit after tax | (2 | ) | 22 | 23 | ||||||||
Profit on disposal of discontinued operations (note 28) | 306 | — | — | |||||||||
Attributable tax expense | (2 | ) | — | — | ||||||||
Profit for the year from discontinued operations | 302 | 22 | 23 | |||||||||
Operating cash flows | (6 | ) | 12 | 11 | ||||||||
Investing cash flows | — | 17 | 47 | |||||||||
Financing cash flows | — | — | (92 | ) | ||||||||
Total cash flows | (6 | ) | 29 | (34 | ) | |||||||
2007 | ||||||||||||||||||||
Government | Data | |||||||||||||||||||
Solutions | Management | Les Echos | Datamark | Total | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Sales | 29 | 56 | 82 | — | 167 | |||||||||||||||
Operating profit | 2 | 12 | 1 | — | 15 | |||||||||||||||
Goodwill impairment | — | (97 | ) | — | — | (97 | ) | |||||||||||||
(Loss)/profit before tax | 2 | (85 | ) | 1 | — | (82 | ) | |||||||||||||
Attributable tax expense | (1 | ) | (4 | ) | — | — | (5 | ) | ||||||||||||
(Loss)/profit after tax | 1 | (89 | ) | 1 | — | (87 | ) | |||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | (19 | ) | — | 165 | — | 146 | ||||||||||||||
Attributable tax (expense)/benefit | (93 | ) | — | — | 7 | (86 | ) | |||||||||||||
(Loss)/profit for the year from discontinued operations | (111 | ) | (89 | ) | 166 | 7 | (27 | ) | ||||||||||||
Operating cash flows | (8 | ) | 11 | 4 | — | 7 | ||||||||||||||
Investing cash flows | — | (1 | ) | 4 | — | 3 | ||||||||||||||
Financing cash flows | (4 | ) | (10 | ) | (7 | ) | — | (21 | ) | |||||||||||
Total cash flows | (12 | ) | — | 1 | — | (11 | ) | |||||||||||||
F-21
2006 | ||||||||||||||||
Government | Data | |||||||||||||||
Solutions | Management | Les Echos | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Sales | 286 | 61 | 86 | 433 | ||||||||||||
Operating profit | 22 | 13 | 5 | 40 | ||||||||||||
Profit before tax | 22 | 13 | 5 | 40 | ||||||||||||
Attributable tax expense | (8 | ) | (5 | ) | (2 | ) | (15 | ) | ||||||||
Profit after tax | 14 | 8 | 3 | 25 | ||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | — | — | — | — | ||||||||||||
Attributable tax expense | — | — | — | — | ||||||||||||
Profit for the year from discontinued operations | 14 | 8 | 3 | 25 | ||||||||||||
Operating cash flows | 20 | 9 | 4 | 33 | ||||||||||||
Investing cash flows | (8 | ) | (2 | ) | — | (10 | ) | |||||||||
Financing cash flows | (1 | ) | (7 | ) | (7 | ) | (15 | ) | ||||||||
Total cash flows | 11 | — | (3 | ) | 8 | |||||||||||
2005 | ||||||||||||||||||||
Government | Data | |||||||||||||||||||
Solutions | Management | Les Echos | Recoletos | Total | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Sales | 288 | 63 | 83 | 27 | 461 | |||||||||||||||
Operating profit | 20 | 15 | 4 | (3 | ) | 36 | ||||||||||||||
Profit before tax | 20 | 15 | 4 | (3 | ) | 36 | ||||||||||||||
Attributable tax expense | (8 | ) | (6 | ) | (2 | ) | 1 | (15 | ) | |||||||||||
Profit after tax | 12 | 9 | 2 | (2 | ) | 21 | ||||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | — | — | — | 306 | 306 | |||||||||||||||
Attributable tax expense | — | — | — | (2 | ) | (2 | ) | |||||||||||||
Profit for the year from discontinued operations | 12 | 9 | 2 | 302 | 325 | |||||||||||||||
Operating cash flows | 22 | 9 | 1 | (6 | ) | 26 | ||||||||||||||
Investing cash flows | (13 | ) | (2 | ) | 1 | — | (14 | ) | ||||||||||||
Financing cash flows | (1 | ) | (7 | ) | (21 | ) | — | (29 | ) | |||||||||||
Total cash flows | 8 | — | (19 | ) | (6 | ) | (17 | ) | ||||||||||||
F-22
Operating expenses |
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
By function: | ||||||||||||
Cost of goods sold | 1,910 | 1,841 | 1,713 | |||||||||
Operating expenses | ||||||||||||
Distribution costs | 264 | 288 | 281 | |||||||||
Administrative and other expenses | 1,538 | 1,462 | 1,309 | |||||||||
Other income | (101 | ) | (99 | ) | (84 | ) | ||||||
Total operating expenses | 1,701 | 1,651 | 1,506 | |||||||||
Total | 3,611 | 3,492 | 3,219 | |||||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
By nature: | ||||||||||||||||
Utilisation of inventory | 19 | 732 | 702 | 754 | ||||||||||||
Depreciation of property, plant and equipment | 11 | 65 | 68 | 73 | ||||||||||||
Amortisation of intangible assets — Pre-publication | 18 | 192 | 210 | 192 | ||||||||||||
Amortisation of intangible assets — Other | 12 | 70 | 48 | 26 | ||||||||||||
Employee benefit expense | 6 | 1,288 | 1,225 | 1,128 | ||||||||||||
Operating lease rentals | 129 | 122 | 108 | |||||||||||||
Other property costs | 122 | 121 | 84 | |||||||||||||
Royalties expensed | 365 | 360 | 362 | |||||||||||||
Advertising, promotion and marketing | 195 | 190 | 186 | |||||||||||||
Information technology costs | 70 | 71 | 81 | |||||||||||||
Other costs | 484 | 474 | 309 | |||||||||||||
Other income | (101 | ) | (99 | ) | (84 | ) | ||||||||||
Total | 3,611 | 3,492 | 3,219 | |||||||||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Fees payable to the Company’s auditor for the audit of parent company and consolidated accounts | 1 | 1 | 1 | |||||||||
The audit of the Company’s subsidiaries pursuant to legislation | 2 | 4 | 3 | |||||||||
Other services pursuant to legislation | 1 | 4 | — | |||||||||
Tax services | 2 | 1 | 1 | |||||||||
Other services | 1 | 1 | 2 | |||||||||
Total | 7 | 11 | 7 | |||||||||
F-23
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act | 4 | 9 | 4 | |||||||||
Non-audit fees | 3 | 2 | 3 | |||||||||
Total audit fees | 7 | 11 | 7 | |||||||||
5. | Other net gains and losses |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ | ||||||||||||
millions) | ||||||||||||
Profit on sale of interest in MarketWatch | 40 | — | — | |||||||||
Other items | — | 9 | (6 | ) | ||||||||
Total other net gains and losses | 40 | 9 | (6 | ) | ||||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Profit on sale of interest in MarketWatch | — | — | 40 | |||||||||
F-22
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
By function: | ||||||||||||
Cost of goods sold | 2,022 | 1,789 | 1,846 | |||||||||
Operating expenses | ||||||||||||
Distribution costs | 249 | 201 | 206 | |||||||||
Administrative and other expenses | 1,384 | 1,365 | 1,439 | |||||||||
Other income | (41 | ) | (46 | ) | (51 | ) | ||||||
Total operating expenses | 1,592 | 1,520 | 1,594 | |||||||||
Total | 3,614 | 3,309 | 3,440 | |||||||||
By nature: | ||||||||||||
Utilisation of inventory | 768 | 700 | 710 | |||||||||
Depreciation of property, plant and equipment (note 11) | 80 | 78 | 79 | |||||||||
Amortisation of intangible assets — pre-publication (note 17) | 192 | 168 | 158 | |||||||||
Amortisation of intangible assets — other (note 12) | 29 | 25 | 32 | |||||||||
Employee benefit expense (note 6) | 1,273 | 1,154 | 1,156 | |||||||||
Operating lease rentals | 119 | 126 | 148 | |||||||||
Other property costs | 88 | 73 | 61 | |||||||||
Royalties expensed | 363 | 331 | 354 | |||||||||
Advertising, promotion and marketing | 202 | 181 | 193 | |||||||||
Information technology costs | 84 | 76 | 85 | |||||||||
Other costs | 457 | 443 | 515 | |||||||||
Other income | (41 | ) | (46 | ) | (51 | ) | ||||||
Total | 3,614 | 3,309 | 3,440 | |||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Statutory audit | 4 | 3 | 3 | |||||||||
Audit-related regulatory reporting services | 1 | 1 | — | |||||||||
Non-audit services: | ||||||||||||
Tax compliance | 1 | 1 | 1 | |||||||||
Tax advisory | — | 1 | 1 | |||||||||
Other non-audit services | 1 | — | — | |||||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Employee benefit expense | ||||||||||||||||
Wages and salaries (including termination benefits and restructuring costs) | 1,087 | 1,035 | 954 | |||||||||||||
Social security costs | 100 | 101 | 91 | |||||||||||||
Share-based payment costs | 26 | 30 | 25 | 23 | ||||||||||||
Pension costs — defined contribution plans | 25 | 39 | 36 | 34 | ||||||||||||
Pension costs — defined benefit plans | 25 | 31 | 29 | 25 | ||||||||||||
Other post-retirement benefits | 25 | 1 | (1 | ) | 1 | |||||||||||
1,288 | 1,225 | 1,128 | ||||||||||||||
F-24
F-23
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Employee benefit expense | ||||||||||||
Wages and salaries (including termination benefits and restructuring costs) | 1,088 | 983 | 988 | |||||||||
Social security costs | 101 | 89 | 87 | |||||||||
Share-based payment costs (note 24) | 23 | 25 | 29 | |||||||||
Pension costs — defined contribution plans (note 24) | 35 | 32 | 28 | |||||||||
Pension costs — defined benefit plans (note 24) | 25 | 24 | 23 | |||||||||
Other post-retirement benefits (note 24) | 1 | 1 | 1 | |||||||||
1,273 | 1,154 | 1,156 | ||||||||||
2005 | 2004 | 2003 | ||||||||||
(Average number employed) | ||||||||||||
School | 10,133 | 10,403 | 9,348 | |||||||||
Higher Education | 4,196 | 4,087 | 3,912 | |||||||||
Professional | 8,342 | 7,491 | 6,434 | |||||||||
Penguin | 4,051 | 4,085 | 4,318 | |||||||||
FT Publishing | 1,952 | 1,989 | 2,283 | |||||||||
IDC | 1,956 | 1,826 | 1,628 | |||||||||
Other | 1,573 | 1,365 | 928 | |||||||||
Continuing operations | 32,203 | 31,246 | 28,851 | |||||||||
Discontinued operations | — | 1,840 | 1,733 | |||||||||
32,203 | 33,086 | 30,584 | ||||||||||
F-24
2007 | 2006 | 2005 | ||||||||||
Average number employed | ||||||||||||
Employee numbers | ||||||||||||
School | 12,906 | 11,064 | 10,133 | |||||||||
Higher Education | 5,098 | 4,368 | 4,196 | |||||||||
Professional | 3,458 | 3,204 | 3,259 | |||||||||
Penguin | 4,163 | 3,943 | 4,051 | |||||||||
FT Publishing | 2,083 | 1,766 | 1,434 | |||||||||
Interactive Data | 2,300 | 2,200 | 1,956 | |||||||||
Other | 1,614 | 1,669 | 1,573 | |||||||||
Continuing operations | 31,622 | 28,214 | 26,602 | |||||||||
Discontinued operations | 1,070 | 6,127 | 5,601 | |||||||||
32,692 | 34,341 | 32,203 | ||||||||||
Net finance costs |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Interest payable | (98 | ) | (91 | ) | (91 | ) | ||||||
Finance costs re employee benefits | (7 | ) | (5 | ) | (9 | ) | ||||||
Net foreign exchange losses | (9 | ) | — | — | ||||||||
Other losses on financial instruments in a hedging relationship: | ||||||||||||
— fair value hedges | (1 | ) | — | — | ||||||||
— net investment hedges | — | — | — | |||||||||
Other losses on financial instruments not in a hedging relationship: | ||||||||||||
— derivatives | (17 | ) | — | — | ||||||||
Finance costs | (132 | ) | (96 | ) | (100 | ) | ||||||
Interest receivable | 21 | 17 | 7 | |||||||||
Net foreign exchange gains | 21 | — | — | |||||||||
Other gains on financial instruments in a hedging relationship: | ||||||||||||
— fair value hedges | 1 | — | — | |||||||||
— net investment hedges | 3 | — | — | |||||||||
Other gains on financial instruments not in a hedging relationship: | ||||||||||||
— amortisation of transitional adjustment on bonds | 7 | — | — | |||||||||
— derivatives | 9 | — | — | |||||||||
Finance income | 62 | 17 | 7 | |||||||||
Net finance costs | (70 | ) | (79 | ) | (93 | ) | ||||||
Analysed as: | ||||||||||||
Net interest payable | (77 | ) | (74 | ) | (84 | ) | ||||||
Finance costs re employee benefits | (7 | ) | (5 | ) | (9 | ) | ||||||
Net finance costs reflected in adjusted earnings | (84 | ) | (79 | ) | (93 | ) | ||||||
Other net finance income | 14 | — | — | |||||||||
Total net finance costs | (70 | ) | (79 | ) | (93 | ) | ||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Interest payable | (114 | ) | (117 | ) | (98 | ) | ||||||||||
Net foreign exchange losses | (25 | ) | (2 | ) | (9 | ) | ||||||||||
Finance cost in respect of employee benefits | 25 | — | — | (7 | ) | |||||||||||
Other losses on financial instruments in a hedging relationship: | ||||||||||||||||
— fair value hedges | (1 | ) | — | (1 | ) | |||||||||||
— net investment hedges | (1 | ) | (2 | ) | — | |||||||||||
Other losses on financial instruments not in a hedging relationship: | ||||||||||||||||
— derivatives | (9 | ) | (12 | ) | (17 | ) | ||||||||||
Finance costs | (150 | ) | (133 | ) | (132 | ) | ||||||||||
Interest receivable | 19 | 23 | 21 | |||||||||||||
Finance income in respect of employee benefits | 25 | 10 | 4 | — | ||||||||||||
Net foreign exchange gains | 8 | 21 | 21 | |||||||||||||
Other gains on financial instruments in a hedging relationship: | ||||||||||||||||
— fair value hedges | — | — | 1 | |||||||||||||
— net investment hedges | — | — | 3 | |||||||||||||
Other gains on financial instruments not in a hedging relationship: | ||||||||||||||||
— amortisation of transitional adjustment on bonds | 1 | 8 | 7 | |||||||||||||
— derivatives | 6 | 3 | 9 | |||||||||||||
Finance income | 44 | 59 | 62 | |||||||||||||
Net finance costs | (106 | ) | (74 | ) | (70 | ) | ||||||||||
Analysed as: | ||||||||||||||||
Net interest payable | (95 | ) | (94 | ) | (77 | ) | ||||||||||
Finance income/(costs) in respect of employee benefits | 25 | 10 | 4 | (7 | ) | |||||||||||
Net finance costs reflected in adjusted earnings | (85 | ) | (90 | ) | (84 | ) | ||||||||||
Other net finance (costs)/income | (21 | ) | 16 | 14 | ||||||||||||
Total net finance costs | (106 | ) | (74 | ) | (70 | ) | ||||||||||
F-25
Income tax |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Current tax | ||||||||||||
Charge in respect of current year | (76 | ) | (65 | ) | (45 | ) | ||||||
Adjustments in respect of prior years | (1 | ) | 25 | 13 | ||||||||
Total current tax charge | (77 | ) | (40 | ) | (32 | ) | ||||||
Deferred tax | ||||||||||||
In respect of timing differences | (66 | ) | (46 | ) | (72 | ) | ||||||
Adjustments in respect of prior years | 19 | 23 | 43 | |||||||||
Total deferred tax charge (note 14) | (47 | ) | (23 | ) | (29 | ) | ||||||
Total tax charge | (124 | ) | (63 | ) | (61 | ) | ||||||
F-25
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Current tax | ||||||||||||||||
Charge in respect of current year | (71 | ) | (81 | ) | (60 | ) | ||||||||||
Recognition of previously unrecognised trading losses | — | 23 | — | |||||||||||||
Other adjustments in respect of prior years | 27 | 35 | (1 | ) | ||||||||||||
Total current tax charge | (44 | ) | (23 | ) | (61 | ) | ||||||||||
Deferred tax | ||||||||||||||||
In respect of timing differences | (96 | ) | (73 | ) | (66 | ) | ||||||||||
Recognition of previously unrecognised capital losses | — | 76 | — | |||||||||||||
Recognition of previously unrecognised trading losses | — | 37 | — | |||||||||||||
Other adjustments in respect of prior years | 9 | (21 | ) | 19 | ||||||||||||
Total deferred tax (charge)/benefit | 14 | (87 | ) | 19 | (47 | ) | ||||||||||
Total tax charge | (131 | ) | (4 | ) | (108 | ) | ||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Profit before tax | 466 | 325 | 313 | |||||||||
Tax calculated at UK rate | (140 | ) | (97 | ) | (94 | ) | ||||||
Effect of overseas tax rates | (22 | ) | (8 | ) | (6 | ) | ||||||
Joint venture and associate income reported net of tax | 5 | 2 | — | |||||||||
Income not subject to tax | 16 | 6 | 11 | |||||||||
Expenses not deductible for tax purposes | (9 | ) | (5 | ) | (7 | ) | ||||||
Utilisation of previously unrecognised tax losses | 11 | 5 | 15 | |||||||||
Unutilised tax losses | (3 | ) | (14 | ) | (36 | ) | ||||||
Prior year adjustments | 18 | 48 | 56 | |||||||||
Total tax charge | (124 | ) | (63 | ) | (61 | ) | ||||||
UK | (26 | ) | 5 | (13 | ) | |||||||
Overseas | (98 | ) | (68 | ) | (48 | ) | ||||||
Total tax charge | (124 | ) | (63 | ) | (61 | ) | ||||||
Add back: tax benefit on other gains and losses | (4 | ) | (36 | ) | (35 | ) | ||||||
Add back: tax benefit on amortisation of acquired intangibles | (4 | ) | (2 | ) | (1 | ) | ||||||
Add back: tax charge on other finance income | 3 | — | — | |||||||||
Adjusted income tax charge — continuing operations | (129 | ) | (101 | ) | (97 | ) | ||||||
Adjusted income tax charge — discontinued operations | 1 | (7 | ) | (19 | ) | |||||||
Total adjusted income tax charge | (128 | ) | (108 | ) | (116 | ) | ||||||
Tax rate reflected in adjusted earnings | 30.3 | % | 30.9 | % | 32.5 | % | ||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Profit before tax | 468 | 448 | 427 | |||||||||
Tax calculated at UK rate | (141 | ) | (135 | ) | (128 | ) | ||||||
Effect of overseas tax rates | (25 | ) | (17 | ) | (18 | ) | ||||||
Joint venture and associate income reported net of tax | 7 | 7 | 5 | |||||||||
Income not subject to tax | 3 | 5 | 16 | |||||||||
Expenses not deductible for tax purposes | (12 | ) | (18 | ) | (9 | ) | ||||||
Utilisation of previously unrecognised tax losses | 3 | 7 | 11 | |||||||||
Recognition of previously unrecognised tax losses | — | 136 | — | |||||||||
Unutilised tax losses | (2 | ) | (3 | ) | (3 | ) | ||||||
Prior year adjustments | 36 | 14 | 18 | |||||||||
Total tax charge | (131 | ) | (4 | ) | (108 | ) | ||||||
UK | (42 | ) | (15 | ) | (26 | ) | ||||||
Overseas | (89 | ) | 11 | (82 | ) | |||||||
Total tax charge | (131 | ) | (4 | ) | (108 | ) | ||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Deferred tax on stock options | 3 | 4 | — | |||||||||
Current tax on foreign exchange gains and losses | 9 | 5 | — | |||||||||
12 | 9 | — | ||||||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Share-based payments | 7 | 2 | 3 | |||||||||
Pension contributions and actuarial gains and losses | 28 | 9 | — | |||||||||
Net investment hedges and other foreign exchange gains and losses | (6 | ) | 1 | 9 | ||||||||
29 | 12 | 12 | ||||||||||
F-26
Earnings per share |
F-26
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Earnings | 624 | 262 | 252 | |||||||||
Adjustments to exclude profit for the year from discontinued operations: | ||||||||||||
Profit for the year from discontinued operations | (302 | ) | (22 | ) | (23 | ) | ||||||
