(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 | ||
or | ||
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 | ||
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 |
þLarge accelerated filer | oAccelerated filer | oNon-accelerated filer |
International Accounting Standards Board | o |
Item 17 | Item 18o |
Yeso | Noþ |
2
2
3
3
• | 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, |
4
• | currency risk, | |
• | US federal and state spending patterns, |
4
• | debt levels, and | |
• | general market and economic conditions. |
5
5
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
Year Ended December 31 | ||||||||||||||||||||||||
2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
$ | £ | £ | £ | £ | £ | |||||||||||||||||||
(In millions, except for per share amounts) | ||||||||||||||||||||||||
IFRS information: | ||||||||||||||||||||||||
Consolidated Income Statement data | ||||||||||||||||||||||||
Total sales | 7,024 | 4,811 | 4,162 | 3,990 | 3,662 | 3,340 | ||||||||||||||||||
Total operating profit | 987 | 676 | 574 | 522 | 497 | 359 | ||||||||||||||||||
Profit after taxation from continuing operations | 603 | 413 | 337 | 444 | 319 | 232 | ||||||||||||||||||
Profit for the financial year | 472 | 323 | 310 | 469 | 644 | 284 | ||||||||||||||||||
Consolidated Earnings data per share | ||||||||||||||||||||||||
Basic earnings per equity share(1) | $ | 0.53 | 36.6p | 35.6p | 55.9p | 78.2p | 32.9p | |||||||||||||||||
Diluted earnings per equity share(2) | $ | 0.53 | 36.6p | 35.6p | 55.8p | 78.1p | 32.9p | |||||||||||||||||
Basic earnings from continuing operations per equity share(1) | $ | 0.70 | 47.9p | 39.0p | 52.7p | 37.5p | 26.4p | |||||||||||||||||
Diluted earnings from continuing operations per equity share(2) | $ | 0.70 | 47.9p | 39.0p | 52.6p | 37.4p | 26.3p | |||||||||||||||||
Dividends per ordinary share | $ | 0.49 | 33.8p | 31.6p | 29.3p | 27.0p | 25.4p | |||||||||||||||||
Consolidated Balance Sheet data at | ||||||||||||||||||||||||
period end | ||||||||||||||||||||||||
Total assets (non-current assets plus current assets) | 14,448 | 9,896 | 7,292 | 7,213 | 7,600 | 6,578 | ||||||||||||||||||
Net assets | 7,335 | 5,024 | 3,874 | 3,644 | 3,733 | 3,014 | ||||||||||||||||||
Long-term obligations(3) | (4,237 | ) | (2,902 | ) | (1,681 | ) | (1,853 | ) | (2,500 | ) | (2,403 | ) | ||||||||||||
Capital stock | 295 | 202 | 202 | 202 | 201 | 201 | ||||||||||||||||||
Number of equity shares outstanding (millions of ordinary shares) | 809 | 809 | 808 | 806 | 804 | 803 |
6
6
Year ended December 31 | ||||||||||||||||||||
2006 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
IFRS | IFRS | IFRS | IFRS | |||||||||||||||||
IFRS | £ | £ | £ | £ | ||||||||||||||||
$ | ||||||||||||||||||||
(In millions, except for per share amounts) | ||||||||||||||||||||
IFRS information: | ||||||||||||||||||||
Consolidated Income Statement data | ||||||||||||||||||||
Total sales | 8,109 | 4,137 | 3,808 | 3,479 | 3,651 | |||||||||||||||
Total operating profit | 1,058 | 540 | 516 | 382 | 401 | |||||||||||||||
Profit after taxation from continuing operations | 892 | 455 | 330 | 248 | 249 | |||||||||||||||
Profit for the financial year | 919 | 469 | 644 | 284 | 275 | |||||||||||||||
Basic earnings per equity share(4) | $1.10 | 55.9 | p | 78.2 | p | 32.9 | p | 31.7 | p | |||||||||||
Diluted earnings per equity share(5) | $1.09 | 55.8 | p | 78.1 | p | 32.9 | p | 31.7 | p | |||||||||||
Dividends per ordinary share | $0.57 | 29.3 | p | 27.0 | p | 25.4 | p | 24.2 | p | |||||||||||
Consolidated Balance Sheet data at period end | ||||||||||||||||||||
Total assets (Fixed assets plus Current assets) | 14,137 | 7,213 | 7,600 | 6,578 | 6,736 | |||||||||||||||
Shareholders funds | 6,813 | 3,476 | 3,564 | 2,800 | 2,969 | |||||||||||||||
Long-term obligations(6) | (3,632 | ) | (1,853 | ) | (2,500 | ) | (2,403 | ) | (1,982 | ) | ||||||||||
Capital stock(1) | 396 | 202 | 201 | 201 | 201 | |||||||||||||||
Number of equity shares outstanding (millions of ordinary shares) | 806 | 806 | 804 | 803 | 802 |