Minority interest share of above | — | 5 | 5 | |||||||||
Earnings — continuing operations | 322 | 245 | 234 | |||||||||
Earnings | 624 | 262 | 252 | |||||||||
Weighted average number of shares (millions) | 797.9 | 795.6 | 794.4 | |||||||||
Effect of dilutive share options (millions) | 1.1 | 1.1 | 0.9 | |||||||||
Weighted average number of shares (millions) for diluted earnings | 799.0 | 796.7 | 795.3 | |||||||||
Earnings per share from continuing and discontinued operations | ||||||||||||
Basic | 78.2 | p | 32.9 | p | 31.7 | p | ||||||
Diluted | 78.1 | p | 32.9 | p | 31.7 | p | ||||||
Earnings per share from continuing operations | ||||||||||||
Basic | 40.4 | p | 30.8 | p | 29.4 | p | ||||||
Diluted | 40.3 | p | 30.8 | p | 29.4 | p | ||||||
Earnings per share from discontinued operations | ||||||||||||
Basic | 37.8 | p | 2.1 | p | 2.3 | p | ||||||
Diluted | 37.8 | p | 2.1 | p | 2.3 | p | ||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Profit for the year from continuing operations | 337 | 444 | 319 | |||||||||||||
Minority interest | (26 | ) | (23 | ) | (20 | ) | ||||||||||
Earnings from continuing operations | 311 | 421 | 299 | |||||||||||||
(Loss)/profit for the year from discontinued operations | 3 | (27 | ) | 25 | 325 | |||||||||||
Earnings | 284 | 446 | 624 | |||||||||||||
Weighted average number of shares (millions) | 796.8 | 798.4 | 797.9 | |||||||||||||
Effect of dilutive share options (millions) | 1.3 | 1.5 | 1.1 | |||||||||||||
Weighted average number of shares (millions) for diluted earnings | 798.1 | 799.9 | 799.0 | |||||||||||||
Earnings per share from continuing and discontinued operations | 2007 | 2006 | 2005 | |||||||||||||
Basic | 35.6p | 55.9p | 78.2p | |||||||||||||
Diluted | 35.6p | 55.8p | 78.1p | |||||||||||||
Earnings per share from continuing operations | ||||||||||||||||
Basic | 39.0p | 52.7p | 37.5p | |||||||||||||
Diluted | 39.0p | 52.6p | 37.4p | |||||||||||||
Earnings per share from discontinued operations | ||||||||||||||||
Basic | (3.4p | ) | 3.2p | 40.7p | ||||||||||||
Dividends |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Final paid in respect of prior year 15.7p (2004: 14.8p; 2003: 14.3p) | 125 | 119 | 115 | |||||||||
Interim paid in respect of current year 10p (2004: 9.7p; 2003: 9.4p) | 80 | 76 | 73 | |||||||||
205 | 195 | 188 | ||||||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Final paid in respect of prior year 18.8p (2006: 17p; 2005: 15.7p) | 150 | 136 | 125 | |||||||||
Interim paid in respect of current year 11.1p (2006: 10.5p; 2005: 10p) | 88 | 84 | 80 | |||||||||
238 | 220 | 205 | ||||||||||
F-27
F-27
Property, plant and equipment |
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Cost | ||||||||||||||||
At 1 January 2003 | 319 | 619 | 20 | 958 | ||||||||||||
Exchange differences | (19 | ) | (28 | ) | (3 | ) | (50 | ) | ||||||||
Additions | 12 | 52 | 14 | 78 | ||||||||||||
Disposals | (15 | ) | (55 | ) | — | (70 | ) | |||||||||
Acquisition through business combination | 5 | 19 | — | 24 | ||||||||||||
Disposal through business disposal | (2 | ) | (6 | ) | — | (8 | ) | |||||||||
Reclassifications | 1 | 9 | (10 | ) | — | |||||||||||
At 31 December 2003 | 301 | 610 | 21 | 932 | ||||||||||||
Exchange differences | (9 | ) | (10 | ) | (1 | ) | (20 | ) | ||||||||
Additions | 14 | 81 | 8 | 103 | ||||||||||||
Disposals | (13 | ) | (39 | ) | — | (52 | ) | |||||||||
Acquisition through business combination | 1 | 4 | — | 5 | ||||||||||||
Disposal through business disposal | (4 | ) | — | — | (4 | ) | ||||||||||
Reclassifications | — | 13 | (13 | ) | — | |||||||||||
Transfer to non-current assets held for sale | (14 | ) | (81 | ) | (2 | ) | (97 | ) | ||||||||
At 31 December 2004 | 276 | 578 | 13 | 867 | ||||||||||||
Exchange differences | 18 | 40 | — | 58 | ||||||||||||
Transfers | — | 13 | — | 13 | ||||||||||||
Additions | 32 | 41 | 1 | 74 | ||||||||||||
Disposals | (5 | ) | (28 | ) | — | (33 | ) | |||||||||
Acquisition through business combination | 3 | 6 | — | 9 | ||||||||||||
Reclassifications | — | 7 | (7 | ) | — | |||||||||||
At 31 December 2005 | 324 | 657 | 7 | 988 | ||||||||||||
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Cost | ||||||||||||||||
At 1 January 2006 | 328 | 683 | 7 | 1,018 | ||||||||||||
Exchange differences | (20 | ) | (54 | ) | — | (74 | ) | |||||||||
Transfers | — | (11 | ) | (1 | ) | (12 | ) | |||||||||
Additions | 12 | 52 | 13 | 77 | ||||||||||||
Disposals | (9 | ) | (32 | ) | — | (41 | ) | |||||||||
Acquisition through business combination | 9 | 12 | — | 21 | ||||||||||||
Reclassifications | — | 8 | (8 | ) | — | |||||||||||
Transfer to non-current assets held for sale | (7 | ) | (27 | ) | — | (34 | ) | |||||||||
At 31 December 2006 | 313 | 631 | 11 | 955 | ||||||||||||
Exchange differences | (2 | ) | — | — | (2 | ) | ||||||||||
Additions | 20 | 62 | 11 | 93 | ||||||||||||
Disposals | (24 | ) | (65 | ) | — | (89 | ) | |||||||||
Acquisition through business combination | — | 27 | — | 27 | ||||||||||||
Disposal through business disposal | (1 | ) | (25 | ) | — | (26 | ) | |||||||||
Reclassifications | — | 6 | (6 | ) | — | |||||||||||
Transfer to non-current assets held for sale | (8 | ) | (14 | ) | — | (22 | ) | |||||||||
At 31 December 2007 | 298 | 622 | 16 | 936 | ||||||||||||
F-28
F-28
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2003 | (104 | ) | (419 | ) | — | (523 | ) | |||||||||
Exchange differences | 10 | 17 | — | 27 | ||||||||||||
Charge for the year | (16 | ) | (69 | ) | — | (85 | ) | |||||||||
Disposals | 7 | 53 | — | 60 | ||||||||||||
Acquisition through business combination | — | (14 | ) | — | (14 | ) | ||||||||||
Disposal through business disposal | 1 | 4 | — | 5 | ||||||||||||
At 31 December 2003 | (102 | ) | (428 | ) | — | (530 | ) | |||||||||
Exchange differences | 4 | 5 | — | 9 | ||||||||||||
Charge for the year | (16 | ) | (68 | ) | — | (84 | ) | |||||||||
Disposals | 6 | 38 | — | 44 | ||||||||||||
Acquisition through business combination | — | (4 | ) | — | (4 | ) | ||||||||||
Disposal through business disposal | 4 | — | — | 4 | ||||||||||||
Transfer to non-current assets held for sale | 2 | 47 | — | 49 | ||||||||||||
At 31 December 2004 | (102 | ) | (410 | ) | — | (512 | ) | |||||||||
Exchange differences | (7 | ) | (33 | ) | — | (40 | ) | |||||||||
Charge for the year | (17 | ) | (63 | ) | — | (80 | ) | |||||||||
Disposals | — | 30 | — | 30 | ||||||||||||
Acquisition through business combination | — | (2 | ) | — | (2 | ) | ||||||||||
At 31 December 2005 | (126 | ) | (478 | ) | — | (604 | ) | |||||||||
Carrying amounts | ||||||||||||||||
At 1 January 2003 | 215 | 200 | 20 | 435 | ||||||||||||
At 31 December 2003 | 199 | 182 | 21 | 402 | ||||||||||||
At 31 December 2004 | 174 | 168 | 13 | 355 | ||||||||||||
At 31 December 2005 | 198 | 179 | 7 | 384 | ||||||||||||
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2006 | (130 | ) | (504 | ) | — | (634 | ) | |||||||||
Exchange differences | 10 | 41 | — | 51 | ||||||||||||
Transfers | — | 5 | — | 5 | ||||||||||||
Charge for the year | (17 | ) | (60 | ) | — | (77 | ) | |||||||||
Disposals | 4 | 27 | — | 31 | ||||||||||||
Acquisition through business combination | — | (8 | ) | — | (8 | ) | ||||||||||
Transfer to non-current assets held for sale | 5 | 20 | — | 25 | ||||||||||||
At 31 December 2006 | (128 | ) | (479 | ) | — | (607 | ) | |||||||||
Exchange differences | — | 1 | — | 1 | ||||||||||||
Charge for the year | (14 | ) | (54 | ) | — | (68 | ) | |||||||||
Disposals | 11 | 63 | — | 74 | ||||||||||||
Acquisition through business combination | — | (16 | ) | — | (16 | ) | ||||||||||
Disposal through business disposal | — | 20 | — | 20 | ||||||||||||
Transfer to non-current assets held for sale | 5 | 10 | — | 15 | ||||||||||||
At 31 December 2007 | (126 | ) | (455 | ) | — | (581 | ) | |||||||||
Carrying amounts | ||||||||||||||||
At 1 January 2006 | 198 | 179 | 7 | 384 | ||||||||||||
At 31 December 2006 | 185 | 152 | 11 | 348 | ||||||||||||
At 31 December 2007 | 172 | 167 | 16 | 355 | ||||||||||||
F-29
Intangible assets |
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
At 1 January 2003 | 3,610 | 146 | — | — | — | 3,756 | ||||||||||||||||||
Exchange differences | (275 | ) | (10 | ) | — | — | — | (285 | ) | |||||||||||||||
Additions | 113 | 26 | — | — | — | 139 | ||||||||||||||||||
Disposals | (4 | ) | (2 | ) | — | — | — | (6 | ) | |||||||||||||||
Acquisition through business combination | — | — | — | 44 | 44 | 44 | ||||||||||||||||||
At 31 December 2003 | 3,444 | 160 | — | 44 | 44 | 3,648 | ||||||||||||||||||
Exchange differences | (201 | ) | (8 | ) | — | (3 | ) | (3 | ) | (212 | ) | |||||||||||||
Additions | 22 | 24 | — | — | — | 46 | ||||||||||||||||||
Disposals | (4 | ) | (11 | ) | — | — | — | (15 | ) | |||||||||||||||
Acquisition through business combination | — | — | 10 | 5 | 15 | 15 | ||||||||||||||||||
Transfer to non-current assets held for sale | (101 | ) | — | — | — | — | (101 | ) | ||||||||||||||||
At 31 December 2004 | 3,160 | 165 | 10 | 46 | 56 | 3,381 | ||||||||||||||||||
Exchange differences | 345 | 15 | 2 | 4 | 6 | 366 | ||||||||||||||||||
Transfers | — | (13 | ) | — | — | — | (13 | ) | ||||||||||||||||
Additions | 155 | 24 | — | — | — | 179 | ||||||||||||||||||
Disposals | (6 | ) | (10 | ) | — | — | — | (16 | ) | |||||||||||||||
Acquisition through business combination | — | — | 56 | 33 | 89 | 89 | ||||||||||||||||||
At 31 December 2005 | 3,654 | 181 | 68 | 83 | 151 | 3,986 | ||||||||||||||||||
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
At 1 January 2006 | 3,654 | 197 | 68 | 83 | 151 | 4,002 | ||||||||||||||||||
Exchange differences | (396 | ) | (17 | ) | (8 | ) | (8 | ) | (16 | ) | (429 | ) | ||||||||||||
Transfers | — | 6 | — | — | — | 6 | ||||||||||||||||||
Additions | — | 29 | — | — | — | 29 | ||||||||||||||||||
Disposals | (5 | ) | (2 | ) | — | — | — | (7 | ) | |||||||||||||||
Acquisition through business combination | 246 | 4 | 36 | 117 | 153 | 403 | ||||||||||||||||||
Adjustment on recognition of pre-acquisition deferred tax | (7 | ) | — | — | — | — | (7 | ) | ||||||||||||||||
Transfer to non-current assets held for sale | (221 | ) | (16 | ) | — | — | — | (237 | ) | |||||||||||||||
At 31 December 2006 | 3,271 | 201 | 96 | 192 | 288 | 3,760 | ||||||||||||||||||
Exchange differences | (4 | ) | (2 | ) | 3 | 1 | 4 | (2 | ) | |||||||||||||||
Additions | — | 33 | — | — | — | 33 | ||||||||||||||||||
Disposals | (34 | ) | (19 | ) | (3 | ) | — | (3 | ) | (56 | ) | |||||||||||||
Acquisition through business combination | 304 | 4 | 40 | 155 | 195 | 503 | ||||||||||||||||||
Transfer to non-current assets held for sale | (194 | ) | — | — | — | — | (194 | ) | ||||||||||||||||
At 31 December 2007 | 3,343 | 217 | 136 | 348 | 484 | 4,044 | ||||||||||||||||||
F-30
F-30
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Amortisation | ||||||||||||||||||||||||
At 1 January 2003 | — | (75 | ) | — | — | — | (75 | ) | ||||||||||||||||
Exchange differences | — | 7 | — | — | — | 7 | ||||||||||||||||||
Charge for the year | — | (28 | ) | — | (4 | ) | (4 | ) | (32 | ) | ||||||||||||||
Disposals | — | 2 | — | — | — | 2 | ||||||||||||||||||
Acquisition through business combination | — | — | — | — | — | — | ||||||||||||||||||
At 31 December 2003 | — | (94 | ) | — | (4 | ) | (4 | ) | (98 | ) | ||||||||||||||
Exchange differences | — | 8 | — | 1 | 1 | 9 | ||||||||||||||||||
Charge for the year | — | (20 | ) | — | (5 | ) | (5 | ) | (25 | ) | ||||||||||||||
Disposals | — | 11 | — | — | — | 11 | ||||||||||||||||||
Acquisition through business combination | — | — | — | — | — | — | ||||||||||||||||||
At 31 December 2004 | — | (95 | ) | — | (8 | ) | (8 | ) | (103 | ) | ||||||||||||||
Exchange differences | — | (10 | ) | — | — | — | (10 | ) | ||||||||||||||||
Charge for the year | — | (18 | ) | (5 | ) | (6 | ) | (11 | ) | (29 | ) | |||||||||||||
Disposals | — | 10 | — | — | — | 10 | ||||||||||||||||||
Acquisition through business combination | — | — | — | — | — | — | ||||||||||||||||||
At 31 December 2005 | — | (113 | ) | (5 | ) | (14 | ) | (19 | ) | (132 | ) | |||||||||||||
Carrying amounts | ||||||||||||||||||||||||
At 1 January 2003 | 3,610 | 71 | — | — | — | 3,681 | ||||||||||||||||||
At 31 December 2003 | 3,444 | 66 | — | 40 | 40 | 3,550 | ||||||||||||||||||
At 31 December 2004 | 3,160 | 70 | 10 | 38 | 48 | 3,278 | ||||||||||||||||||
At 31 December 2005 | 3,654 | 68 | 63 | 69 | 132 | 3,854 | ||||||||||||||||||
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Amortisation | ||||||||||||||||||||||||
At 1 January 2006 | — | (129 | ) | (5 | ) | (14 | ) | (19 | ) | (148 | ) | |||||||||||||
Exchange differences | — | 13 | 1 | 2 | 3 | 16 | ||||||||||||||||||
Transfers | — | (5 | ) | — | — | — | (5 | ) | ||||||||||||||||
Charge for the year | — | (23 | ) | (11 | ) | (17 | ) | (28 | ) | (51 | ) | |||||||||||||
Disposals | — | 1 | — | — | — | 1 | ||||||||||||||||||
Acquisition through business combination | — | (1 | ) | — | — | — | (1 | ) | ||||||||||||||||
Transfer to non-current assets held for sale | — | 9 | — | — | — | 9 | ||||||||||||||||||
At 31 December 2006 | — | (135 | ) | (15 | ) | (29 | ) | (44 | ) | (179 | ) | |||||||||||||
Exchange differences | — | 1 | — | 1 | 1 | 2 | ||||||||||||||||||
Charge for the year | — | (25 | ) | (17 | ) | (28 | ) | (45 | ) | (70 | ) | |||||||||||||
Disposals | — | 19 | — | — | — | 19 | ||||||||||||||||||
Acquisition through business combination | — | (2 | ) | — | — | — | (2 | ) | ||||||||||||||||
Transfer to non-current assets held for sale | — | — | — | — | — | — | ||||||||||||||||||
At 31 December 2007 | — | (142 | ) | (32 | ) | (56 | ) | (88 | ) | (230 | ) | |||||||||||||
Carrying amounts | ||||||||||||||||||||||||
At 1 January 2006 | 3,654 | 68 | 63 | 69 | 132 | 3,854 | ||||||||||||||||||
At 31 December 2006 | 3,271 | 66 | 81 | 163 | 244 | 3,581 | ||||||||||||||||||
At 31 December 2007 | 3,343 | 75 | 104 | 292 | 396 | 3,814 | ||||||||||||||||||
F-31
F-31
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Higher Education | 1,106 | 950 | 1,007 | |||||||||
School Book | 861 | 739 | 783 | |||||||||
School Assessment and Testing | 271 | 232 | 246 | |||||||||
School Technology | 385 | 330 | 350 | |||||||||
Other Assessment and Testing | 245 | 211 | 223 | |||||||||
Other Government Solutions | 234 | 201 | 213 | |||||||||
Other Book | 70 | 60 | 63 | |||||||||
Pearson Education total | 3,172 | 2,723 | 2,885 | |||||||||
Penguin US | 149 | 122 | 138 | |||||||||
Penguin UK | 146 | 146 | 146 | |||||||||
Pearson Australia | 45 | 42 | 44 | |||||||||
Penguin total | 340 | 310 | 328 | |||||||||
IDC | 138 | 123 | 127 | |||||||||
FT Publishing | 4 | 4 | 4 | |||||||||
Recoletos | — | — | 100 | |||||||||
Total goodwill | 3,654 | 3,160 | 3,444 | |||||||||
Notes | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Higher Education | 1,031 | 780 | ||||||||||
School Curriculum (2006: School Book) | 867 | 683 | ||||||||||
School Assessment and Information (2006: School Assessment and Testing) | 540 | 342 | ||||||||||
School Technology | — | 356 | ||||||||||
Other Assessment and Testing | 247 | 490 | ||||||||||
Technology and Business Publishing (2006: Other Book) | 55 | 56 | ||||||||||
Pearson Education total | 2,740 | 2,707 | ||||||||||
Penguin US | 155 | 156 | ||||||||||
Penguin UK | 111 | 114 | ||||||||||
Pearson Australia | 52 | 44 | ||||||||||
Penguin total | 318 | 314 | ||||||||||
Financial Times | 12 | 4 | ||||||||||
Mergermarket | 126 | 97 | ||||||||||
Interactive Data | 147 | 149 | ||||||||||
FT Group total | 285 | 250 | ||||||||||
Total goodwill — continuing operations | 3,343 | 3,271 | ||||||||||
Goodwill held for sale | 30 | 96 | 221 | |||||||||
Total goodwill | 3,439 | 3,492 | ||||||||||
F-32
13. | |
F-32
Investments in joint ventures and associates |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
At beginning of year | 14 | 12 | 12 | |||||||||
Exchange differences | (3 | ) | 1 | 4 | ||||||||
Share of loss after tax | (1 | ) | (5 | ) | (9 | ) | ||||||
Dividends | (4 | ) | (3 | ) | (2 | ) | ||||||
Additions or further investment | 6 | 9 | 7 | |||||||||
At end of year | 12 | 14 | 12 | |||||||||
2007 | 2006 | |||||||
All figures in | ||||||||
£ millions | ||||||||
At beginning of year | 12 | 12 | ||||||
Exchange differences | — | (3 | ) | |||||
Share of profit after tax | 4 | 3 | ||||||
Dividends | (8 | ) | (4 | ) | ||||
Additions and further investment | 3 | 4 | ||||||
At end of year | 11 | 12 | ||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Assets | ||||||||||||
Non-current assets | 3 | 3 | — | |||||||||
Current assets | 26 | 19 | 18 | |||||||||
Liabilities | ||||||||||||
Current liabilities | (17 | ) | (8 | ) | (6 | ) | ||||||
Net assets | 12 | 14 | 12 | |||||||||
Income | 46 | 37 | 33 | |||||||||
Expenses | (47 | ) | (42 | ) | (42 | ) | ||||||
Loss after income tax | (1 | ) | (5 | ) | (9 | ) | ||||||
2007 | 2006 | |||||||
All figures in | ||||||||
£ millions | ||||||||
Assets | ||||||||
Non-current assets | 3 | 3 | ||||||
Current assets | 23 | 24 | ||||||
Liabilities | ||||||||
Current liabilities | (15 | ) | (15 | ) | ||||
Net assets | 11 | 12 | ||||||
Income | 61 | 52 | ||||||
Expenses | (57 | ) | (49 | ) | ||||
Profit after income tax | 4 | 3 | ||||||
F-33
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
At beginning of year | 33 | 52 | 94 | |||||||||
Share of profit after tax | 15 | 15 | 13 | |||||||||
Dividends | (10 | ) | (9 | ) | (8 | ) | ||||||
Loan repayment | — | — | (2 | ) | ||||||||
Additions | — | 1 | — | |||||||||
Disposals | (14 | ) | (24 | ) | (45 | ) | ||||||
Transfer to non-current assets held for sale | — | (2 | ) | — | ||||||||
At end of year | 24 | 33 | 52 | |||||||||
2007 | 2006 | |||||||
All figures in | ||||||||
£ millions | ||||||||
At beginning of year | 8 | 24 | ||||||
Exchange differences | (1 | ) | (1 | ) | ||||
Share of profit after tax | 19 | 21 | ||||||
Dividends | (24 | ) | (41 | ) | ||||
Additions | 1 | — | ||||||
Distribution from associate in excess of carrying value | 6 | 5 | ||||||
At end of year | 9 | 8 | ||||||
F-33
% | ||||||||||||||||||||||||
2005 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 79 | (67 | ) | 105 | 12 | |||||||||||||||||
Other | 42 | (30 | ) | 49 | 3 | |||||||||||||||||||
Total | 121 | (97 | ) | 154 | 15 | |||||||||||||||||||
% | ||||||||||||||||||||||||
2004 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 71 | (62 | ) | 98 | 11 | |||||||||||||||||
Other | 42 | (18 | ) | 192 | 4 | |||||||||||||||||||
Total | 113 | (80 | ) | 290 | 15 | |||||||||||||||||||
% | ||||||||||||||||||||||||
2003 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 103 | (101 | ) | 95 | 9 | |||||||||||||||||
Other | 81 | (31 | ) | 139 | 4 | |||||||||||||||||||
Total | 184 | (132 | ) | 234 | 13 | |||||||||||||||||||
% | ||||||||||||||||||||||||
2007 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 63 | (63 | ) | 131 | 15 | |||||||||||||||||
Other | 30 | (21 | ) | 56 | 4 | |||||||||||||||||||
Total | 93 | (84 | ) | 187 | 19 | |||||||||||||||||||
% | ||||||||||||||||||||||||
2006 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 64 | (64 | ) | 122 | 18 | |||||||||||||||||
Other | 28 | (20 | ) | 48 | 3 | |||||||||||||||||||
Total | 92 | (84 | ) | 170 | 21 | |||||||||||||||||||
Deferred income tax |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Deferred tax assets | ||||||||||||
Deferred tax asset to be recovered after more than 12 months | 343 | 318 | 313 | |||||||||
Deferred tax asset to be recovered within 12 months | 42 | 41 | 29 | |||||||||
385 | 359 | 342 | ||||||||||
Deferred tax liabilities | ||||||||||||
Deferred tax liability to be settled after more than 12 months | (204 | ) | (139 | ) | (140 | ) | ||||||
Deferred tax liability to be settled within 12 months | — | — | — | |||||||||
(204 | ) | (139 | ) | (140 | ) | |||||||
Net deferred tax | 181 | 220 | 202 | |||||||||
2007 | 2006 | |||||||
All figures in | ||||||||
£ millions | ||||||||
Deferred income tax assets | ||||||||
Deferred income tax assets to be recovered after more than 12 months | 262 | 288 | ||||||
Deferred income tax assets to be recovered within 12 months | 66 | 129 | ||||||
328 | 417 | |||||||
Deferred income tax liabilities | ||||||||
Deferred income tax liabilities to be settled after more than 12 months | (287 | ) | (245 | ) | ||||
Deferred income tax liabilities to be settled within 12 months | — | — | ||||||
(287 | ) | (245 | ) | |||||
Net deferred income tax | 41 | 172 | ||||||
F-34
F-34
2005 | 2004 | 2003 | ||||||||||
(All figures in £ | ||||||||||||
millions) | ||||||||||||
At beginning of year | 220 | 202 | 255 | |||||||||
Transition adjustment on adoption of IAS 39 | 5 | — | — | |||||||||
Exchange differences | 21 | (13 | ) | (34 | ) | |||||||
Acquisition through business combination | (21 | ) | — | (15 | ) | |||||||
Transfer between current and deferred taxation | — | 41 | 25 | |||||||||
Income statement charge (note 8) | (47 | ) | (23 | ) | (29 | ) | ||||||
Tax benefit to equity (note 8) | 3 | 4 | — | |||||||||
Transfer to non-current assets held for sale | — | 9 | — | |||||||||
At end of year | 181 | 220 | 202 | |||||||||
Notes | 2007 | 2006 | ||||||||||
All figures in | ||||||||||||
£ millions | ||||||||||||
At beginning of year | 172 | 181 | ||||||||||
Exchange differences | (4 | ) | (16 | ) | ||||||||
Income statement (charge)/benefit | 8 | (87 | ) | 19 | ||||||||
Acquisition through business combination | 30 | (45 | ) | (26 | ) | |||||||
Disposal through business disposal | 32 | 2 | — | |||||||||
Tax benefit to equity | 3 | 14 | ||||||||||
At end of year | 41 | 172 | ||||||||||
Goodwill | ||||||||||||||||
Tax | and | |||||||||||||||
losses | intangibles | Other | Total | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Deferred income tax assets | ||||||||||||||||
At 1 January 2003 | 131 | 57 | 186 | 374 | ||||||||||||
Exchange differences | (16 | ) | (4 | ) | (22 | ) | (42 | ) | ||||||||
Transfer between current and deferred taxation | 25 | — | (17 | ) | 8 | |||||||||||
Income statement (charge)/release | (27 | ) | (7 | ) | 36 | 2 | ||||||||||
At 31 December 2003 | 113 | 46 | 183 | 342 | ||||||||||||
Exchange differences | (10 | ) | (3 | ) | (11 | ) | (24 | ) | ||||||||
Transfer between current and deferred taxation | 41 | — | (11 | ) | 30 | |||||||||||
Income statement release/(charge) | 6 | (6 | ) | 7 | 7 | |||||||||||
Tax benefit to equity | — | — | 4 | 4 | ||||||||||||
At 31 December 2004 | 150 | 37 | 172 | 359 | ||||||||||||
Transition adjustment on adoption of IAS 39 | — | — | 5 | 5 | ||||||||||||
Exchange differences | 16 | 4 | 18 | 38 | ||||||||||||
Acquisition through business combination | — | — | 1 | 1 | ||||||||||||
Transfer between current and deferred taxation | — | — | 23 | 23 | ||||||||||||
Income statement charge | (32 | ) | (6 | ) | (6 | ) | (44 | ) | ||||||||
Tax benefit to equity | — | — | 3 | 3 | ||||||||||||
At 31 December 2005 | 134 | 35 | 216 | 385 | ||||||||||||
Capital | Trading | Goodwill and | Returns | |||||||||||||||||||||
losses | losses | intangibles | provisions | Other | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Deferred income tax asset | ||||||||||||||||||||||||
At 1 January 2006 | — | 134 | 35 | 83 | 133 | 385 | ||||||||||||||||||
Exchange differences | — | (17 | ) | (4 | ) | (10 | ) | (11 | ) | (42 | ) | |||||||||||||
Income statement benefit/(charge) | 76 | 12 | (6 | ) | (7 | ) | (12 | ) | 63 | |||||||||||||||
Tax benefit to equity | — | — | — | — | 11 | 11 | ||||||||||||||||||
At 31 December 2006 | 76 | 129 | 25 | 66 | 121 | 417 | ||||||||||||||||||
Exchange differences | — | (5 | ) | — | (1 | ) | (2 | ) | (8 | ) | ||||||||||||||
Acquisition through business combination | — | 10 | — | — | 1 | 11 | ||||||||||||||||||
Income statement (charge)/benefit | (76 | ) | (47 | ) | (5 | ) | 14 | 19 | (95 | ) | ||||||||||||||
Tax benefit to equity | — | — | — | — | 3 | 3 | ||||||||||||||||||
At 31 December 2007 | — | 87 | 20 | 79 | 142 | 328 | ||||||||||||||||||
F-35
F-35
Goodwill and | ||||||||||||
intangibles | Other | Total | ||||||||||
(All figures in £ millions) | ||||||||||||
Deferred income tax liabilities | ||||||||||||
At 1 January 2003 | (25 | ) | (94 | ) | (119 | ) | ||||||
Exchange differences | — | 8 | 8 | |||||||||
Acquisition through business combination | (15 | ) | — | (15 | ) | |||||||
Transfer between current and deferred taxation | — | 17 | 17 | |||||||||
Income statement charge | (19 | ) | (12 | ) | (31 | ) | ||||||
At 31 December 2003 | (59 | ) | (81 | ) | (140 | ) | ||||||
Exchange differences | 8 | 3 | 11 | |||||||||
Transfer between current and deferred taxation | — | 11 | 11 | |||||||||
Income statement charge | (8 | ) | (22 | ) | (30 | ) | ||||||
Transfer to non-current assets held for sale | — | 9 | 9 | |||||||||
At 31 December 2004 | (59 | ) | (80 | ) | (139 | ) | ||||||
Exchange differences | (8 | ) | (9 | ) | (17 | ) | ||||||
Acquisition through business combination | (24 | ) | 2 | (22 | ) | |||||||
Transfer between current and deferred taxation | — | (23 | ) | (23 | ) | |||||||
Income statement (charge)/release | (26 | ) | 23 | (3 | ) | |||||||
At 31 December 2005 | (117 | ) | (87 | ) | (204 | ) | ||||||
Goodwill and | ||||||||||||
intangibles | Other | Total | ||||||||||
All figures in £ millions | ||||||||||||
Deferred income tax liabilities | ||||||||||||
At 1 January 2006 | (117 | ) | (87 | ) | (204 | ) | ||||||
Exchange differences | 15 | 11 | 26 | |||||||||
Acquisition through business combination | (20 | ) | (6 | ) | (26 | ) | ||||||
Income statement charge | (27 | ) | (17 | ) | (44 | ) | ||||||
Tax benefit to equity | — | 3 | 3 | |||||||||
At 31 December 2006 | (149 | ) | (96 | ) | (245 | ) | ||||||
Exchange differences | 3 | 1 | 4 | |||||||||
Acquisition through business combination | (56 | ) | — | (56 | ) | |||||||
Disposal through business disposal | — | 2 | 2 | |||||||||
Income statement (charge)/benefit | (12 | ) | 20 | 8 | ||||||||
Tax benefit to equity | — | — | — | |||||||||
At 31 December 2007 | (214 | ) | (73 | ) | (287 | ) | ||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ | ||||||||||||
millions) | ||||||||||||
At beginning of year | 15 | 21 | 22 | |||||||||
Exchange differences | 1 | (1 | ) | (3 | ) | |||||||
Additions | 4 | 5 | 3 | |||||||||
Disposals | (2 | ) | (8 | ) | (1 | ) | ||||||
Transfer to non-current assets held for sale | — | (2 | ) | — | ||||||||
At end of year | 18 | 15 | 21 | |||||||||
F-36
2007 | ||||||||||||
Net carrying | ||||||||||||
amount | +1% change | −1% change | ||||||||||
£ millions | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 10 | (24 | ) | 26 | ||||||||
Interest rate derivatives — not in hedge relationship | (1 | ) | 1 | (1 | ) | |||||||
Cross currency rate derivatives — in a net investment hedge relationship | 17 | — | — | |||||||||
Cross currency rate derivatives — not in hedge relationship | 9 | — | — | |||||||||
Total | 35 | (23 | ) | 25 | ||||||||
2006 | ||||||||||||
Net carrying | ||||||||||||
amount | +1% change | −1% change | ||||||||||
£ millions | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 3 | (28 | ) | 31 | ||||||||
Interest rate derivatives — not in hedge relationship | 7 | 1 | (1 | ) | ||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 40 | — | — | |||||||||
Cross currency rate derivatives — not in hedge relationship | 17 | (1 | ) | 1 | ||||||||
Total | 67 | (28 | ) | 31 | ||||||||
F-37
2007 | 2006 | |||||||
£ millions | ||||||||
Fixed rate | 567 | 514 | ||||||
Floating rate | 406 | 545 | ||||||
Total | 973 | 1,059 | ||||||
2007 | 2006 | |||||||
£ millions | ||||||||
Bank debt | 458 | 177 | ||||||
Bonds | 1,150 | 1,566 | ||||||
Total | 1,608 | 1,743 | ||||||
2007 | ||||||||||||||||
Currency | 2006 | |||||||||||||||
As reported | derivatives | Combined | Combined | |||||||||||||
£ millions | ||||||||||||||||
US dollar | 1,251 | 150 | 1,401 | 1,253 | ||||||||||||
Sterling | 357 | (150 | ) | 207 | 206 | |||||||||||
Euro | — | — | — | 284 | ||||||||||||
Total | 1,608 | — | 1,608 | 1,743 | ||||||||||||
F-38
2007 | ||||||||||||||||||||
Impact of 1% | Impact of 1% | Impact of 10% | Impact of 10% | |||||||||||||||||
Carrying | increase in | decrease in | strengthening in | weakening in | ||||||||||||||||
value | interest rates | interest rates | sterling | sterling | ||||||||||||||||
All amounts in £ millions | ||||||||||||||||||||
Investments in unlisted securities | 52 | — | — | (4 | ) | 5 | ||||||||||||||
Cash and cash equivalents | 560 | — | — | (36 | ) | 44 | ||||||||||||||
Marketable securities | 40 | — | — | (3 | ) | 4 | ||||||||||||||
Derivative financial instruments | 35 | (23 | ) | 25 | 11 | (13 | ) | |||||||||||||
Bonds | (1,150 | ) | 24 | (26 | ) | 71 | (87 | ) | ||||||||||||
Other borrowings | (458 | ) | — | — | 42 | (51 | ) | |||||||||||||
Other net financial assets | 408 | — | — | (29 | ) | 35 | ||||||||||||||
Total financial instruments | (513 | ) | 1 | (1 | ) | 52 | (63 | ) | ||||||||||||
F-39
2006 | ||||||||||||||||||||
Impact of 1% | Impact of 1% | Impact of 10% | Impact of 10% | |||||||||||||||||
Carrying | increase in | decrease in | strengthening in | weakening in | ||||||||||||||||
value | interest rates | interest rates | sterling | sterling | ||||||||||||||||
All amounts in £ millions | ||||||||||||||||||||
Investments in unlisted securities | 17 | — | — | (1 | ) | 1 | ||||||||||||||
Cash and cash equivalents | 592 | — | — | (38 | ) | 46 | ||||||||||||||
Marketable securities | 25 | — | — | (2 | ) | 2 | ||||||||||||||
Derivative financial instruments | 67 | (28 | ) | 31 | 8 | (10 | ) | |||||||||||||
Bonds | (1,566 | ) | 28 | (31 | ) | 108 | (132 | ) | ||||||||||||
Other borrowings | (177 | ) | — | — | 16 | (19 | ) | |||||||||||||
Other net financial assets | 425 | — | — | (31 | ) | 38 | ||||||||||||||
Total financial instruments | (617 | ) | — | — | 60 | (74 | ) | |||||||||||||
F-40
2007 | ||||||||||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||||||||
Derivatives | Derivatives | Amortised cost | Total | Total | ||||||||||||||||||||||||||||
Available | deemed held | in hedging | Loans and | Other | carrying | market | ||||||||||||||||||||||||||
Notes | for sale | for trading | relationships | receivables | liabilities | value | value | |||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||
Investments in unlisted securities | 16 | 52 | — | — | — | — | 52 | 52 | ||||||||||||||||||||||||
Marketable securities | 40 | — | — | — | — | 40 | 40 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | 16 | 35 | — | — | 51 | 51 | ||||||||||||||||||||||||
Trade receivables | 20 | — | — | — | 750 | — | 750 | 750 | ||||||||||||||||||||||||
Cash and cash equivalents | 21 | — | — | — | 560 | — | 560 | 560 | ||||||||||||||||||||||||
Total financial assets | 92 | 16 | 35 | 1,310 | — | 1,453 | 1,453 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | (8 | ) | (8 | ) | — | — | (16 | ) | (16 | ) | ||||||||||||||||||||
Trade payables | 24 | — | — | — | — | (342 | ) | (342 | ) | (342 | ) | |||||||||||||||||||||
Bank loans and overdrafts | 22 | — | — | — | — | (444 | ) | (444 | ) | (444 | ) | |||||||||||||||||||||
Borrowings due within one year | 22 | — | — | — | — | (115 | ) | (115 | ) | (112 | ) | |||||||||||||||||||||
Borrowings due after more than one year | 22 | — | — | — | — | (1,049 | ) | (1,049 | ) | (1,046 | ) | |||||||||||||||||||||
Total financial liabilities | — | (8 | ) | (8 | ) | — | (1,950 | ) | (1,966 | ) | (1,960 | ) | ||||||||||||||||||||
F-41
F-36
2006 | ||||||||||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||||||||
Derivatives | Derivatives | Amortised cost | Total | Total | ||||||||||||||||||||||||||||
Available | deemed held | in hedging | Loans and | Other | carrying | market | ||||||||||||||||||||||||||
Notes | for sale | for trading | relationships | receivables | liabilities | value | value | |||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||
Investments in unlisted securities | 16 | 17 | — | — | — | — | 17 | 17 | ||||||||||||||||||||||||
Marketable securities | 25 | — | — | — | — | 25 | 25 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | 25 | 61 | — | — | 86 | 86 | ||||||||||||||||||||||||
Trade receivables | 20 | — | — | — | 768 | — | 768 | 768 | ||||||||||||||||||||||||
Cash and cash equivalents | 21 | — | — | — | 592 | — | 592 | 592 | ||||||||||||||||||||||||
Total financial assets | 42 | 25 | 61 | 1,360 | — | 1,488 | 1,488 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | (2 | ) | (17 | ) | — | — | (19 | ) | (19 | ) | ||||||||||||||||||||
Trade payables | 24 | — | — | — | — | (343 | ) | (343 | ) | (343 | ) | |||||||||||||||||||||
Bank loans and overdrafts | 22 | — | — | — | — | (173 | ) | (173 | ) | (173 | ) | |||||||||||||||||||||
Borrowings due within one year | 22 | — | — | — | — | (422 | ) | (422 | ) | (400 | ) | |||||||||||||||||||||
Borrowings due after more than one year | 22 | — | — | — | — | (1,148 | ) | (1,148 | ) | (1,157 | ) | |||||||||||||||||||||
Total financial liabilities | — | (2 | ) | (17 | ) | — | (2,086 | ) | (2,105 | ) | (2,092 | ) | ||||||||||||||||||||
F-42
2007 | ||||||||||||||||
USD | GBP | EUR | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Not later than one year | 153 | (30 | ) | — | 123 | |||||||||||
Later than one year and not later than five years | 966 | 70 | — | 1,036 | ||||||||||||
Later than five years | 420 | 285 | — | 705 | ||||||||||||
Total | 1,539 | 325 | — | 1,864 | ||||||||||||
Analysed as: | ||||||||||||||||
Revolving credit facilities and commercial paper | 429 | — | — | 429 | ||||||||||||
Bonds | 1,017 | 483 | — | 1,500 | ||||||||||||
Rate derivatives — inflows | (268 | ) | (160 | ) | — | (428 | ) | |||||||||
Rate derivatives — outflows | 361 | 2 | — | 363 | ||||||||||||
Total | 1,539 | 325 | — | 1,864 | ||||||||||||
2006 | ||||||||||||||||
USD | GBP | EUR | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Not later than one year | 166 | 18 | 265 | 449 | ||||||||||||
Later than one year and not later than five years | 758 | 60 | — | 818 | ||||||||||||
Later than five years | 478 | 242 | — | 720 | ||||||||||||
Total | 1,402 | 320 | 265 | 1,987 | ||||||||||||
Analysed as: | ||||||||||||||||
Revolving credit facilities and commercial paper | 99 | — | — | 99 | ||||||||||||
Bonds | 1,045 | 511 | 423 | 1,979 | ||||||||||||
Rate derivatives — inflows | (318 | ) | (329 | ) | (192 | ) | (839 | ) | ||||||||
Rate derivatives — outflows | 576 | 138 | 34 | 748 | ||||||||||||
Total | 1,402 | 320 | 265 | 1,987 | ||||||||||||
Other financial assets |
Notes | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
At beginning of year | 17 | 18 | ||||||||||
Exchange differences | — | (1 | ) | |||||||||
Equity interest received on sale of Government Solutions | 32 | 35 | — | |||||||||
At end of year | 52 | 17 | ||||||||||
F-43
17. | Derivative financial instruments |
2005 | 2005 | |||||||
Assets | Liabilities | |||||||
(All figures in £ | ||||||||
millions) | ||||||||
Interest rate derivatives — in a fair value hedging relationship | 31 | (16 | ) | |||||
Interest rate derivatives — not in a hedging relationship | 18 | (6 | ) | |||||
Cross currency rate derivatives — in a net investment hedging relationship | 13 | — | ||||||
Cross currency rate derivatives — not in a hedging relationship | 21 | — | ||||||
83 | (22 | ) | ||||||