Year ended December 31 | |||||||||||||||||||||||||
2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||
£ | £ | £ | £ | £ | |||||||||||||||||||||
$ | |||||||||||||||||||||||||
(I | n millions, except for per share amounts) | ||||||||||||||||||||||||
US GAAP information(7): | |||||||||||||||||||||||||
Consolidated Income Statement data | |||||||||||||||||||||||||
Total sales(8) | 8,292 | 4,231 | 3,892 | 3,562 | 3,774 | 3,896 | |||||||||||||||||||
Total operating profit(2) | 902 | 460 | 364 | 269 | 361 | 408 | |||||||||||||||||||
Profit after taxation from continuing operations | 823 | 420 | 182 | 170 | 197 | 185 | |||||||||||||||||||
Net income for the year | 668 | 341 | 411 | 182 | 173 | 189 | |||||||||||||||||||
Profit from continuing operations for the year(3) | 780 | 398 | 164 | 153 | 159 | 187 | |||||||||||||||||||
(Loss)/profit from discontinued operations(3) | (112 | ) | (57 | ) | 8 | 29 | 17 | 24 | |||||||||||||||||
Profit/(loss) on disposal of discontinued operations(3) | — | — | 239 | — | (3 | ) | (1 | ) | |||||||||||||||||
Basic earnings per equity share(4) | $ | 0.84 | 42.7 | p | 51.5 | p | 22.8 | p | 21.8 | p | 23.7 | p | |||||||||||||
Diluted earnings per equity share(5) | $ | 0.83 | 42.6 | p | 51.4 | p | 22.8 | p | 21.8 | p | 23.7 | p | |||||||||||||
Basic earnings from continuing operations per equity | |||||||||||||||||||||||||
Share(1)(4) | $ | 0.98 | 49.9 | p | 20.5 | p | 19.2 | p | 20.0 | p | 23.5 | p | |||||||||||||
Diluted earnings from continuing operations per equity Shares(3)(5) | $ | 0.97 | 49.8 | p | 20.5 | p | 19.2 | p | 20.0 | p | 23.5 | p | |||||||||||||
Basic (loss)/earnings per share from discontinued operations(3)(4) | $ | (0.14 | ) | (7.2 | )p | 31.0 | p | 3.6 | p | 1.8 | p | 2.9 | p | ||||||||||||
Diluted (loss)/earnings per share from discontinued operations(3)(5) | $ | (0.14 | ) | (7.2 | )p | 30.9 | p | 3.6 | p | 1.8 | p | 2.9 | p | ||||||||||||
Dividends per ordinary share | $ | 0.57 | 29.3 | p | 27.0 | p | 25.4 | p | 24.2 | p | 22.7 | p |
7
Year ended December 31 | ||||||||||||||||||||||||
2006 | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
£ | £ | £ | £ | £ | ||||||||||||||||||||
$ | ||||||||||||||||||||||||
(I | n millions, except for per share amounts) | |||||||||||||||||||||||
Consolidated Balance Sheet data at period end | ||||||||||||||||||||||||
Total assets | 14,351 | 7,322 | 7,800 | 7,040 | 7,101 | 6,767 | ||||||||||||||||||
Shareholders’ funds | 7,019 | 3,581 | 3,838 | 3,218 | 3,333 | 4,155 | ||||||||||||||||||
Long-term obligations(6) | (3,622 | ) | (1,848 | ) | (2,397 | ) | (2,392 | ) | (1,951 | ) | (2,026 | ) |
(1) | ||
Basic earnings per equity share is based on | ||
Diluted earnings per equity share is based on diluted earnings for the financial period and the diluted weighted average number of ordinary shares in issue during the period. Diluted earnings comprise earnings adjusted for the tax benefit on the conversion of share options by employees and the weighted average number of ordinary shares adjusted for the dilutive effect of share options. | ||
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 the | ||
8
Fiscal year | Interim | Final | Total | Interim | Final | Total | ||||||||||||||||||
(Pence per ordinary share) | (Cents per ordinary share) | |||||||||||||||||||||||
2006 | 10.5 | 18.8 | 29.3 | 20.6 | 36.8 | 57.4 | ||||||||||||||||||
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 |
Fiscal year | Interim | Final | Total | Interim | Final | Total | ||||||||||||||||||
(Pence per ordinary share) | (Cents per ordinary share) | |||||||||||||||||||||||
2008 | 11.8 | 22.0 | 33.8 | 21.6 | 32.1 | * | 53.7 | ** | ||||||||||||||||
2007 | 11.1 | 20.5 | 31.6 | 22.4 | 39.9 | 62.3 | ||||||||||||||||||
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 |
* | As the 2008 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, 2008. | |