Analysed as: | ||||||||
Non-current | 79 | (22 | ) | |||||
Current (expiring in less than 1 year) | 4 | — | ||||||
83 | (22 | ) | ||||||
2007 | 2006 | |||||||||||||||||||||||
Gross notional | Gross notional | |||||||||||||||||||||||
amounts | Assets | Liabilities | amounts | Assets | Liabilities | |||||||||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 522 | 18 | (8 | ) | 953 | 20 | (17 | ) | ||||||||||||||||
Interest rate derivatives — not in a hedge relationship | 796 | 7 | (8 | ) | 1,026 | 9 | (2 | ) | ||||||||||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 100 | 17 | — | 230 | 40 | — | ||||||||||||||||||
Cross currency rate derivatives — not in a hedge relationship | 50 | 9 | — | 180 | 17 | — | ||||||||||||||||||
Total | 1,468 | 51 | (16 | ) | 2,389 | 86 | (19 | ) | ||||||||||||||||
Analysed as expiring: | ||||||||||||||||||||||||
In less than one year | 320 | 28 | — | 976 | 50 | — | ||||||||||||||||||
Later than one year and not later than five years | 796 | 13 | (8 | ) | 1,005 | 26 | (4 | ) | ||||||||||||||||
Later than five years | 352 | 10 | (8 | ) | 408 | 10 | (15 | ) | ||||||||||||||||
Total | 1,468 | 51 | (16 | ) | 2,389 | 86 | (19 | ) | ||||||||||||||||
F-44
F-37
Intangible assets — |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Cost | ||||||||||||
At beginning of year | 1,109 | 1,104 | 1,189 | |||||||||
Exchange differences | 112 | (63 | ) | (90 | ) | |||||||
Acquisition through business combination | 27 | — | — | |||||||||
Additions | 222 | 181 | 173 | |||||||||
Disposals | (113 | ) | (113 | ) | (168 | ) | ||||||
At end of year | 1,357 | 1,109 | 1,104 | |||||||||
Amortisation | ||||||||||||
At beginning of year | (753 | ) | (742 | ) | (809 | ) | ||||||
Exchange differences | (87 | ) | 44 | 57 | ||||||||
Acquisition through business combination | (12 | ) | — | — | ||||||||
Charge for the year | (192 | ) | (168 | ) | (158 | ) | ||||||
Disposals | 113 | 113 | 168 | |||||||||
At end of year | (931 | ) | (753 | ) | (742 | ) | ||||||
Carrying amounts | ||||||||||||
At end of year | 426 | 356 | 362 | |||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Cost | ||||||||
At beginning of year | 1,152 | 1,357 | ||||||
Exchange differences | (7 | ) | (148 | ) | ||||
Transfers | — | 6 | ||||||
Additions | 230 | 213 | ||||||
Disposals | (125 | ) | (280 | ) | ||||
Acquisition through business combination | 19 | 4 | ||||||
Transfer to non-current assets held for sale | (5 | ) | — | |||||
At end of year | 1,264 | 1,152 | ||||||
Amortisation | ||||||||
At beginning of year | (750 | ) | (931 | ) | ||||
Exchange differences | 1 | 111 | ||||||
Charge for the year | (192 | ) | (210 | ) | ||||
Disposals | 125 | 280 | ||||||
Acquisition through business combination | (1 | ) | — | |||||
Transfer to non-current assets held for sale | 3 | — | ||||||
At end of year | (814 | ) | (750 | ) | ||||
Carrying amounts | ||||||||
At end of year | 450 | 402 | ||||||
Inventories |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Raw materials | 23 | 23 | 19 | |||||||||
Work in progress | 43 | 35 | 30 | |||||||||
Finished goods | 307 | 256 | 270 | |||||||||
373 | 314 | 319 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Raw materials | 24 | 26 | ||||||
Work in progress | 30 | 28 | ||||||
Finished goods | 314 | 300 | ||||||
368 | 354 | |||||||
F-45
F-38
Trade and other receivables |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Current | ||||||||||||
Trade receivables | 825 | 725 | 814 | |||||||||
Royalty advances | 124 | 114 | 110 | |||||||||
Prepayments and accrued income | 38 | 41 | 38 | |||||||||
Other receivables | 42 | 51 | 62 | |||||||||
Receivables from related parties | 2 | 2 | 1 | |||||||||
1,031 | 933 | 1,025 | ||||||||||
Non-current | ||||||||||||
Royalty advances | 67 | 70 | 83 | |||||||||
Prepayments and accrued income | 4 | 1 | 1 | |||||||||
Other receivables | 37 | 31 | 16 | |||||||||
108 | 102 | 100 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Current | ||||||||
Trade receivables | 750 | 768 | ||||||
Royalty advances | 84 | 91 | ||||||
Prepayments and accrued income | 48 | 34 | ||||||
Other receivables | 59 | 58 | ||||||
Receivables from related parties | 5 | 2 | ||||||
946 | 953 | |||||||
Non-current | ||||||||
Royalty advances | 68 | 80 | ||||||
Prepayments and accrued income | 4 | 4 | ||||||
Other receivables | 57 | 40 | ||||||
129 | 124 | |||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
At beginning of year | (46 | ) | (45 | ) | ||||
Exchange differences | (1 | ) | 3 | |||||
Income statement movements | (19 | ) | (23 | ) | ||||
Utilised | 15 | 21 | ||||||
Acquisition through business combination | (3 | ) | (2 | ) | ||||
Disposal through business disposal | 2 | — | ||||||
At end of year | (52 | ) | (46 | ) | ||||
F-46
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Within due date | 811 | 810 | ||||||
Up to three months past due date | 161 | 177 | ||||||
Three to six months past due date | 43 | 62 | ||||||
Six to nine months past due date | 7 | 6 | ||||||
Nine to 12 months past due date | 13 | 8 | ||||||
More that 12 months past due date | 4 | 1 | ||||||
Total trade receivables | 1,039 | 1,064 | ||||||
Less: provision for sales returns | (281 | ) | (243 | ) | ||||
Transfer to non-current assets held for sale | (8 | ) | (53 | ) | ||||
Net trade receivables | 750 | 768 | ||||||
Cash and cash equivalents (excluding overdrafts) |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Cash at bank and in hand | 393 | 338 | 302 | |||||||||
Short-term bank deposits | 509 | 123 | 249 | |||||||||
902 | 461 | 551 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Cash at bank and in hand | 439 | 421 | ||||||
Short-term bank deposits | 121 | 171 | ||||||
560 | 592 | |||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Cash and cash equivalents | 902 | 461 | 551 | |||||||||
Cash and cash equivalents included in assets classified as held for sale | — | 141 | — | |||||||||
Bank overdrafts | (58 | ) | (58 | ) | (23 | ) | ||||||
844 | 544 | 528 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Cash and cash equivalents | 560 | 592 | ||||||
Bank overdrafts | (68 | ) | (61 | ) | ||||
492 | 531 | |||||||
F-47
F-39
Financial liabilities — Borrowings |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Non-current | ||||||||||||
Bank borrowings | — | 62 | 85 | |||||||||
7.375% US Dollar notes 2006 (nominal amount $250m) | — | 130 | 139 | |||||||||
6.125% Euro Bonds 2007 (nominal amount€591m) | 436 | 390 | 343 | |||||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | 107 | 100 | 100 | |||||||||
4.7% US Dollar Bonds 2009 (nominal amount $350m) | 203 | 181 | — | |||||||||
7% Global Dollar Bonds 2011 (nominal amount $500m) | 307 | 260 | 278 | |||||||||
7% Sterling Bonds 2014 (nominal amount £250m) | 250 | 226 | 235 | |||||||||
5.7% US Dollar Bonds 2014 (nominal amount $400m) | 238 | 207 | — | |||||||||
4.625% US Dollar notes 2018 (nominal amount $300m) | 161 | 156 | 167 | |||||||||
Finance lease liabilities | 1 | 2 | 2 | |||||||||
1,703 | 1,714 | 1,349 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Non-current | ||||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | — | 105 | ||||||
4.7% US Dollar Bonds 2009 (nominal amount $350m) | 176 | 178 | ||||||
7% Global Dollar Bonds 2011 (nominal amount $500m) | 264 | 266 | ||||||
7% Sterling Bonds 2014 (nominal amount £250m) | 251 | 251 | ||||||
5.7% US Dollar Bonds 2014 (nominal amount $400m) | 211 | 206 | ||||||
4.625% US Dollar notes 2018 (nominal amount $300m) | 143 | 139 | ||||||
Finance lease liabilities | 4 | 3 | ||||||
1,049 | 1,148 | |||||||
Current | ||||||||
Due within one year or on demand: | ||||||||
Bank loans and overdrafts | 444 | 173 | ||||||
6.125% Euro Bonds 2007 (nominal amount €591m) | — | 421 | ||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | 105 | — | ||||||
Loan notes | 8 | — | ||||||
Finance lease liabilities | 2 | 1 | ||||||
559 | 595 | |||||||
Total borrowings | 1,608 | 1,743 | ||||||
Current | ||||||||||||
Due within one year or on demand: | ||||||||||||
Bank loans and overdrafts | 102 | 107 | 119 | |||||||||
7.375% US Dollar notes 2006 | 152 | — | — | |||||||||
9.5% Sterling Bonds 2004 | — | — | 108 | |||||||||
4.625% Euro Bonds 2004 | — | — | 348 | |||||||||
Finance lease liabilities | 2 | 2 | 3 | |||||||||
256 | 109 | 578 | ||||||||||
Total borrowings | 1,959 | 1,823 | 1,927 | |||||||||
F-40
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Between one and two years | 437 | 131 | 86 | |||||||||
Between two and five years | 310 | 734 | 583 | |||||||||
Over five years | 956 | 849 | 680 | |||||||||
1,703 | 1,714 | 1,349 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Between one and two years | 178 | 107 | ||||||
Between two and five years | 266 | 445 | ||||||
Over five years | 605 | 596 | ||||||
1,049 | 1,148 | |||||||
One to | More than | |||||||||||||||
Total | One year | five years | five years | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Carrying value of borrowings | 1,959 | 256 | 747 | 956 | ||||||||||||
Effect of interest rate swaps | — | 1,161 | (473 | ) | (688 | ) | ||||||||||
1,959 | 1,417 | 274 | 268 | |||||||||||||
Less than | One to | More than | ||||||||||||||
one year | five years | five years | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Carrying value of borrowings | 559 | 444 | 605 | 1,608 | ||||||||||||
Effect of rate derivatives | 359 | (7 | ) | (352 | ) | — | ||||||||||
918 | 437 | 253 | 1,608 | |||||||||||||
F-48
Carrying | Carrying | Carrying | ||||||||||||||||||||||||||
Effective | amount | Fair value | amount | Fair value | amount | Fair value | ||||||||||||||||||||||
interest Rate | 2005 | 2005 | 2004 | 2004 | 2003 | 2003 | ||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||
Bank borrowings | n/a | — | — | 62 | 62 | 85 | 85 | |||||||||||||||||||||
7.375% US Dollar notes 2006 | 7.75 | % | — | — | 130 | 138 | 139 | 157 | ||||||||||||||||||||
6.125% Euro Bonds 2007 | 6.18 | % | 436 | 419 | 390 | 409 | 343 | 448 | ||||||||||||||||||||
10.5% Sterling Bonds 2008 | 10.53 | % | 107 | 113 | 100 | 116 | 100 | 120 | ||||||||||||||||||||
4.7% US Dollar Bonds 2009 | 4.86 | % | 203 | 200 | 181 | 185 | — | — | ||||||||||||||||||||
7% Global Dollar Bonds 2011 | 7.16 | % | 307 | 310 | 260 | 293 | 278 | 317 | ||||||||||||||||||||
7% Sterling Bonds 2014 | 7.20 | % | 250 | 282 | 226 | 255 | 235 | 275 | ||||||||||||||||||||
5.7% US Dollar Bonds 2014 | 5.88 | % | 238 | 234 | 207 | 217 | — | — | ||||||||||||||||||||
4.625% US Dollar notes 2018 | 4.69 | % | 161 | 155 | 156 | 142 | 167 | 151 | ||||||||||||||||||||
Finance lease liabilities | n/a | 1 | 1 | 2 | 2 | 2 | 2 | |||||||||||||||||||||
1,703 | 1,714 | 1,714 | 1,819 | 1,349 | 1,555 | |||||||||||||||||||||||
Carrying | Carrying | |||||||||||||||||||
Effective | amount | Market value | amount | Market value | ||||||||||||||||
interest rate | 2007 | 2007 | 2006 | 2006 | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
10.5% Sterling Bonds 2008 | 10.53 | % | — | — | 105 | 106 | ||||||||||||||
4.7% US Dollar Bonds 2009 | 4.86 | % | 176 | 176 | 178 | 176 | ||||||||||||||
7% Global Dollar Bonds 2011 | 7.16 | % | 264 | 267 | 266 | 269 | ||||||||||||||
7% Sterling Bonds 2014 | 7.20 | % | 251 | 261 | 251 | 265 | ||||||||||||||
5.7% US Dollar Bonds 2014 | 5.88 | % | 211 | 203 | 206 | 203 | ||||||||||||||
4.625% US Dollar notes 2018 | 4.69 | % | 143 | 135 | 139 | 135 | ||||||||||||||
Finance lease liabilities | n/a | 4 | 4 | 3 | 3 | |||||||||||||||
1,049 | 1,046 | 1,148 | 1,157 | |||||||||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
US dollar | 1,165 | 1,335 | 1,432 | |||||||||
Sterling | 357 | 202 | 201 | |||||||||
Euro | 437 | 284 | 292 | |||||||||
Other currencies | — | 2 | 2 | |||||||||
1,959 | 1,823 | 1,927 | ||||||||||
F-41
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
US dollar | 1,251 | 966 | ||||||
Sterling | 357 | 356 | ||||||
Euro | — | 421 | ||||||
1,608 | 1,743 | |||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Finance lease liabilities — minimum lease payments | ||||||||||||
Not later than one year | 2 | 2 | 3 | |||||||||
Later than one year and not later than five years | 1 | 2 | 3 | |||||||||
Later than five years | — | — | — | |||||||||
Future finance charges on finance leases | — | — | (1 | ) | ||||||||
Present value of finance lease liabilities | 3 | 4 | 5 |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Not later than one year | 2 | 2 | 3 | |||||||||
Later than one year and not later than five years | 1 | 2 | 2 | |||||||||
Later than five years | — | — | — | |||||||||
3 | 4 | 5 | ||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Floating rate | ||||||||||||
— expiring within one year | — | — | — | |||||||||
— expiring beyond one year | 786 | 641 | 950 | |||||||||
786 | 641 | 950 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Floating rate | ||||||||
— expiring within one year | — | — | ||||||
— expiring beyond one year | 1,007 | 894 | ||||||
1,007 | 894 | |||||||
F-49
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Finance lease liabilities — minimum lease payments | ||||||||
Not later than one year | 2 | 1 | ||||||
Later than one year and not later than two years | 2 | 3 | ||||||
Later than two years and not later than three years | 1 | — | ||||||
Later than three years and not later than four years | 1 | — | ||||||
Later than four years and not later than five years | — | — | ||||||
Later than five years | — | — | ||||||
Future finance charges on finance leases | — | — | ||||||
Present value of finance lease liabilities | 6 | 4 | ||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Not later than one year | 2 | 1 | ||||||
Later than one year and not later than five years | 4 | 3 | ||||||
Later than five years | — | — | ||||||
6 | 4 | |||||||
Provisions for other liabilities and charges |
Deferred | Re- | |||||||||||||||||||||||
consideration | Integration | organisations | Leases | Other | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
At 1 January 2005 | 20 | 5 | 11 | 14 | 7 | 57 | ||||||||||||||||||
Exchange differences | 2 | — | 1 | 1 | — | 4 | ||||||||||||||||||
Charged to consolidated income statement | ||||||||||||||||||||||||
— Additional provisions | — | — | — | 1 | 13 | 14 | ||||||||||||||||||
— Unused amounts reversed | — | — | (1 | ) | (3 | ) | (1 | ) | (5 | ) | ||||||||||||||
On acquisition/disposal | 5 | — | — | — | — | 5 | ||||||||||||||||||
Utilised during year | (1 | ) | (2 | ) | (6 | ) | (1 | ) | (1 | ) | (11 | ) | ||||||||||||
At 31 December 2005 | 26 | 3 | 5 | 12 | 18 | 64 | ||||||||||||||||||
Deferred | ||||||||||||||||
consideration | Leases | Other | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
At 1 January 2007 | 25 | 12 | 15 | 52 | ||||||||||||
Exchange differences | (1 | ) | — | (1 | ) | (2 | ) | |||||||||
Charged to consolidated income statement | ||||||||||||||||
— Additional provisions: interest | 2 | — | — | 2 | ||||||||||||
— Additional provisions: prior year adjustments | 3 | — | — | 3 | ||||||||||||
— Additional provisions: other | — | — | 12 | 12 | ||||||||||||
— Unused amounts reversed | — | (1 | ) | (1 | ) | (2 | ) | |||||||||
Acquisition through business combination | 12 | — | 2 | 14 | ||||||||||||
Disposal through business disposal | — | — | (1 | ) | (1 | ) | ||||||||||
Utilised | (4 | ) | (2 | ) | (5 | ) | (11 | ) | ||||||||
At 31 December 2007 | 37 | 9 | 21 | 67 | ||||||||||||
F-50
F-42
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Analysis of provisions | ||||||||||||
Non-current | 31 | 43 | 59 | |||||||||
Current | 33 | 14 | 18 | |||||||||
64 | 57 | 77 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Analysis of provisions | ||||||||
Non-current | 44 | 29 | ||||||
Current | 23 | 23 | ||||||
67 | 52 | |||||||
Trade and other liabilities |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Trade payables | 348 | 316 | 405 | |||||||||
Social security and other taxes | 21 | 14 | 4 | |||||||||
Accruals and deferred income | 600 | 509 | 465 | |||||||||
Other liabilities | 156 | 128 | 139 | |||||||||
1,125 | 967 | 1,013 | ||||||||||
Less: non-current portion | ||||||||||||
Accruals and deferred income | 66 | 21 | 9 | |||||||||
Other liabilities | 85 | 78 | 61 | |||||||||
151 | 99 | 70 | ||||||||||
Current portion | 974 | 868 | 943 | |||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Trade payables | 342 | 343 | ||||||
Social security and other taxes | 23 | 18 | ||||||
Accruals | 402 | 345 | ||||||
Deferred income | 290 | 276 | ||||||
Dividends payable to minority | 12 | — | ||||||
Other liabilities | 171 | 178 | ||||||
1,240 | 1,160 | |||||||
Less: non-current portion | ||||||||
Accruals | 30 | 24 | ||||||
Deferred income | 58 | 47 | ||||||
Other liabilities | 102 | 91 | ||||||
190 | 162 | |||||||
Current portion | 1,050 | 998 | ||||||
• | multi-year obligations to deliver workbooks to adoption customers in school businesses; | |
• | advance payments in contracting businesses; | |
• | subscription income in school, newspaper and market pricing businesses; | |
• | advertising income relating to future publishing days in newspaper businesses; and | |
• | obligations to deliver digital content in future periods. |
F-51
F-43
2005 | 2005 | 2004 | 2004 | 2003 | 2003 | |||||||||||||||||||
UK Group | Other | UK Group | Other | UK Group | Other | |||||||||||||||||||
% | scheme | schemes | scheme | schemes | scheme | schemes | ||||||||||||||||||
Inflation | 2.80 | 2.95 | 2.80 | 2.98 | 2.75 | 2.98 | ||||||||||||||||||
Expected rate of increase in salaries | 4.50 | 4.43 | 4.80 | 4.44 | 4.75 | 4.45 | ||||||||||||||||||
Expected rate of increase for pensions in payment and deferred pensions | 2.50 to 4.00 | — | 2.80 to 4.00 | — | 2.75 to 4.00 | — | ||||||||||||||||||
Rate used to discount scheme liabilities | 4.85 | 5.54 | 5.40 | 5.84 | 5.50 | 6.11 | ||||||||||||||||||
Expected return on assets | 6.40 | 7.31 | 6.60 | 7.23 | 6.81 | 7.75 | ||||||||||||||||||
Defined | ||||||||||||||||||||
UK Group | benefit | Defined | 2005 | |||||||||||||||||
scheme | other | Sub Total | contribution | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Current service cost | (25 | ) | (2 | ) | (27 | ) | (35 | ) | (62 | ) | ||||||||||
Past service cost | — | — | — | — | — | |||||||||||||||
Curtailments | — | 2 | 2 | — | 2 | |||||||||||||||
Total operating charge | (25 | ) | — | (25 | ) | (35 | ) | (60 | ) | |||||||||||
Expected return on plan assets | 75 | 6 | 81 | — | 81 | |||||||||||||||
Interest on pension scheme liabilities | (79 | ) | (6 | ) | (85 | ) | — | (85 | ) | |||||||||||
Net finance charge | (4 | ) | — | (4 | ) | — | (4 | ) | ||||||||||||
Net income statement charge | (29 | ) | — | (29 | ) | (35 | ) | (64 | ) | |||||||||||
Actual return on plan assets | 214 | 7 | 221 | — | 221 | |||||||||||||||
Defined | ||||||||||||||||||||
UK Group | benefit | Defined | 2004 | |||||||||||||||||
scheme | other | Sub Total | contribution | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Current service cost | (22 | ) | (2 | ) | (24 | ) | (32 | ) | (56 | ) | ||||||||||
Past service cost | — | — | — | — | — | |||||||||||||||
Total operating charge | (22 | ) | (2 | ) | (24 | ) | (32 | ) | (56 | ) | ||||||||||
Expected return on plan assets | 71 | 6 | 77 | — | 77 | |||||||||||||||
Interest on pension scheme liabilities | (72 | ) | (6 | ) | (78 | ) | — | (78 | ) | |||||||||||
Net finance charge | (1 | ) | — | (1 | ) | — | (1 | ) | ||||||||||||
Net income statement charge | (23 | ) | (2 | ) | (25 | ) | (32 | ) | (57 | ) | ||||||||||
Actual return on plan assets | 135 | 9 | 144 | — | 144 | |||||||||||||||
F-44
Defined | ||||||||||||||||||||
UK Group | benefit | Sub | Defined | 2003 | ||||||||||||||||
scheme | other | Total | contribution | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Current service cost | (21 | ) | (2 | ) | (23 | ) | (28 | ) | (51 | ) | ||||||||||
Past service cost | — | — | — | — | — | |||||||||||||||
Total operating charge | (21 | ) | (2 | ) | (23 | ) | (28 | ) | (51 | ) | ||||||||||
Expected return on plan assets | 65 | 4 | 69 | — | 69 | |||||||||||||||
Interest on pension scheme liabilities | (67 | ) | (7 | ) | (74 | ) | — | (74 | ) | |||||||||||
Net finance charge | (2 | ) | (3 | ) | (5 | ) | — | (5 | ) | |||||||||||
Net income statement charge | (23 | ) | (5 | ) | (28 | ) | (28 | ) | (56 | ) | ||||||||||
Actual return on plan assets | 145 | 12 | 157 | — | 157 | |||||||||||||||
2005 | 2005 | 2005 | 2004 | 2004 | 2004 | 2003 | 2003 | 2003 | ||||||||||||||||||||||||||||||||||||||||
UK | Other | Other | UK | Other | Other | UK | Other | Other | ||||||||||||||||||||||||||||||||||||||||
Group | funded | unfunded | 2005 | Group | funded | unfunded | 2004 | Group | funded | unfunded | 2003 | |||||||||||||||||||||||||||||||||||||
scheme | plans | plans | Total | scheme | plans | plans | Total | scheme | plans | plans | Total | |||||||||||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of plan assets | 1,390 | 110 | — | 1,500 | 1,198 | 82 | — | 1,280 | 1,089 | 75 | — | 1,164 | ||||||||||||||||||||||||||||||||||||
Present value of plan liabilities | (1,661 | ) | (131 | ) | (11 | ) | (1,803 | ) | (1,502 | ) | (104 | ) | (9 | ) | (1,615 | ) | (1,340 | ) | (105 | ) | (9 | ) | (1,454 | ) | ||||||||||||||||||||||||
Net pension liability | (271 | ) | (21 | ) | (11 | ) | (303 | ) | (304 | ) | (22 | ) | (9 | ) | (335 | ) | (251 | ) | (30 | ) | (9 | ) | (290 | ) | ||||||||||||||||||||||||
Other post-retirement medical benefit obligation | (60 | ) | (58 | ) | (61 | ) | ||||||||||||||||||||||||||||||||||||||||||
Other pension accruals | (26 | ) | (15 | ) | (13 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total retirement benefit obligations | (389 | ) | (408 | ) | (364 | ) | ||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
UK Group | Other | UK Group | Other | UK Group | Other | |||||||||||||||||||||||||||||||
plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB | ||||||||||||||||||||||||||||
% | ||||||||||||||||||||||||||||||||||||
Inflation | 3.30 | 2.93 | 3.00 | 3.00 | 2.91 | 3.00 | 2.80 | 2.95 | 3.00 | |||||||||||||||||||||||||||
Rate used to discount plan liabilities | 5.80 | 6.01 | 6.05 | 5.20 | 5.70 | 5.85 | 4.85 | 5.54 | 5.60 | |||||||||||||||||||||||||||
Expected return on assets | 6.50 | 7.27 | — | 6.40 | 7.18 | — | 6.40 | 7.31 | — | |||||||||||||||||||||||||||
Expected rate of increase in salaries | 5.00 | 4.36 | — | 4.70 | 4.37 | — | 4.50 | 4.43 | — | |||||||||||||||||||||||||||
Expected rate of increase for pensions in payment and deferred pensions | 2.50 to 4.30 | — | — | 2.10 to 4.60 | — | — | 2.50 to 4.00 | — | — | |||||||||||||||||||||||||||
Initial rate of increase in healthcare rate | — | — | 9.50 | — | — | 10.00 | — | — | 10.00 | |||||||||||||||||||||||||||
Ultimate rate of increase in healthcare rate | — | — | 5.00 | — | — | 5.00 | — | — | 5.00 | |||||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in | ||||||||||||
£ millions) | ||||||||||||
Amounts recognised for defined benefit schemes | 21 | (60 | ) | (25 | ) | |||||||
Amounts recognised on post-retirement medical benefit schemes | 5 | (1 | ) | (3 | ) | |||||||
Total recognised in year | 26 | (61 | ) | (28 | ) | |||||||
Cumulative amounts recognised | (63 | ) | (89 | ) | (28 | ) | ||||||
2005 | 2005 | 2004 | 2004 | 2003 | 2003 | |||||||||||||||||||||||||||||||
UK | Other | UK | Other | UK | Other | |||||||||||||||||||||||||||||||
group | funded | 2005 | Group | funded | 2004 | Group | funded | 2003 | ||||||||||||||||||||||||||||
% | scheme | plans | Total | scheme | plans | Total | scheme | plans | Total | |||||||||||||||||||||||||||
Equities | 47.4 | 4.3 | 51.7 | 49.7 | 4.2 | 53.9 | 50.5 | 4.2 | 54.7 | |||||||||||||||||||||||||||
Bonds | 24.7 | 2.0 | 26.7 | 21.5 | 2.1 | 23.6 | 22.5 | 2.1 | 24.6 | |||||||||||||||||||||||||||
Properties | 8.9 | — | 8.9 | 8.9 | — | 8.9 | 9.2 | — | 9.2 | |||||||||||||||||||||||||||
Other | 11.7 | 1.0 | 12.7 | 13.5 | 0.1 | 13.6 | 11.4 | 0.1 | 11.5 |
F-45
2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
UK Group | 2005 | 2005 | UK Group | 2004 | 2004 | UK Group | 2003 | 2003 | ||||||||||||||||||||||||||||
scheme | Other | Total | scheme | Other | Total | scheme | Other | Total | ||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||
Fair value of assets | ||||||||||||||||||||||||||||||||||||
Opening fair value of plan assets | 1,198 | 82 | 1,280 | 1,089 | 75 | 1,164 | 974 | 57 | 1,031 | |||||||||||||||||||||||||||
Exchange differences | — | 9 | 9 | — | (5 | ) | (5 | ) | — | (5 | ) | (5 | ) | |||||||||||||||||||||||
Expected return on plan assets | 75 | 6 | 81 | 71 | 6 | 77 | 65 | 4 | 69 | |||||||||||||||||||||||||||
Actuarial gains and losses | 139 | 1 | 140 | 64 | 3 | 67 | 80 | 8 | 88 | |||||||||||||||||||||||||||
Contributions by employer | 35 | 10 | 45 | 30 | 9 | 39 | 24 | 9 | 33 | |||||||||||||||||||||||||||
Contributions by employee | 6 | — | 6 | 6 | — | 6 | 6 | — | 6 | |||||||||||||||||||||||||||
Benefits paid | (63 | ) | (6 | ) | (69 | ) | (62 | ) | (6 | ) | (68 | ) | (60 | ) | (6 | ) | (66 | ) | ||||||||||||||||||
Acquisition through business combination | — | 8 | 8 | — | — | — | — | 8 | 8 | |||||||||||||||||||||||||||
Closing fair value of plan assets | 1,390 | 110 | 1,500 | 1,198 | 82 | 1,280 | 1,089 | 75 | 1,164 | |||||||||||||||||||||||||||
Present value of defined benefit obligation | ||||||||||||||||||||||||||||||||||||
Opening defined benefit obligation | (1,502 | ) | (113 | ) | (1,615 | ) | (1,340 | ) | (114 | ) | (1,454 | ) | (1,207 | ) | (96 | ) | (1,303 | ) | ||||||||||||||||||
Exchange differences | — | (12 | ) | (12 | ) | — | 6 | 6 | — | 9 | 9 | |||||||||||||||||||||||||
Current service cost | (25 | ) | (2 | ) | (27 | ) | (22 | ) | (2 | ) | (24 | ) | (21 | ) | (2 | ) | (23 | ) | ||||||||||||||||||
Curtailment | — | 2 | 2 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Interest cost | (79 | ) | (6 | ) | (85 | ) | (72 | ) | (6 | ) | (78 | ) | (67 | ) | (7 | ) | (74 | ) | ||||||||||||||||||
Contributions by employee | (6 | ) | — | (6 | ) | (6 | ) | — | (6 | ) | (6 | ) | — | (6 | ) | |||||||||||||||||||||
Acquisition through business combination | — | (10 | ) | (10 | ) | — | — | — | — | (10 | ) | (10 | ) | |||||||||||||||||||||||
Benefits paid | 63 | 6 | 69 | 62 | 6 | 68 | 60 | 6 | 66 | |||||||||||||||||||||||||||
Actuarial gains and losses | (112 | ) | (7 | ) | (119 | ) | (124 | ) | (3 | ) | (127 | ) | (99 | ) | (14 | ) | (113 | ) | ||||||||||||||||||
Closing defined benefit obligation | (1,661 | ) | (142 | ) | (1,803 | ) | (1,502 | ) | (113 | ) | (1,615 | ) | (1,340 | ) | (114 | ) | (1,454 | ) | ||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Present value of defined benefit obligation | (1,803 | ) | (1,615 | ) | (1,454 | ) | ||||||
Fair value of plan assets | 1,500 | 1,280 | 1,164 | |||||||||
Net pension liability | (303 | ) | (335 | ) | (290 | ) | ||||||
Experience adjustments on plan liabilities | (119 | ) | (127 | ) | (113 | ) | ||||||
Experience adjustments on plan assets | 140 | 67 | 88 | |||||||||
F-46
F-52
UK | US | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Male | 21.3 | 20.9 | 17.9 | 17.9 | ||||||||||||
Female | 21.6 | 21.3 | 21.3 | 21.3 |
% | 2005 | 2004 | 2003 | |||||||||
Inflation | 3.0 | 3.0 | 3.0 | |||||||||
Initial rate of increase in healthcare rates | 10.0 | 12.0 | 12.0 | |||||||||
Ultimate rate of increase in healthcare rates | 5.0 | 5.0 | 5.0 | |||||||||
Rate used to discount scheme liabilities | 5.6 | 6.1 | 6.1 |
UK | US | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Male | 23.1 | 22.2 | 17.9 | 17.9 | ||||||||||||
Female | 23.6 | 22.5 | 21.3 | 21.3 |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Current service cost | (1 | ) | (1 | ) | (1 | ) | ||||||
Interest cost | (3 | ) | (4 | ) | (4 | ) | ||||||
Net income statement charge | (4 | ) | (5 | ) | (5 | ) | ||||||
2007 | ||||||||||||||||||||||||
Defined | ||||||||||||||||||||||||
UK Group | benefit | Defined | ||||||||||||||||||||||
plan | other | Sub total | contribution | PRMB | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Current service cost | 29 | 2 | 31 | 39 | 1 | 71 | ||||||||||||||||||
Total operating expense | 29 | 2 | 31 | 39 | 1 | 71 | ||||||||||||||||||
Expected return on plan assets | (96 | ) | (7 | ) | (103 | ) | — | — | (103 | ) | ||||||||||||||
Interest on plan liabilities | 84 | 7 | 91 | — | 2 | 93 | ||||||||||||||||||
Net finance (income)/expense | (12 | ) | — | (12 | ) | — | 2 | (10 | ) | |||||||||||||||
Net income statement charge | 17 | 2 | 19 | 39 | 3 | 61 | ||||||||||||||||||
Actual return on plan assets | 128 | 4 | 132 | — | — | 132 | ||||||||||||||||||
2006 | ||||||||||||||||||||||||
Defined | ||||||||||||||||||||||||
UK Group | benefit | Defined | ||||||||||||||||||||||
plan | other | Sub total | contribution | PRMB | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Current service cost | 27 | 2 | 29 | 36 | 1 | 66 | ||||||||||||||||||
Past service cost | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||
Total operating expense/(income) | 27 | 2 | 29 | 36 | (1 | ) | 64 | |||||||||||||||||
Expected return on plan assets | (85 | ) | (7 | ) | (92 | ) | — | — | (92 | ) | ||||||||||||||
Interest on plan liabilities | 78 | 7 | 85 | — | 3 | 88 | ||||||||||||||||||
Net finance (income)/expense | (7 | ) | — | (7 | ) | — | 3 | (4 | ) | |||||||||||||||
Net income statement charge | 20 | 2 | 22 | 36 | 2 | 60 | ||||||||||||||||||
Actual return on plan assets | 153 | 13 | 166 | — | — | 166 | ||||||||||||||||||
F-53
2005 | ||||||||||||||||||||||||
Defined | ||||||||||||||||||||||||
UK Group | benefit | Defined | ||||||||||||||||||||||
plan | other | Sub total | contribution | PRMB | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Current service cost | 25 | 2 | 27 | 34 | 1 | 62 | ||||||||||||||||||
Curtailments | — | (2 | ) | (2 | ) | — | — | (2 | ) | |||||||||||||||
Total operating expense/(income) | 25 | — | 25 | 34 | 1 | 60 | ||||||||||||||||||
Expected return on plan assets | (75 | ) | (6 | ) | (81 | ) | — | — | (81 | ) | ||||||||||||||
Interest on plan liabilities | 79 | 6 | 85 | — | 3 | 88 | ||||||||||||||||||
Net finance (income)/expense | 4 | — | 4 | — | 3 | 7 | ||||||||||||||||||
Net income statement charge | 29 | — | 29 | 34 | 4 | 67 | ||||||||||||||||||
Actual return on plan assets | 214 | 7 | 221 | — | — | 221 | ||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Opening obligation | (58 | ) | (61 | ) | (63 | ) | ||||||
Exchange differences | (7 | ) | 6 | 6 | ||||||||
Current service cost | (1 | ) | (1 | ) | (1 | ) | ||||||
Interest cost | (3 | ) | (4 | ) | (4 | ) | ||||||
Benefits paid | 4 | 3 | 4 | |||||||||
Actuarial gains and losses | 5 | (1 | ) | (3 | ) | |||||||
Closing obligation | (60 | ) | (58 | ) | (61 | ) | ||||||
2007 | 2006 | |||||||||||||||||||||||||||||||
Other | Other | Other | Other | |||||||||||||||||||||||||||||
UK Group | funded | unfunded | UK Group | funded | unfunded | |||||||||||||||||||||||||||
plan | plans | plans | Total | plan | plans | plans | Total | |||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||
Fair value of plan assets | 1,744 | 109 | — | 1,853 | 1,528 | 105 | — | 1,633 | ||||||||||||||||||||||||
Present value of defined benefit obligation | (1,682 | ) | (117 | ) | (12 | ) | (1,811 | ) | (1,683 | ) | (115 | ) | (12 | ) | (1,810 | ) | ||||||||||||||||
Net pension asset/(liability) | 62 | (8 | ) | (12 | ) | 42 | (155 | ) | (10 | ) | (12 | ) | (177 | ) | ||||||||||||||||||
Other post-retirement medical benefit obligation | (47 | ) | (48 | ) | ||||||||||||||||||||||||||||
Other pension accruals | (28 | ) | (25 | ) | ||||||||||||||||||||||||||||
Net retirement benefit obligations | (33 | ) | (250 | ) | ||||||||||||||||||||||||||||
Analysed as: | ||||||||||||||||||||||||||||||||
Retirement benefit asset | 62 | — | ||||||||||||||||||||||||||||||
Retirement benefit obligations | (95 | ) | (250 | ) | ||||||||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Amounts recognised for defined benefit plans | 79 | 102 | 21 | |||||||||
Amounts recognised for post-retirement medical benefit plans | 1 | 5 | 5 | |||||||||
Total recognised in year | 80 | 107 | 26 | |||||||||
Cumulative amounts recognised | 124 | 44 | (63 | ) | ||||||||
F-54
2007 | 2006 | |||||||||||||||||||||||
Other | Other | |||||||||||||||||||||||
UK Group | funded | UK Group | funded | |||||||||||||||||||||
plan | plans | Total | plan | plans | Total | |||||||||||||||||||
% | ||||||||||||||||||||||||
Equities | �� | 34.3 | 3.4 | 37.7 | 46.6 | 3.9 | 50.5 | |||||||||||||||||
Bonds | 34.9 | 2.0 | 36.9 | 23.8 | 2.1 | 25.9 | ||||||||||||||||||
Properties | 7.7 | — | 7.7 | 9.2 | — | 9.2 | ||||||||||||||||||
Other | 17.2 | 0.5 | 17.7 | 14.0 | 0.4 | 14.4 |
2007 | 2006 | |||||||||||||||||||||||
UK Group | Other | UK Group | Other | |||||||||||||||||||||
plan | plans | Total | plan | plans | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Fair value of plan assets | ||||||||||||||||||||||||
Opening fair value of plan assets | 1,528 | 105 | 1,633 | 1,390 | 110 | 1,500 | ||||||||||||||||||
Exchange differences | — | 1 | 1 | — | (12 | ) | (12 | ) | ||||||||||||||||
Expected return on plan assets | 96 | 7 | 103 | 85 | 7 | 92 | ||||||||||||||||||
Actuarial gains and losses | 32 | (3 | ) | 29 | 68 | 6 | 74 | |||||||||||||||||
Contributions by employer | 152 | 5 | 157 | 43 | 2 | 45 | ||||||||||||||||||
Contributions by employee | 8 | — | 8 | 7 | — | 7 | ||||||||||||||||||
Benefits paid | (72 | ) | (6 | ) | (78 | ) | (65 | ) | (8 | ) | (73 | ) | ||||||||||||
Closing fair value of plan assets | 1,744 | 109 | 1,853 | 1,528 | 105 | 1,633 | ||||||||||||||||||
Present value of defined benefit obligation | ||||||||||||||||||||||||
Opening defined benefit obligation | (1,683 | ) | (127 | ) | (1,810 | ) | (1,661 | ) | (142 | ) | (1,803 | ) | ||||||||||||
Exchange differences | — | 1 | 1 | — | 15 | 15 | ||||||||||||||||||
Current service cost | (29 | ) | (2 | ) | (31 | ) | (27 | ) | (2 | ) | (29 | ) | ||||||||||||
Interest cost | (84 | ) | (7 | ) | (91 | ) | (78 | ) | (7 | ) | (85 | ) | ||||||||||||
Actuarial gains and losses | 50 | — | 50 | 25 | 3 | 28 | ||||||||||||||||||
Contributions by employee | (8 | ) | — | (8 | ) | (7 | ) | — | (7 | ) | ||||||||||||||
Benefits paid | 72 | 6 | 78 | 65 | 8 | 73 | ||||||||||||||||||
Acquisition through business combination | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||
Closing defined benefit obligation | (1,682 | ) | (129 | ) | (1,811 | ) | (1,683 | ) | (127 | ) | (1,810 | ) | ||||||||||||
F-55
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Opening defined benefit obligation | (48 | ) | (60 | ) | ||||
Exchange differences | — | 8 | ||||||
Current service cost | (1 | ) | (1 | ) | ||||
Past service cost | — | 2 | ||||||
Interest cost | (2 | ) | (3 | ) | ||||
Actuarial gains and losses | 1 | 5 | ||||||
Benefits paid | 3 | 4 | ||||||
Reclassifications | — | (3 | ) | |||||
Closing defined benefit obligation | (47 | ) | (48 | ) | ||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Fair value of plan assets | 1,853 | 1,633 | 1,500 | 1,280 | 1,164 | |||||||||||||||
Present value of defined benefit obligation | (1,811 | ) | (1,810 | ) | (1,803 | ) | (1,615 | ) | (1,454 | ) | ||||||||||