** | The US dollar values for dividends paid are translated at actual rates on the date paid. In the prior table of selected consolidated financial data, the US dollar dividends per ordinary share are translated at the noon rate on December 31, 2008. The difference between the two amounts is due to the differing exchange rates on the date of payment of the interim dividend and December 31, 2008. |
7
Month | High | Low | ||||||
March 2007 | $ | 1.97 | $ | 1.92 | ||||
February 2007 | $ | 1.97 | $ | 1.94 | ||||
January 2007 | $ | 1.98 | $ | 1.93 | ||||
December 2006 | $ | 1.98 | $ | 1.95 | ||||
November 2006 | $ | 1.97 | $ | 1.89 | ||||
October 2006 | $ | 1.91 | $ | 1.85 |
Year ended December 31 | Average rate | |||
2006 | $ | 1.84 | ||
2005 | $ | 1.81 | ||
2004 | $ | 1.83 | ||
2003 | $ | 1.63 | ||
2002 | $ | 1.51 |
Month | High | Low | ||||||
February 2009 | $ | 1.49 | $ | 1.42 | ||||
January 2009 | $ | 1.53 | $ | 1.37 | ||||
December 2008 | $ | 1.55 | $ | 1.44 | ||||
November 2008 | $ | 1.62 | $ | 1.48 | ||||
October 2008 | $ | 1.78 | $ | 1.55 | ||||
September 2008 | $ | 1.86 | $ | 1.75 |
Year Ended December 31 | Average rate | |||
2008 | $ | 1.84 | ||
2007 | $ | 2.01 | ||
2006 | $ | 1.84 | ||
2005 | $ | 1.81 | ||
2004 | $ | 1.83 |
8
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9
10
Students seeking cheaper sources of content, e.g. | ||
Competition from major publishers and other educational material and service providers, including not for profit organizations, in our US educational textbook and | ||
— | People: the investments we make in our employees, combined with our employment policies and practices, we believe are critical factors enabling us to recruit and retain the very best people in our business sectors. |
10
11
11
12
12
ITEM 4. | INFORMATION ON THE COMPANY |
13
• | FT Publishing | |
• | Interactive Data |
• | Content: We invest steadily in unique | |
• | Technology and services: Content alone is not enough, and to make our content more useful and enticing, we often add technology. We |
13
14
services, and these are many of our fastest-growing businesses. Digital services of one kind or another are fundamental to every part of Pearson today. |
• | International markets: Though we currently generate | |
• | Efficiency: |
North American Higher |
14
15
15
16
Interactive Data Interactive Data |
• | 50% interest in The Economist Group, publisher of one of the world’s leading weekly business and current affairs | |
• | 50% interest in FTSE International, a joint venture with the London Stock Exchange, which publishes a wide range of global indices, including the |
16
• | 50% interest inBusiness DayandFinancial Mail, publishers of one of South Africa’s leading financial | |
• |
17
• | The School market is primarily driven by an adoption cycle in which major state education boards ‘adopt’ programs and provide funding to schools for the purchase of these programs. There is an established and published adoption cycle with new adoptions taking place on average every 5 years for a particular subject. Once adopted, a program will typically sell over the course of the subsequent 5 years. The Company renews its pre-publication assets to meet the market adoption cycles. Therefore the operating cycle naturally follows the market cycle. | |
• | 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 line with the release of new editions or new technology offerings. The Company renews its pre-publication assets to meet the typical demand for new editions of, or revisions to, educational programs. Analysis of historical data shows that the average life cycle of Higher Education content is 5 years. Again the operating cycle mirrors the market cycle. |
17
18
18
19
Percentage | ||||||
interest/voting | ||||||
Name | Country of incorporation/residence | power | ||||
Pearson Education | ||||||
Pearson Education | United States (Delaware) | % | ||||
Pearson Education | England and Wales | % | ||||
Edexcel Ltd. | England and Wales | 100 | % | |||
NCS Pearson | United States (Minnesota) | % | ||||
FT Group | ||||||
The Financial Times Limited | England and Wales | % | ||||
England and Wales | ||||||
% | ||||||