Net pension asset/(liability) | 42 | (177 | ) | (303 | ) | (335 | ) | (290 | ) | |||||||||||
Experience adjustments on plan assets | 29 | 74 | 140 | 67 | 88 | |||||||||||||||
Experience adjustments on plan liabilities | 50 | 28 | (119 | ) | (127 | ) | (113 | ) |
2007 | ||||||||
1% increase | 1% decrease | |||||||
All figures in £ millions | ||||||||
Effect on: | ||||||||
(Decrease)/increase in defined benefit obligation — UK Group plan | (222 | ) | 275 | |||||
(Decrease)/increase of aggregate of service cost and interest cost — UK Group plan | (4.6 | ) | 5.8 | |||||
(Decrease)/increase in defined benefit obligation — US plan | (6.7 | ) | 7.3 |
F-56
2005 | 2005 | 2004 | 2004 | 2003 | 2003 | |||||||||||||||||||
1% increase | 1% decrease | 1% increase | 1% decrease | 1% increase | 1% decrease | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Effect on: | ||||||||||||||||||||||||
Aggregate of service cost and interest cost | 0.2 | (0.2 | ) | 0.2 | (0.2 | ) | 0.3 | (0.3 | ) | |||||||||||||||
Defined benefit obligation | 4.7 | 4.1 | 4.1 | (3.7 | ) | 4.8 | (4.2 | ) |
F-47
2007 | ||||||||
1% increase | 1% decrease | |||||||
All figures in £ millions | ||||||||
Effect on: | ||||||||
(Decrease)/increase in post-retirement medical benefit obligation | (3.7 | ) | 4.1 | |||||
Increase/(decrease) of aggregate of service cost and interest cost | 0.1 | (0.1 | ) |
26. | Share-based payments |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Pearson plans | 13 | 15 | 20 | |||||||||
IDC plans | 10 | 10 | 9 | |||||||||
Total share-based payment costs | 23 | 25 | 29 | |||||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Pearson plans | 23 | 18 | 13 | |||||||||
Interactive Data plans | 7 | 7 | 10 | |||||||||
Total share-based payment costs | 30 | 25 | 23 | |||||||||
F-57
F-48
2005 | 2005 | 2004 | 2004 | 2003 | 2003 | |||||||||||||||||||
Number of | Weighted | Number of | Weighted | Number of | Weighted | |||||||||||||||||||
share | average | share | average | share | average | |||||||||||||||||||
options | exercise | options | exercise | options | exercise | |||||||||||||||||||
000s | price £ | 000s | price £ | 000s | price £ | |||||||||||||||||||
Outstanding at beginning of year | 26,179 | 5.93 | 32,284 | 6.93 | 35,608 | 8.84 | ||||||||||||||||||
Granted during the year | 606 | 5.06 | 886 | 4.56 | 2,309 | 5.16 | ||||||||||||||||||
Exercised during the year | (324 | ) | 6.78 | (254 | ) | 10.10 | (89 | ) | 10.60 | |||||||||||||||
Forfeited during the year | (4,352 | ) | 10.42 | (6,301 | ) | 7.49 | (5,053 | ) | 16.25 | |||||||||||||||
Expired during the year | (432 | ) | — | (436 | ) | — | (491 | ) | — | |||||||||||||||
Outstanding at end of year | 21,677 | 5.05 | 26,179 | 5.93 | 32,284 | 6.93 | ||||||||||||||||||
Options exercisable at the end of year | 7,634 | 7.80 | 9,071 | 9.23 | 9,882 | 9.44 | ||||||||||||||||||
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
share | exercise | share | exercise | |||||||||||||
options | price | options | price | |||||||||||||
000s | £ | 000s | £ | |||||||||||||
Outstanding at beginning of year | 18,861 | 13.36 | 21,677 | 13.15 | ||||||||||||
Granted during the year | 773 | 6.90 | 837 | 6.30 | ||||||||||||
Exercised during the year | (1,326 | ) | 5.80 | (1,396 | ) | 5.36 | ||||||||||
Forfeited during the year | (1,434 | ) | 19.63 | (1,828 | ) | 15.39 | ||||||||||
Expired during the year | (93 | ) | 7.68 | (429 | ) | 6.72 | ||||||||||
Outstanding at end of year | 16,781 | 13.15 | 18,861 | 13.36 | ||||||||||||
Options exercisable at end of year | 13,999 | 14.63 | 15,595 | 14.14 | ||||||||||||
F-49
2005 | 2005 | 2004 | 2004 | 2003 | 2003 | |||||||||||||||||||
Number of | Weighted | Number of | Weighted | Number of | Weighted | |||||||||||||||||||
share | average | share | average | share | average | |||||||||||||||||||
Range of exercise prices | options | contractual | options | contractual | options | contractual | ||||||||||||||||||
£ | 000s | life years | 000s | life years | 000s | life years | ||||||||||||||||||
0 — 5 | 2,773 | 2.08 | 3,251 | 2.97 | 2,740 | 3.66 | ||||||||||||||||||
5 — 10 | 5,555 | 4.48 | 6,538 | 5.44 | 7,797 | 6.02 | ||||||||||||||||||
10 — 15 | 8,237 | 4.63 | 9,604 | 5.57 | 11,758 | 6.63 | ||||||||||||||||||
15 — 20 | 1,168 | 3.80 | 1,469 | 4.81 | 2,210 | 5.78 | ||||||||||||||||||
20 — 25 | 930 | 3.80 | 1,346 | 4.92 | 2,210 | 6.02 | ||||||||||||||||||
>25 | 3,014 | 4.22 | 3,971 | 4.65 | 5,569 | 5.79 | ||||||||||||||||||
21,677 | 4.13 | 26,179 | 5.00 | 32,284 | 5.99 | |||||||||||||||||||
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
share | contractual | share | contractual | |||||||||||||
Range of exercise prices | options | life | options | life | ||||||||||||
£ | 000s | Years | 000s | Years | ||||||||||||
0 — 5 | 930 | 1.56 | 1,649 | 1.94 | ||||||||||||
5 — 10 | 4,909 | 3.22 | 5,254 | 3.85 | ||||||||||||
10 — 15 | 7,257 | 2.62 | 7,638 | 3.63 | ||||||||||||
15 — 20 | 980 | 1.85 | 1,050 | 2.88 | ||||||||||||
20 — 25 | 400 | 2.19 | 424 | 3.19 | ||||||||||||
>25 | 2,305 | 2.19 | 2,846 | 3.22 | ||||||||||||
16,781 | 2.62 | 18,861 | 3.42 | |||||||||||||
F-58
2005 | 2004 | 2003 | ||||||||||
Weighted | Weighted | Weighted | ||||||||||
average | average | average | ||||||||||
Fair value | £2.34 | £2.70 | £1.82 | |||||||||
Weighted average share price | £6.54 | £6.58 | £5.15 | |||||||||
Weighted average exercise price | £5.08 | £4.96 | £4.25 | |||||||||
Expected volatility | 33.69 | % | 41.95 | % | 48.74 | % | ||||||
Expected life | 3.6 years | 3.8 years | 4.0 years | |||||||||
Risk free rate | 4.48 | % | 4.77 | % | 3.84 | % | ||||||
Expected dividend yield | 2.40 | % | 2.72 | % | 4.55 | % | ||||||
Forfeiture rate | 20.0 | % | 21.1 | % | 18.7 | % | ||||||
2007 | 2006 | |||||||
Weighted | Weighted | |||||||
average | average | |||||||
Fair value | £2.53 | £1.92 | ||||||
Weighted average share price | £8.91 | £7.66 | ||||||
Weighted average exercise price | £6.90 | £6.30 | ||||||
Expected volatility | 19.72 | % | 23.12 | % | ||||
Expected life | 4.0 years | 4.0 years | ||||||
Risk free rate | 5.34 | % | 4.42 | % | ||||
Expected dividend yield | 3.29 | % | 3.52 | % | ||||
Forfeiture rate | 3.5 | % | 5.0 | % |
2005 | 2005 | 2004 | 2003 | |||||||||||||||||||||
Number | Weighted | 2004 | Weighted | 2003 | Weighted | |||||||||||||||||||
of shares | average | Number | average | Number | average | |||||||||||||||||||
000s | fair value | of shares | fair value | of shares | fair value | |||||||||||||||||||
£ | 000s | £ | 000s | £ | ||||||||||||||||||||
Annual Bonus Share Matching Plan | 71 | 5.57 | 53 | 5.42 | 108 | 4.36 | ||||||||||||||||||
Long-term Incentive Plan | 3,987 | 5.05 | 2,413 | 4.54 | 1,711 | 5.21 |
F-50
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number | average | Number | average | |||||||||||||
of shares | fair value | of shares | fair value | |||||||||||||
000s | £ | 000s | £ | |||||||||||||
Annual Bonus Share Matching Plan | 143 | 7.67 | 90 | 6.27 | ||||||||||||
Long-Term Incentive Plan | 3,377 | 7.12 | 3,585 | 6.96 |
2005 | 2004 | |||||||
Weighted | Weighted | |||||||
Average | Average | |||||||
Fair value | £6.19 | £4.54 | ||||||
Weighted average share price | £6.69 | £6.13 | ||||||
Weighted average exercise price | — | — | ||||||
Expected volatility | 32.79 | % | 38.39 | % | ||||
Expected life | 3.3 years | 3.0 years | ||||||
Risk free rate | 4.19 | % | 4.59 | % | ||||
Expected dividend yield | 2.35 | % | 4.00 | % | ||||
Forfeiture rate | 9.9 | % | 4.5 | % | ||||
F-59
F-51
2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||
2005 | Weighted | 2005 | 2004 | Weighted | 2004 | 2003 | Weighted | 2003 | ||||||||||||||||||||||||||||
Number | average | Weighted | Number | average | Weighted | Number | average | Weighted | ||||||||||||||||||||||||||||
of share | exercise | average | of share | exercise | average | of share | exercise | average | ||||||||||||||||||||||||||||
options | price | exercise | options | price | exercise | options | price | exercise | ||||||||||||||||||||||||||||
000s | $ | price £ | 000s | $ | price £ | 000s | $ | price £ | ||||||||||||||||||||||||||||
Outstanding at beginning of year | 9,832 | 13.46 | 7.36 | 9,358 | 12.15 | 7.44 | 8,619 | 10.43 | 6.38 | |||||||||||||||||||||||||||
Granted during the year | 1,940 | 21.38 | 11.80 | 1,937 | 17.48 | 9.56 | 2,107 | 16.40 | 10.04 | |||||||||||||||||||||||||||
Exercised during the year | (1,412 | ) | 11.57 | 6.39 | (1,157 | ) | 9.59 | 5.24 | (1,195 | ) | 7.20 | 4.41 | ||||||||||||||||||||||||
Forfeited during the year | (292 | ) | 16.86 | 9.31 | (306 | ) | 13.32 | 7.28 | (173 | ) | 12.36 | 7.57 | ||||||||||||||||||||||||
Outstanding at end of year | 10,068 | 15.16 | 8.37 | 9,832 | 13.46 | 7.36 | 9,358 | 12.15 | 7.44 | |||||||||||||||||||||||||||
Options exercisable at end of year | 6,052 | 12.58 | 6.94 | 5,321 | 11.41 | 6.24 | 4,259 | 9.93 | 6.08 | |||||||||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
Number | average | average | Number | average | average | |||||||||||||||||||
of share | exercise | exercise | of share | exercise | exercise | |||||||||||||||||||
options | price | price | options | price | price | |||||||||||||||||||
000s | $ | £ | 000s | $ | £ | |||||||||||||||||||
Outstanding at beginning of year | 10,506 | 16.33 | 8.34 | 10,068 | 15.16 | 8.37 | ||||||||||||||||||
Granted during the year | 1,560 | 27.17 | 13.65 | 1,835 | 20.58 | 10.52 | ||||||||||||||||||
Exercised during the year | (1,935 | ) | 14.88 | 7.48 | (1,252 | ) | 12.88 | 6.58 | ||||||||||||||||
Forfeited during the year | (293 | ) | 20.38 | 10.24 | (139 | ) | 19.02 | 9.72 | ||||||||||||||||
Expired during the year | (11 | ) | 18.12 | 9.10 | (6 | ) | 11.46 | 5.86 | ||||||||||||||||
Outstanding at end of year | 9,827 | 18.21 | 9.15 | 10,506 | 16.33 | 8.34 | ||||||||||||||||||
Options exercisable at end of year | 6,199 | 15.27 | 7.67 | 6,547 | 14.11 | 7.21 | ||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2003 | 2003 | |||||||||||||||||||
Number | Weighted | Number | Weighted | Number | Weighted | |||||||||||||||||||
of share | average | of share | average | of share | average | |||||||||||||||||||
Range of exercise prices | options | contractual | options | contractual | options | contractual | ||||||||||||||||||
$ | 000s | life years | 000s | life years | 000s | life years | ||||||||||||||||||
0 — 4.4 | 33 | 4.2 | 64 | 4.3 | 143 | 6.1 | ||||||||||||||||||
4.4 — 7.5 | 206 | 3.6 | 287 | 4.5 | 499 | 5.0 | ||||||||||||||||||
7.5 — 12 | 2,685 | 5.3 | 3,398 | 6.3 | 4,117 | 7.3 | ||||||||||||||||||
12 — 20 | 5,243 | 7.4 | 6,083 | 8.4 | 4,599 | 8.8 | ||||||||||||||||||
>20 | 1,901 | 9.5 | — | — | — | — | ||||||||||||||||||
10,068 | 5.4 | 9,832 | 7.5 | 9,358 | 7.9 | |||||||||||||||||||
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number | average | Number | average | |||||||||||||
of share | contractual | of share | contractual | |||||||||||||
Range of exercise prices | options | life | options | life | ||||||||||||
$ | 000s | Years | 000s | Years | ||||||||||||
0 — 4.4 | — | — | 30 | 3.1 | ||||||||||||
4.4 — 7.5 | 72 | 2.1 | 157 | 2.3 | ||||||||||||
7.5 — 12 | 1,745 | 3.4 | 2,164 | 4.4 | ||||||||||||
12 — 20 | 3,464 | 5.6 | 4,640 | 6.4 | ||||||||||||
> 20 | 4,546 | 8.5 | 3,515 | 9.0 | ||||||||||||
9,827 | 6.6 | 10,506 | 6.8 | |||||||||||||
F-60
2005 | ||||||||||||||||||||||||||||||||||||
2005 | Weighted | 2005 | 2004 | 2004 | 2003 | 2003 | ||||||||||||||||||||||||||||||
Number | average | Weighted | 2004 | Weighted | Weighted | 2003 | Weighted | Weighted | ||||||||||||||||||||||||||||
of shares | fair value | average | Number | average | average | Number | average | average | ||||||||||||||||||||||||||||
000s | $ | fair value | of shares | fair value | fair value | of shares | fair value | fair value | ||||||||||||||||||||||||||||
£ | 000s | $ | £ | 000s | $ | £ | ||||||||||||||||||||||||||||||
2000 Long-Term Incentive Plan | 148 | 20.57 | 11.35 | 69 | 17.57 | 9.61 | 76 | 16.97 | 10.39 | |||||||||||||||||||||||||||
2001 Employee Stock Purchase Plan | 178 | 3.68 | 2.03 | 124 | 3.24 | 1.77 | 118 | 2.64 | 1.62 |
F-52
Long-Term Incentive Plan | Employee Stock Purchase Plan | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||
average | average | average | average | average | average | |||||||||||||||||||
Fair value | $ 5.56 | $ 7.50 | $ 8.09 | $ 3.68 | $ 3.24 | $ 2.64 | ||||||||||||||||||
Weighted average share price | $21.38 | $17.48 | $16.40 | $15.46 | $14.48 | $11.24 | ||||||||||||||||||
Weighted average exercise price | $21.38 | $17.48 | $16.40 | $15.46 | $14.48 | $11.24 | ||||||||||||||||||
Expected volatility | 24.50 | % | 32.20 | % | 61.10 | % | 20.00 | % | 20.00 | % | 25.00 | % | ||||||||||||
Expected life | 4.0 years | 4.0 years | 4.0 years | 0.5 years | 0.5 years | 0.5 years | ||||||||||||||||||
Risk free rate | 3.86 | % | 3.45 | % | 2.00 | % | 2.33 | % | 1.03 | % | 1.20 | % | ||||||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||
Forfeiture rate | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||
Long-Term Incentive Plan | Employee Stock Purchase Plan | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||
average | average | average | average | |||||||||||||
Fair value | $ 6.60 | $ 6.57 | $ 4.76 | $ 3.98 | ||||||||||||
Weighted average share price | $27.17 | $20.58 | $17.77 | $15.58 | ||||||||||||
Weighted average exercise price | $27.17 | $20.58 | $17.77 | $15.58 | ||||||||||||
Expected volatility | 23.40 | % | 25.90 | % | 20.50 | % | 18.32 | % | ||||||||
Expected life | 5.0 years | 4.7 years | 0.5 years | 0.5 years | ||||||||||||
Risk free rate | 4.2% to 4.9% | 4.6% to 5.1% | 4.3% to 5.1% | 3.7% to 5.2% | ||||||||||||
Expected dividend yield | 1.9 | % | 0.0 | % | 2.0 | % | 0.0 | % | ||||||||
Forfeiture rate | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
2007 | 2006 | |||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
Number | average | average | Number | average | average | |||||||||||||||||||
of shares | fair value | fair value | of shares | fair value | fair value | |||||||||||||||||||
000s | $ | £ | 000s | $ | £ | |||||||||||||||||||
2000 Long-Term Incentive Plan | 185 | 27.07 | 13.60 | 196 | 20.82 | 10.64 |
Share capital and share premium |
Number of | Ordinary | Share | ||||||||||
shares | shares | premium | ||||||||||
(thousands) | £m | £m | ||||||||||
At 1 January 2003 | 801,662 | 200 | 2,465 | |||||||||
Issue of shares — share option schemes | 726 | 1 | 4 | |||||||||
At 31 December 2003 | 802,388 | 201 | 2,469 | |||||||||
Issue of shares — share option schemes | 862 | — | 4 | |||||||||
At 31 December 2004 | 803,250 | 201 | 2,473 | |||||||||
Issue of shares — share option schemes | 770 | — | 4 | |||||||||
At 31 December 2005 | 804,020 | 201 | 2,477 | |||||||||
Number | Ordinary | Share | ||||||||||
of shares | shares | premium | ||||||||||
000s | £m | £m | ||||||||||
At 1 January 2006 | 804,020 | 201 | 2,477 | |||||||||
Issue of ordinary shares — share option schemes | 2,089 | 1 | 10 | |||||||||
At 31 December 2006 | 806,109 | 202 | 2,487 | |||||||||
Issue of ordinary shares — share option schemes | 1,919 | — | 12 | |||||||||
At 31 December 2007 | 808,028 | 202 | 2,499 | |||||||||
F-61
F-53
Treasury shares |
Pearson plc | Interactive Data | Total | ||||||||||||||||||
Number | Number | |||||||||||||||||||
of shares | of shares | |||||||||||||||||||
000s | £m | 000s | £m | £m | ||||||||||||||||
At 1 January 2006 | 5,249 | 110 | 4,552 | 43 | 153 | |||||||||||||||
Purchase of treasury shares | 4,700 | 36 | 1,500 | 16 | 52 | |||||||||||||||
Release of treasury shares | (1,188 | ) | (16 | ) | — | — | (16 | ) | ||||||||||||
At 31 December 2006 | 8,761 | 130 | 6,052 | 59 | 189 | |||||||||||||||
Purchase of treasury shares | 4,900 | 40 | 1,177 | 16 | 56 | |||||||||||||||
Release of treasury shares | (1,900 | ) | (29 | ) | — | — | (29 | ) | ||||||||||||
At 31 December 2007 | 11,761 | 141 | 7,229 | 75 | 216 | |||||||||||||||
F-62
29. | Other reserves and retained earnings |
Total | ||||||||||||||||||||
Treasury | Translation | Fair value | other | Retained | ||||||||||||||||
shares | reserve | reserve | reserves | earnings | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
At 1 January 2003 | (121 | ) | — | — | (121 | ) | 644 | |||||||||||||
Net exchange differences on translation of foreign operations | — | (288 | ) | — | (288 | ) | — | |||||||||||||
Purchase of treasury shares | (1 | ) | — | — | (1 | ) | — | |||||||||||||
Profit for the year attributable to equity holders of the parent | — | — | — | — | 252 | |||||||||||||||
Dividends paid | — | — | — | — | (188 | ) | ||||||||||||||
Equity settled transactions | — | — | — | — | 29 | |||||||||||||||
Actuarial gains and losses on defined benefit schemes | — | — | — | — | (28 | ) | ||||||||||||||
Taxation on items taken directly to equity | — | — | — | — | — | |||||||||||||||
At 31 December 2003 | (122 | ) | (288 | ) | — | (410 | ) | 709 | ||||||||||||
Net exchange differences on translation of foreign operations | — | (203 | ) | — | (203 | ) | — | |||||||||||||
Purchase of treasury shares | (10 | ) | — | — | (10 | ) | — | |||||||||||||
Profit for the year attributable to equity holders of the parent | — | — | — | — | 262 | |||||||||||||||
Dividends paid | — | — | — | — | (195 | ) | ||||||||||||||
Equity settled transactions | — | — | — | — | 25 | |||||||||||||||
Actuarial gains and losses on defined benefit schemes | — | — | — | — | (61 | ) | ||||||||||||||
Taxation on items taken directly to equity | — | — | — | — | 9 | |||||||||||||||
At 31 December 2004 | (132 | ) | (491 | ) | — | (623 | ) | 749 | ||||||||||||
Net exchange differences on translation of foreign operations | — | 327 | — | 327 | — | |||||||||||||||
Cumulative translation adjustment disposed | — | (14 | ) | — | (14 | ) | — | |||||||||||||
Purchase of treasury shares | (21 | ) | — | — | (21 | ) | — | |||||||||||||
Profit for the year attributable to equity holders of the parent | — | — | — | — | 624 | |||||||||||||||
Dividends paid | — | — | — | — | (205 | ) | ||||||||||||||
Equity settled transactions | — | — | — | — | 23 | |||||||||||||||
Actuarial gains and losses on defined benefit schemes | — | — | — | — | 26 | |||||||||||||||
Taxation on items taken directly to equity | — | — | — | — | 12 | |||||||||||||||
Transition adjustment on adoption of IAS 39 (note 34) | — | 3 | — | 3 | (15 | ) | ||||||||||||||
At 31 December 2005 | (153 | ) | (175 | ) | — | (328 | ) | 1,214 | ||||||||||||
Total | ||||||||||||||||||||
Translation | Fair value | other | Retained | |||||||||||||||||
Notes | reserve | reserve | reserves | earnings | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
At 1 January 2006 | (175 | ) | — | (175 | ) | 1,214 | ||||||||||||||
Net exchange differences on translation of foreign operations | (417 | ) | — | (417 | ) | — | ||||||||||||||
Profit for the year attributable to equity holders of the Company | — | — | — | 446 | ||||||||||||||||
Dividends paid to equity holders of the Company | 10 | — | — | — | (220 | ) | ||||||||||||||
Equity settled transactions | 26 | — | — | — | 25 | |||||||||||||||
Actuarial gains on retirement benefit obligations | 25 | — | — | — | 107 | |||||||||||||||
Treasury shares released under employee share plans | 28 | — | — | — | (16 | ) | ||||||||||||||
Taxation on items charged to equity | 8 | — | — | — | 12 | |||||||||||||||
At 31 December 2006 | (592 | ) | — | (592 | ) | 1,568 | ||||||||||||||
Net exchange differences on translation of foreign operations | 25 | — | 25 | — | ||||||||||||||||
Cumulative translation adjustment disposed | 32 | 53 | — | 53 | — | |||||||||||||||
Profit for the year attributable to equity holders of the Company | — | — | — | 284 | ||||||||||||||||
Dividends paid to equity holders of the Company | 10 | — | — | — | (238 | ) | ||||||||||||||
Equity settled transactions | 26 | — | — | — | 30 | |||||||||||||||
Actuarial gains on retirement benefit obligations | 25 | — | — | — | 80 | |||||||||||||||
Treasury shares released under employee share plans | 28 | — | — | — | (29 | ) | ||||||||||||||
Taxation on items charged to equity | 8 | — | — | — | 29 | |||||||||||||||
At 31 December 2007 | (514 | ) | — | (514 | ) | 1,724 | ||||||||||||||
F-54
Business combinations |
F-63
2005 | ||||||||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||||||
AGS | AGS | AGS | Other | Total | Total | Total | ||||||||||||||||||||||
carrying | fair value | fair | fair | fair | fair | fair | ||||||||||||||||||||||
amount | adjs | value | value | value | value | value | ||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||
Tangible fixed assets | 1 | — | 1 | 6 | 7 | 1 | 10 | |||||||||||||||||||||
Intangible assets | — | 58 | 58 | 31 | 89 | 15 | 44 | |||||||||||||||||||||
Intangible assets — pre-publication | 15 | — | 15 | — | 15 | — | — | |||||||||||||||||||||
Inventory | 3 | — | 3 | 7 | 10 | 2 | — | |||||||||||||||||||||
Receivables | 7 | — | 7 | 25 | 32 | 3 | 32 | |||||||||||||||||||||
Payables | (5 | ) | (1 | ) | (6 | ) | (36 | ) | (42 | ) | (4 | ) | (95 | ) | ||||||||||||||
Provisions | (2 | ) | — | (2 | ) | (1 | ) | (3 | ) | 1 | (4 | ) | ||||||||||||||||
Deferred taxation | — | (20 | ) | (20 | ) | (1 | ) | (21 | ) | — | (15 | ) | ||||||||||||||||
Cash and cash equivalents | (1 | ) | — | (1 | ) | 4 | 3 | — | 34 | |||||||||||||||||||
Equity minority interests | — | — | — | 8 | 8 | (3 | ) | (8 | ) | |||||||||||||||||||
Net assets/(liabilities) acquired at fair value | 18 | 37 | 55 | 43 | 98 | 15 | (2 | ) | ||||||||||||||||||||
Goodwill | 105 | — | 105 | 50 | 155 | 22 | 113 | |||||||||||||||||||||
Total | 160 | 93 | 253 | 37 | 111 | |||||||||||||||||||||||
Satisfied by: | ||||||||||||||||||||||||||||
Cash | (160 | ) | (89 | ) | (249 | ) | (39 | ) | (87 | ) | ||||||||||||||||||
Deferred cash consideration | — | (5 | ) | (5 | ) | — | (24 | ) | ||||||||||||||||||||
Costs provided for | — | 1 | 1 | (1 | ) | — | ||||||||||||||||||||||
Net prior year adjustments | — | — | — | 3 | — | |||||||||||||||||||||||
Total consideration | (160 | ) | (93 | ) | (253 | ) | (37 | ) | (111 | ) | ||||||||||||||||||
Book value of net assets/(liabilities acquired) | 18 | 40 | 58 | 4 | (32 | ) | ||||||||||||||||||||||
Fair value adjustments | 37 | 3 | 40 | 1 | 30 | |||||||||||||||||||||||
Fair value to the Group | 55 | 43 | 98 | 5 | (2 | ) | ||||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
Harcourt | eCollege | Other | Total | Total | ||||||||||||||||||||
Notes | Fair value | Fair value | Fair value | Fair value | Fair value | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Property, plant and equipment | 11 | 6 | 5 | — | 11 | 13 | ||||||||||||||||||
Intangible assets | 12 | 81 | 100 | 16 | 197 | 156 | ||||||||||||||||||
Intangible assets — Pre-publication | 18 | 16 | 2 | — | 18 | 4 | ||||||||||||||||||
Inventories | 15 | — | — | 15 | 14 | |||||||||||||||||||
Trade and other receivables | 12 | 13 | 3 | 28 | 24 | |||||||||||||||||||
Cash and cash equivalents | — | — | — | — | 28 | |||||||||||||||||||
Trade and other liabilities | (23 | ) | (12 | ) | (3 | ) | (38 | ) | (52 | ) | ||||||||||||||
Financial liabilities — Borrowings | — | (1 | ) | (1 | ) | (3 | ) | |||||||||||||||||
Current income tax | 2 | 2 | — | 4 | — | |||||||||||||||||||
Net deferred income tax liabilities | 14 | (21 | ) | (24 | ) | — | (45 | ) | (26 | ) | ||||||||||||||
Retirement benefit obligations | 25 | — | — | — | — | (2 | ) | |||||||||||||||||
Provisions for other liabilities and charges | 23 | (1 | ) | — | (1 | ) | (2 | ) | (3 | ) | ||||||||||||||
Equity minority interest | — | — | — | — | (9 | ) | ||||||||||||||||||
Net assets acquired at fair value | 87 | 85 | 15 | 187 | 144 | |||||||||||||||||||
Goodwill | 12 | 68 | 181 | 55 | 304 | 246 | ||||||||||||||||||
Total | 155 | 266 | 70 | 491 | 390 | |||||||||||||||||||
Satisfied by: | ||||||||||||||||||||||||
Cash | (155 | ) | (266 | ) | (47 | ) | (468 | ) | (382 | ) | ||||||||||||||
Deferred consideration | — | — | (12 | ) | (12 | ) | (17 | ) | ||||||||||||||||
Net prior year adjustments | — | — | (11 | ) | (11 | ) | 9 | |||||||||||||||||
Total consideration | (155 | ) | (266 | ) | (70 | ) | (491 | ) | (390 | ) | ||||||||||||||
Carrying value of net assets acquired | 25 | 15 | 1 | 41 | 48 | |||||||||||||||||||
Fair value adjustments | 62 | 70 | 14 | 146 | 96 | |||||||||||||||||||
Fair value to the Group | 87 | 85 | 15 | 187 | 144 | |||||||||||||||||||
F-64
Harcourt | ||||||||||||
Carrying | Fair | Provisional | ||||||||||
value | value adjs | fair value | ||||||||||
All figures in £ millions | ||||||||||||
Property, plant and equipment | 6 | — | 6 | |||||||||
Intangible assets | — | 81 | 81 | |||||||||
Intangible assets — Pre-publication | 14 | 2 | 16 | |||||||||
Inventories | 15 | — | 15 | |||||||||
Trade and other receivables | 12 | — | 12 | |||||||||
Trade and other liabilities | (23 | ) | — | (23 | ) | |||||||
Current income tax | 2 | — | 2 | |||||||||
Net deferred income tax liabilities | — | (21 | ) | (21 | ) | |||||||
Provisions for other liabilities and charges | (1 | ) | — | (1 | ) | |||||||
Net assets acquired at fair value | 25 | 62 | 87 | |||||||||
Goodwill | 68 | |||||||||||
Total | 155 | |||||||||||
eCollege | ||||||||||||
Carrying | Fair | Provisional | ||||||||||
value | value adjs | fair value | ||||||||||
All figures in £ millions | ||||||||||||
Property, plant and equipment | 5 | — | 5 | |||||||||
Intangible assets | 2 | 98 | 100 | |||||||||
Intangible assets — Pre-publication | 2 | — | 2 | |||||||||
Trade and other receivables | 13 | — | 13 | |||||||||
Trade and other liabilities | (10 | ) | (2 | ) | (12 | ) | ||||||
Financial liabilities — Borrowings | (1 | ) | — | (1 | ) | |||||||
Current income tax | 2 | — | 2 | |||||||||
Net deferred income tax assets/(liabilities) | 2 | (26 | ) | (24 | ) | |||||||
Net assets acquired at fair value | 15 | 70 | 85 | |||||||||
Goodwill | 181 | |||||||||||
Total | 266 | |||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Cash — current year acquisitions | (249 | ) | (39 | ) | (87 | ) | ||||||
Deferred payments for prior year acquisitions and other items | — | (2 | ) | (7 | ) | |||||||
Cash and cash equivalents acquired | 3 | — | 34 | |||||||||
Cash outflow on acquisition | (246 | ) | (41 | ) | (60 | ) | ||||||
F-55
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Cash — Current year acquisitions | (468 | ) | (382 | ) | (249 | ) | ||||||
Deferred payments for prior year acquisitions and other items | (4 | ) | (9 | ) | — | |||||||
Cash and cash equivalents acquired | — | 28 | 3 | |||||||||
Cash outflow on acquisition | (472 | ) | (363 | ) | (246 | ) | ||||||
F-65
2005 | ||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||
Recoletos | Other | Total | Total | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Disposal of subsidiaries | ||||||||||||||||||||
Property, plant and equipment | (48 | ) | — | (48 | ) | — | (3 | ) | ||||||||||||
Other financial assets | (2 | ) | — | (2 | ) | — | — | |||||||||||||
Associates | (3 | ) | — | (3 | ) | — | — | |||||||||||||
Inventory | (4 | ) | — | (4 | ) | — | (2 | ) | ||||||||||||
Receivables | (59 | ) | — | (59 | ) | (4 | ) | (9 | ) | |||||||||||
Payables | 68 | 3 | 71 | 2 | 10 | |||||||||||||||
Provisions | 2 | 1 | 3 | — | — | |||||||||||||||
Deferred taxation | 8 | — | 8 | — | — | |||||||||||||||
Net (cash and cash equivalents)/borrowings | (132 | ) | (2 | ) | (134 | ) | 1 | 1 | ||||||||||||
Equity minority interests | 60 | (6 | ) | 54 | (4 | ) | — | |||||||||||||
Attributable goodwill | (98 | ) | (6 | ) | (104 | ) | (4 | ) | (4 | ) | ||||||||||
Currency translation adjustment | 14 | — | 14 | — | — | |||||||||||||||
Net assets disposed of | (194 | ) | (10 | ) | (204 | ) | (9 | ) | (7 | ) | ||||||||||
Proceeds received | 503 | 10 | 513 | 8 | 1 | |||||||||||||||
Costs | (3 | ) | — | (3 | ) | (2 | ) | (1 | ) | |||||||||||
Deferred consideration | — | — | — | — | 2 | |||||||||||||||
Net prior year adjustments | — | — | — | — | 1 | |||||||||||||||
Profit/(loss) on sale | 306 | — | 306 | (3 | ) | (4 | ) | |||||||||||||
2005 | 2004 | 2003 | ||||||||||
Cash flow from disposals | ||||||||||||
Cash — current year disposals | 513 | 8 | 1 | |||||||||
Costs paid | (3 | ) | (2 | ) | (2 | ) | ||||||
Deferred receipts and payments from prior year disposals and other amounts | — | — | (3 | ) | ||||||||
Cash and cash equivalents/net debt disposed of | (134 | ) | 1 | 1 | ||||||||
Net cash outflow | 376 | 7 | (3 | ) | ||||||||
Notes | 2007 | 2006 | ||||||||||
Property, plant and equipment | 11 | 7 | 9 | |||||||||
Intangible assets — Goodwill | 96 | 221 | ||||||||||
Intangible assets — Other | 12 | — | 7 | |||||||||
Intangible assets — Pre-publication | 2 | — | ||||||||||
Inventories | 4 | 1 | ||||||||||
Trade and other receivables | 8 | 56 | ||||||||||
Non-current assets classified as held for sale | 117 | 294 | ||||||||||
Other liabilities | (9 | ) | (26 | ) | ||||||||
Liabilities directly associated with non-current assets classified as held for sale | (9 | ) | (26 | ) | ||||||||
Net assets classified as held for sale | 108 | 268 | ||||||||||
F-66
F-56
Disposals |
2007 | ||||||||||||||||||||||||||||
Government | 2006 | 2005 | ||||||||||||||||||||||||||
Solutions | Les Echos | Datamark | Other | Total | Total | Total | ||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||
Disposal of subsidiaries | ||||||||||||||||||||||||||||
Property, plant and equipment | (10 | ) | (3 | ) | (3 | ) | — | (16 | ) | — | (48 | ) | ||||||||||||||||
Intangible assets | (6 | ) | — | — | — | (6 | ) | — | — | |||||||||||||||||||
Investments in associates and other financial assets | — | — | — | — | — | — | (5 | ) | ||||||||||||||||||||
Inventories | — | — | (1 | ) | — | (1 | ) | — | (4 | ) | ||||||||||||||||||
Trade and other receivables | (63 | ) | (26 | ) | (5 | ) | (1 | ) | (95 | ) | — | (59 | ) | |||||||||||||||
Cash and cash equivalents | — | (14 | ) | — | — | (14 | ) | — | (134 | ) | ||||||||||||||||||
Deferred income tax liabilities | — | 2 | — | — | 2 | — | 8 | |||||||||||||||||||||
Trade and other liabilities | 23 | 42 | 6 | 2 | 73 | (1 | ) | 71 | ||||||||||||||||||||
Retirement benefit obligations | — | 3 | — | — | 3 | — | — | |||||||||||||||||||||
Provisions for other liabilities and charges | — | 1 | — | — | 1 | — | 3 | |||||||||||||||||||||
Equity minority interests | — | — | — | (8 | ) | (8 | ) | (4 | ) | 54 | ||||||||||||||||||
Attributable goodwill | (221 | ) | (4 | ) | (17 | ) | (8 | ) | (250 | ) | (5 | ) | (104 | ) | ||||||||||||||
Cumulative translation adjustment | (53 | ) | — | — | — | (53 | ) | — | 14 | |||||||||||||||||||
Net (assets)/liabilities disposed | (330 | ) | 1 | (20 | ) | (15 | ) | (364 | ) | (10 | ) | (204 | ) | |||||||||||||||
Cash received | 286 | 174 | 20 | 15 | 495 | 10 | 513 | |||||||||||||||||||||
Other proceeds received | 35 | — | — | — | 35 | — | — | |||||||||||||||||||||
Costs | (10 | ) | (10 | ) | — | — | (20 | ) | — | (3 | ) | |||||||||||||||||
(Loss)/profit on sale | (19 | ) | 165 | — | — | 146 | — | 306 | ||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash flow from disposals | ||||||||||||
Cash — Current year disposals | 495 | 10 | 513 | |||||||||
Costs paid | (12 | ) | — | (3 | ) | |||||||
Cash and cash equivalents disposed | (14 | ) | — | (134 | ) | |||||||
Net cash inflow | 469 | 10 | 376 | |||||||||
F-67
33. | Cash generated from operations |
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Net profit | 644 | 284 | 275 | |||||||||
Adjustments for: | ||||||||||||
Tax | 125 | 70 | 84 | |||||||||
Depreciation | 80 | 84 | 85 | |||||||||
Amortisation of purchased intangible assets | 11 | 5 | 4 | |||||||||
Amortisation of other intangible assets | 18 | 20 | 28 | |||||||||
Amortisation of pre-publication investment | 192 | 168 | 158 | |||||||||
Loss on sale of property, plant and equipment | — | 4 | 2 | |||||||||
(Profit)/loss on sale of other financial assets | — | (16 | ) | 1 | ||||||||
Net finance costs | 70 | 76 | 90 | |||||||||
Share of results of joint ventures and associates | (14 | ) | (10 | ) | (4 | ) | ||||||
(Profit)/loss on sale of subsidiaries and associates | (346 | ) | 3 | (8 | ) | |||||||
Net foreign exchange losses/(gains) from transactions | 39 | (15 | ) | (51 | ) | |||||||
Share-based payments | 23 | 25 | 29 | |||||||||
Inventories | (17 | ) | (12 | ) | 10 | |||||||
Trade and other receivables | (4 | ) | (18 | ) | (92 | ) | ||||||
Trade and other payables | 71 | 61 | (50 | ) | ||||||||
Provisions | (17 | ) | (24 | ) | (30 | ) | ||||||
Cash generated from operations | 875 | 705 | 531 | |||||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Net profit | 310 | 469 | 644 | |||||||||||||
Adjustments for: | ||||||||||||||||
Income tax | 222 | 19 | 125 | |||||||||||||
Depreciation | 11 | 68 | 77 | 80 | ||||||||||||
Amortisation of purchased intangible assets | 12 | 45 | 28 | 11 | ||||||||||||
Adjustment on recognition of pre-acquisition deferred tax | 12 | — | 7 | — | ||||||||||||
Amortisation of other intangible assets | 12 | 25 | 23 | 18 | ||||||||||||
Investment in pre-publication assets | 18 | (230 | ) | (213 | ) | (222 | ) | |||||||||
Amortisation of pre-publication assets | 18 | 192 | 210 | 192 | ||||||||||||
Loss on sale of property, plant and equipment | 1 | 2 | — | |||||||||||||
Net finance costs | 7 | 106 | 74 | 70 | ||||||||||||
Share of results of joint ventures and associates | 13 | (23 | ) | (24 | ) | (14 | ) | |||||||||
Profit on sale of discontinued operations | 3 | (146 | ) | — | (346 | ) | ||||||||||
Goodwill impairment of discontinued operation | 3 | 97 | — | — | ||||||||||||
Net foreign exchange gains/(losses) from transactions | 11 | (37 | ) | 39 | ||||||||||||
Share-based payment costs | 26 | 30 | 25 | 23 | ||||||||||||
Inventories | (1 | ) | (16 | ) | (17 | ) | ||||||||||
Trade and other receivables | (5 | ) | (60 | ) | (4 | ) | ||||||||||
Trade and other liabilities | 80 | 54 | 71 | |||||||||||||
Retirement benefit obligations | (126 | ) | (17 | ) | (17 | ) | ||||||||||
Provisions | 3 | — | — | |||||||||||||
Net cash generated from operations | 659 | 621 | 653 | |||||||||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in | ||||||||||||
£ millions) | ||||||||||||
Net book amount | 3 | 8 | 10 | |||||||||
Loss on sale of property, plant and equipment | — | (4 | ) | (2 | ) | |||||||
Proceeds from sale of property, plant and equipment | 3 | 4 | 8 | |||||||||
Non-cash transactions | ||||||||||||
The principal non-cash transactions are movements in finance lease obligations | — | (1 | ) | (1 | ) | |||||||
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Net book amount | 15 | 10 | 3 | |||||||||
Loss on sale of property, plant and equipment | (1 | ) | (2 | ) | — | |||||||
Proceeds from sale of property, plant and equipment | 14 | 8 | 3 | |||||||||
Contingencies |
F-68
F-57
35. | Commitments |
2005 | 2004 | 2003 | ||||||||||
(All figures in | ||||||||||||
£ millions) | ||||||||||||
Property, plant and equipment | 1 | 6 | 1 | |||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Property, plant and equipment | 3 | — | ||||||
2005 | 2004 | 2003 | ||||||||||
(All figures in £ millions) | ||||||||||||
Not later than one year | 129 | 117 | 123 | |||||||||
Later than one year and not later than five years | 397 | 353 | 375 | |||||||||
Later than five years | 869 | 584 | 529 | |||||||||
1,395 | 1,054 | 1,027 | ||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Not later than one year | 123 | 123 | ||||||
Later than one year and not later than two years | 116 | 113 | ||||||
Later than two years and not later than three years | 102 | 103 | ||||||
Later than three years and not later than four years | 93 | 90 | ||||||
Later than four years and not later than five years | 85 | 83 | ||||||
Later than five years | 834 | 857 | ||||||
1,353 | 1,369 | |||||||
36. | Related party transactions |
F-58
F-59
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 503 | (68 | ) | 435 | ||||||||
Intangible assets | 3,610 | 71 | 3,681 | |||||||||
Investments in joint ventures and associates | 113 | (7 | ) | 106 | ||||||||
Deferred income tax assets | — | 374 | 374 | |||||||||
Other financial assets | 22 | — | 22 | |||||||||
Other receivables | — | 74 | 74 | |||||||||
4,248 | 444 | 4,692 | ||||||||||
Current assets | ||||||||||||
Intangible assets — pre-publication | — | 380 | 380 | |||||||||
Inventories | 734 | (380 | ) | 354 | ||||||||
Trade and other receivables | 1,059 | (79 | ) | 980 | ||||||||
Deferred income tax assets | 174 | (174 | ) | — | ||||||||
Cash and cash equivalents | 575 | (10 | ) | 565 | ||||||||
2,542 | (263 | ) | 2,279 | |||||||||
Total assets | 6,790 | 181 | 6,971 | |||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Financial liabilities — Borrowings | (1,734 | ) | (2 | ) | (1,736 | ) | ||||||
Deferred income tax liabilities | — | (119 | ) | (119 | ) | |||||||
Retirement benefit obligations | — | (351 | ) | (351 | ) | |||||||
Provisions for other liabilities and charges | (165 | ) | 120 | (45 | ) | |||||||
Other liabilities | (60 | ) | (10 | ) | (70 | ) | ||||||
(1,959 | ) | (362 | ) | (2,321 | ) | |||||||
Current liabilities | ||||||||||||
Trade and other liabilities | (1,114 | ) | 178 | (936 | ) | |||||||
Financial liabilities — Borrowings | (249 | ) | (3 | ) | (252 | ) | ||||||
Current income tax liabilities | — | (52 | ) | (52 | ) | |||||||
Provisions for other liabilities and charges | — | (34 | ) | (34 | ) | |||||||
(1,363 | ) | 89 | (1,274 | ) | ||||||||
Total liabilities | (3,322 | ) | (273 | ) | (3,595 | ) | ||||||
Net assets | 3,468 | (92 | ) | 3,376 | ||||||||
Equity | ||||||||||||
Share capital | 200 | — | 200 | |||||||||
Share premium | 2,465 | — | 2,465 | |||||||||
Other reserves | (121 | ) | — | (121 | ) | |||||||
Retained earnings | 732 | (88 | ) | 644 | ||||||||
Total equity attributable to equity holders of the Company | 3,276 | (88 | ) | 3,188 | ||||||||
Minority interest | 192 | (4 | ) | 188 | ||||||||
Total equity | 3,468 | (92 | ) | 3,376 | ||||||||
F-60
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 468 | (66 | ) | 402 | ||||||||
Intangible assets | 3,260 | 290 | 3,550 | |||||||||
Investments in joint ventures and associates | 64 | — | 64 | |||||||||
Deferred income tax assets | — | 342 | 342 | |||||||||
Other financial assets | 21 | — | 21 | |||||||||
Other receivables | — | 100 | 100 | |||||||||
3,813 | 666 | 4,479 | ||||||||||
Current assets | ||||||||||||
Intangible assets — pre-publication | — | 362 | 362 | |||||||||
Inventories | 683 | (364 | ) | 319 | ||||||||
Trade and other receivables | 1,134 | (109 | ) | 1,025 | ||||||||
Deferred income tax assets | 145 | (145 | ) | — | ||||||||
Cash and cash equivalents | 561 | (10 | ) | 551 | ||||||||
2,523 | (266 | ) | 2,257 | |||||||||
Total assets | 6,336 | 400 | 6,736 | |||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Financial liabilities — Borrowings | (1,347 | ) | (2 | ) | (1,349 | ) | ||||||
Deferred income tax liabilities | — | (140 | ) | (140 | ) | |||||||
Retirement benefit obligations | — | (364 | ) | (364 | ) | |||||||
Provisions for other liabilities and charges | (152 | ) | 93 | (59 | ) | |||||||
Other liabilities | (45 | ) | (25 | ) | (70 | ) | ||||||
(1,544 | ) | (438 | ) | (1,982 | ) | |||||||
Current liabilities | ||||||||||||
Trade and other liabilities | (1,129 | ) | 186 | (943 | ) | |||||||
Financial liabilities — Borrowings | (575 | ) | (3 | ) | (578 | ) | ||||||
Current income tax liabilities | — | (54 | ) | (54 | ) | |||||||
Provisions for other liabilities and charges | — | (18 | ) | (18 | ) | |||||||
(1,704 | ) | 111 | (1,593 | ) | ||||||||
Total liabilities | (3,248 | ) | (327 | ) | (3,575 | ) | ||||||
Net assets | 3,088 | 73 | 3,161 | |||||||||
Equity | ||||||||||||
Share capital | 201 | — | 201 | |||||||||
Share premium | 2,469 | — | 2,469 | |||||||||
Other reserves | (122 | ) | (288 | ) | (410 | ) | ||||||
Retained earnings | 345 | 364 | 709 | |||||||||
Total equity attributable to equity holders of the Company | 2,893 | 76 | 2,969 | |||||||||
Minority interest | 195 | (3 | ) | 192 | ||||||||
Total equity | 3,088 | 73 | 3,161 | |||||||||
F-61
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 473 | (118 | ) | 355 | ||||||||
Intangible assets | 2,890 | 388 | 3,278 | |||||||||
Investments in joint ventures and associates | 48 | (1 | ) | 47 | ||||||||
Deferred income tax assets | — | 359 | 359 | |||||||||
Other financial assets | 17 | (2 | ) | 15 | ||||||||
Other receivables | — | 102 | 102 | |||||||||
3,428 | 728 | 4,156 | ||||||||||
Current assets | ||||||||||||
Intangible assets — pre-publication | — | 356 | 356 | |||||||||
Inventories | 676 | (362 | ) | 314 | ||||||||
Trade and other receivables | 1,104 | (171 | ) | 933 | ||||||||
Deferred income tax assets | 165 | (165 | ) | — | ||||||||
Cash and cash equivalents | 613 | (152 | ) | 461 | ||||||||
2,558 | (494 | ) | 2,064 | |||||||||
Non-current assets classified as held for sale | — | 358 | 358 | |||||||||
2,558 | (136 | ) | 2,422 | |||||||||
Total assets | 5,986 | 592 | 6,578 | |||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Financial liabilities — Borrowings | (1,712 | ) | (2 | ) | (1,714 | ) | ||||||
Deferred income tax liabilities | — | (139 | ) | (139 | ) | |||||||
Retirement benefit obligations | — | (408 | ) | (408 | ) | |||||||
Provisions for other liabilities and charges | (123 | ) | 80 | (43 | ) | |||||||
Other liabilities | (60 | ) | (39 | ) | (99 | ) | ||||||
(1,895 | ) | (508 | ) | (2,403 | ) | |||||||
Current liabilities | ||||||||||||
Trade and other liabilities | (1,168 | ) | 300 | (868 | ) | |||||||
Financial liabilities — Borrowings | (107 | ) | (2 | ) | (109 | ) | ||||||
Current income tax liabilities | — | (89 | ) | (89 | ) | |||||||
Provisions for other liabilities and charges | — | (14 | ) | (14 | ) | |||||||
(1,275 | ) | 195 | (1,080 | ) | ||||||||
Liabilities directly associated with non-current assets classified as held for sale | — | (81 | ) | (81 | ) | |||||||
Total liabilities | (3,170 | ) | (394 | ) | (3,564 | ) | ||||||
Net assets | 2,816 | 198 | 3,014 | |||||||||
Equity | ||||||||||||
Share capital | 201 | — | 201 | |||||||||
Share premium | 2,473 | — | 2,473 | |||||||||
Other reserves | (132 | ) | (491 | ) | (623 | ) | ||||||
Retained earnings | 61 | 688 | 749 | |||||||||
Total equity attributable to equity holders of the Company | 2,603 | 197 | 2,800 | |||||||||
Minority interest | 213 | 1 | 214 | |||||||||
Total equity | 2,816 | 198 | 3,014 | |||||||||
F-62
Notes | 1 Jan 2003 | 31 Dec 2003 | 31 Dec 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Total equity UK GAAP | 3,468 | 3,088 | 2,816 | |||||||||||||
Goodwill amortisation | a | 66 | 228 | 394 | ||||||||||||
Intangible assets acquired | b | — | 40 | 48 | ||||||||||||
Intangible assets — capitalised software costs | c | 3 | — | — | ||||||||||||
Intangible assets — pre-publication expenditure | d | — | — | — | ||||||||||||
Share-based payments | e | 13 | 15 | 22 | ||||||||||||
Employee benefits | f | (259 | ) | (284 | ) | (338 | ) | |||||||||
Leases | g | (12 | ) | (22 | ) | (33 | ) | |||||||||
Joint ventures | h | (3 | ) | (5 | ) | (6 | ) | |||||||||
Associates | i | (10 | ) | (10 | ) | (8 | ) | |||||||||
Income taxes | j | (3 | ) | (5 | ) | (7 | ) | |||||||||
Dividends | k | 115 | 119 | 125 | ||||||||||||
Other | (2 | ) | (3 | ) | 1 | |||||||||||
Discontinued operations | l | — | — | — | ||||||||||||
Total adjustments to equity | (92 | ) | 73 | 198 | ||||||||||||
Total equity IFRS | 3,376 | 3,161 | 3,014 | |||||||||||||
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Continuing operations | ||||||||||||
Sales | 4,048 | (198 | ) | 3,850 | ||||||||
Cost of goods sold | (1,910 | ) | 64 | (1,846 | ) | |||||||
Gross profit | 2,138 | (134 | ) | 2,004 | ||||||||
Operating expenses | (1,912 | ) | 318 | (1,594 | ) | |||||||
Other net gains and losses | 6 | (12 | ) | (6 | ) | |||||||
Share of results of joint ventures and associates | — | 2 | 2 | |||||||||
Operating profit | 232 | 174 | 406 | |||||||||
Net finance costs | (80 | ) | (13 | ) | (93 | ) | ||||||
Profit before tax | 152 | 161 | 313 | |||||||||
Income tax | (75 | ) | 14 | (61 | ) | |||||||
Profit for the year from continuing operations | 77 | 175 | 252 | |||||||||
Profit for the year from discontinued operations | — | 23 | 23 | |||||||||
Profit for the year | 77 | 198 | 275 | |||||||||
F-63
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Continuing operations | ||||||||||||
Sales | 3,919 | (223 | ) | 3,696 | ||||||||
Cost of goods sold | (1,866 | ) | 77 | (1,789 | ) | |||||||
Gross profit | 2,053 | (146 | ) | 1,907 | ||||||||
Operating expenses | (1,832 | ) | 312 | (1,520 | ) | |||||||
Other net gains and losses | 9 | — | 9 | |||||||||
Share of results of joint ventures and associates | 10 | (2 | ) | 8 | ||||||||
Operating profit | 240 | 164 | 404 | |||||||||
Net finance costs | (69 | ) | (10 | ) | (79 | ) | ||||||
Profit before tax | 171 | 154 | 325 | |||||||||
Income tax | (62 | ) | (1 | ) | (63 | ) | ||||||
Profit for the year from continuing operations | 109 | 153 | 262 | |||||||||
Profit for the year from discontinued operations | — | 22 | 22 | |||||||||
Profit for the year | 109 | 175 | 284 | |||||||||
Notes | 2003 | 2004 | ||||||||||
(All figures in £ | ||||||||||||
millions) | ||||||||||||
Profit for the year UK GAAP | 77 | 109 | ||||||||||
Goodwill amortisation | a | 242 | 204 | |||||||||
Intangible assets acquired | b | (4 | ) | (5 | ) | |||||||
Intangible assets — capitalised software costs | c | (1 | ) | (1 | ) | |||||||
Intangible assets — pre-publication expenditure | d | — | — | |||||||||
Share-based payments | e | (23 | ) | (16 | ) | |||||||
Employee benefits | f | 1 | 6 | |||||||||
Leases | g | (10 | ) | (12 | ) | |||||||
Joint ventures | h | (2 | ) | (2 | ) | |||||||
Associates | i | (2 | ) | (2 | ) | |||||||
Income taxes | j | (2 | ) | (2 | ) | |||||||
Other | (1 | ) | 5 | |||||||||
Discontinued operations | l | — | — | |||||||||
Total adjustments to profit for the year | 198 | 175 | ||||||||||
Profit for the year IFRS | 275 | 284 | ||||||||||
F-64
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Cash flows from operating activities | 228 | 172 | 400 | |||||||||
Cash flows from investing activities | (91 | ) | (172 | ) | (263 | ) | ||||||
Cash flows from financing activities | (228 | ) | 86 | (142 | ) | |||||||
Effects of exchange rate changes on cash and cash equivalents | 37 | 8 | 45 | |||||||||
Net (decrease)/increase in cash and cash equivalents | (54 | ) | 94 | 40 | ||||||||
Cash and cash equivalents at beginning of year | 340 | 148 | 488 | |||||||||
Cash and cash equivalents at end of year | 286 | 242 | 528 | |||||||||
UK GAAP | Adjs | IFRS | ||||||||||
(All figures in £ millions) | ||||||||||||
Cash flows from operating activities | 387 | 175 | 562 | |||||||||
Cash flows from investing activities | (102 | ) | (179 | ) | (281 | ) | ||||||
Cash flows from financing activities | (255 | ) | (6 | ) | (261 | ) | ||||||
Effects of exchange rate changes on cash and cash equivalents | (3 | ) | (1 | ) | (4 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | 27 | (11 | ) | 16 | ||||||||
Cash and cash equivalents at beginning of year | 286 | 242 | 528 | |||||||||
Cash and cash equivalents at end of year | 313 | 231 | 544 | |||||||||
31 Dec 2004 | Adj | 1 Jan 2005 | ||||||||||
(All figures in £ millions) | ||||||||||||
Non-current assets | ||||||||||||
Deferred income tax assets | 359 | 5 | 364 | |||||||||
Financial assets — Derivative financial instruments | — | 145 | 145 | |||||||||
Current assets | ||||||||||||
Financial assets — Derivative financial instruments | — | 1 | 1 | |||||||||
Non-current liabilities | ||||||||||||
Financial liabilities — Borrowings | (1,714 | ) | (134 | ) | (1,848 | ) | ||||||
Financial liabilities — Derivative financial instruments | — | (40 | ) | (40 | ) | |||||||
Current liabilities | ||||||||||||
Trade and other liabilities | (868 | ) | 14 | (854 | ) | |||||||
Financial liabilities — Borrowings | (109 | ) | — | (109 | ) | |||||||
Financial liabilities — Derivative financial instruments | — | (3 | ) | (3 | ) | |||||||
Reserves | (126 | ) | 12 | (114 | ) | |||||||
F-65
F-69
F-66
F-67
F-68
Year ended December 31 | |||||||||||||||||
Note | 2005 | 2004 | 2003 | ||||||||||||||
£m | £m | £m | |||||||||||||||
Profit for the financial year under IFRS | 624 | 262 | 252 | ||||||||||||||
US GAAP adjustments: | |||||||||||||||||
Intangible amortization | (i | ) | (60 | ) | (75 | ) | (97 | ) | |||||||||
Discontinued operations | (ii | ) | — | (1 | ) | (3 | ) | ||||||||||
Disposal adjustments | (iii | ) | (119 | ) | 3 | (6 | ) | ||||||||||
Pensions and other post-retirement benefits | (iv | ) | (26 | ) | (23 | ) | (4 | ) | |||||||||
Deferred taxation | (v | ) | 1 | — | (27 | ) | |||||||||||
Share based payments | (vi | ) | (4 | ) | (13 | ) | (4 | ) | |||||||||
Derivative financial instruments | (vii | ) | (12 | ) | (23 | ) | 35 | ||||||||||
Acquisition adjustments | (x | ) | 1 | — | — | ||||||||||||
Partnerships and associates | (viii | ) | (2 | ) | — | (3 | ) | ||||||||||
Minority interests | (ix | ) | 2 | — | (1 | ) | |||||||||||
Other | (9 | ) | (1 | ) | 4 | ||||||||||||
Taxation effect of US GAAP adjustments | (v | ) | 15 | 53 | 27 | ||||||||||||
Total US GAAP adjustments | (213 | ) | (80 | ) | (79 | ) | |||||||||||
Profit for the financial year under US GAAP | 411 | 182 | 173 | ||||||||||||||
Profit from continuing operations (less charge for applicable taxes 2005: £107m, 2004: £11m, 2003: £71m) | 174 | 166 | 160 | ||||||||||||||
(Loss)/profit from discontinued operations (less charge for/(benefit from) applicable taxes 2005: £(1)m; 2004: £6m, 2003: £22m) | (2 | ) | 16 | 16 | |||||||||||||
Profit/(loss) on disposal of discontinued operations (less charge for applicable taxes 2005: £1m; 2004: £nil, 2003: £2m) | 239 | — | (3 | ) | |||||||||||||
Profit for the financial year under US GAAP | 411 | 182 | 173 | ||||||||||||||
F-69
Year ended December 31 | ||||||||||||||||
Note | 2005 | 2004 | 2003 | |||||||||||||
Presentation of earnings per equity share under US GAAP | (xi | ) | ||||||||||||||
Earnings per equity share | (p | ) | (p | ) | (p | ) | ||||||||||
Basic: | ||||||||||||||||
Continuing operations | 21.8 | 20.9 | 20.1 | |||||||||||||
Discontinued operations | 29.7 | 2.0 | 1.7 | |||||||||||||
Total | 51.5 | 22.9 | 21.8 | |||||||||||||
Diluted: | ||||||||||||||||
Continuing operations | 21.7 | 20.8 | 20.1 | |||||||||||||
Discontinued operations | 29.7 | 2.0 | 1.7 | |||||||||||||
Total | 51.4 | 22.8 | 21.8 | |||||||||||||
Average shares outstanding (millions) | 797.9 | 795.6 | 794.4 | |||||||||||||
Dilutive effect of stock options (millions) | 1.1 | 1.1 | 0.9 | |||||||||||||
Average number of shares outstanding assuming dilution (millions) | 799.0 | 796.7 | 795.3 | |||||||||||||
Year ended | |||||||||||||
December 31 | |||||||||||||
Note | 2005 | 2004 | |||||||||||
£m | £m | ||||||||||||
Shareholders’ funds under IFRS | 3,564 | 2,800 | |||||||||||
US GAAP adjustments: | |||||||||||||
Goodwill | (i | ) | 88 | 136 | |||||||||
Intangibles | (i | ) | 231 | 267 | |||||||||
Discontinued operations | (ii | ) | — | 49 | |||||||||
Pensions and other post-retirement benefits | (iv | ) | 61 | 62 | |||||||||
Derivative financial instruments | (vii | ) | 15 | 11 | |||||||||
Acquisition adjustments | (x | ) | 26 | 20 | |||||||||
Partnerships and associates | (viii | ) | 15 | 9 | |||||||||
Minority interests | (ix | ) | (30 | ) | (15 | ) | |||||||
Other | (6 | ) | 3 | ||||||||||
Taxation effect of US GAAP adjustments | (v | ) | (126 | ) | (124 | ) | |||||||
Total US GAAP adjustments | 274 | 418 | |||||||||||
Shareholders’ funds under US GAAP | 3,838 | 3,218 | |||||||||||
F-70
F-71
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Total operating profit/(loss) in respect of discontinued operations | (3 | ) | 21 | 27 | ||||||||
Assets in respect of discontinued operations | — | 413 | ||||||||||
Liabilities in respect of discontinued operations | — | (148 | ) |
2005 | 2004 | 2003 | ||||||||||
£m | £m | £m | ||||||||||
Difference in carrying value on disposal | (86 | ) | — | — | ||||||||
Cumulative translation adjustment | (33 | ) | — | — | ||||||||
Timing on property disposals | — | 3 | (6 | ) | ||||||||
Total US GAAP differences in respect of disposals | (119 | ) | 3 | (6 | ) | |||||||
F-72
Income | Equity | Income | Equity | Income | ||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2003 | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Tax effect of GAAP adjustments on: | ||||||||||||||||||||
Goodwill and intangible amortization | 18 | (121 | ) | 17 | (129 | ) | 20 | |||||||||||||
Derivative financial instruments | 3 | (5 | ) | 38 | (3 | ) | (21 | ) | ||||||||||||
Options, pensions, disposals and other adjustments | (6 | ) | — | (2 | ) | 8 | 28 | |||||||||||||
Total taxation effect of US GAAP adjustments | 15 | (126 | ) | 53 | (124 | ) | 27 | |||||||||||||
F-73
F-74
F-75
F-76
F-77
F-78
/s/ | ||
F-70
F-79