Interactive Data Corporation | United States (Delaware) | |||||
% | ||||||
The Penguin Group | ||||||
Penguin Group (USA) | United States (Delaware) | % | ||||
The Penguin Publishing Co | England and Wales | % | ||||
Dorling Kindersley Holdings Ltd | England and Wales | % |
19
General use of property | Location | Area in square feet | ||||
Kirkwood, New York, USA | ||||||
Pittston, Pennsylvania, USA | 406,000 | |||||
Office | Iowa City, Iowa, USA | 310,000 | ||||
Old Tappan, New Jersey, USA | 210,112 | |||||
Warehouse/ | Cedar Rapids, Iowa, USA | 205,000 | ||||
Southwark, London, UK | 155,000 | |||||
Hadley, Massachusetts, USA | 136,570 | |||||
Printing | Owatonna, Minnesota, USA | 128,000 | ||||
20
General use of property | Location | Area in square feet | ||||
Lebanon, Indiana, USA | 1,091,435 | |||||
Cranbury, New Jersey, USA | 886,747 | |||||
Warehouse/ | Indianapolis, Indiana, USA | 737,850 | ||||
Warehouse/ | San Antonio, Texas, USA | 559,258 | ||||
Warehouse/Office | Newmarket, Ontario, Canada | 518,128 | ||||
Upper Saddle River, New Jersey, USA | 474,801 | |||||
Warehouse/ | Rugby, UK | 446,077 | ||||
London, UK | 282,917 | |||||
Office | Harlow, UK | 231,850 | ||||
Warehouse/ | Austin, Texas, USA | 226,076 | ||||
Boston, Massachusetts, USA | 225,299 | |||||
Warehouse | Scoresby, Victoria, Australia | |||||
Boston, Massachusetts, USA | 191,360 | * | ||||
Glenview, Illinois, USA | 187,500 | |||||
Bedfordshire, UK | 187,248 | |||||
Office | Bloomington, Minnesota, USA | 153,240 | ||||
Parsippany, New Jersey, USA | 143,777 | |||||
Warehouse | San Antonio Zomeyucan, Mexico | 113,638 | ||||
London, UK | 112,000 | |||||
Lawrence, | 105,000 |
* | Reduced to 53,248 square feet subsequent to year end |
20
21
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22
22
Year ended December 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
£m | £m | £m | |||||||||||
Education: | |||||||||||||
School | 1,455 | 1,295 | 1,087 | ||||||||||
Higher Education | 795 | 779 | 729 | ||||||||||
Professional | 341 | 301 | 290 | ||||||||||
FT Group: | |||||||||||||
FT Publishing | 366 | 332 | 318 | ||||||||||
IDC | 332 | 297 | 269 | ||||||||||
Penguin | 848 | 804 | 786 | ||||||||||
Total | 4,137 | 3,808 | 3,479 | ||||||||||
Year Ended December 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
£m | £m | £m | ||||||||||
Education: | ||||||||||||
North American | 2,002 | 1,667 | 1,679 | |||||||||
International | 866 | 735 | 640 | |||||||||
Professional | 244 | 226 | 211 | |||||||||
FT Group: | ||||||||||||
FT Publishing | 390 | 344 | 280 | |||||||||
Interactive Data | 406 | 344 | 332 | |||||||||
Penguin | 903 | 846 | 848 | |||||||||
Total | 4,811 | 4,162 | 3,990 | |||||||||
Year ended December 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
£m | £m | £m | |||||||||||
European countries | 1,089 | 951 | 820 | ||||||||||
North America | 2,642 | 2,451 | 2,309 | ||||||||||
Asia Pacific | 298 | 300 | 263 | ||||||||||
Other countries | 108 | 106 | 87 | ||||||||||
Total | 4,137 | 3,808 | 3,479 | ||||||||||
Year Ended December 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
£m | £m | £m | ||||||||||
European countries | 1,217 | 1,102 | 1,003 | |||||||||
North America | 3,028 | 2,591 | 2,585 | |||||||||
Asia Pacific | 415 | 351 | 295 | |||||||||
Other countries | 151 | 118 | 107 | |||||||||
Total | 4,811 | 4,162 | 3,990 | |||||||||
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25
Year ended December 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
£m | £m | £m | |||||||||||
Profit for the year | |||||||||||||
IFRS | 446 | 624 | 262 | ||||||||||
US GAAP | 341 | 411 | 182 | ||||||||||
Equity shareholders’ funds | |||||||||||||
IFRS | 3,476 | 3,564 | |||||||||||
US GAAP | 3,581 | 3,838 |
26
24
Year ended | |||||||||
December 31 | |||||||||
2006 | 2005 | ||||||||
£m | £m | ||||||||
Cost of goods sold | 1,917 | 1,787 | |||||||
Distribution costs | 299 | 292 | |||||||
Administration and other expenses | 1,504 | 1,351 | |||||||
Other operating income | (99 | ) | (84 | ) | |||||
Total | 1,704 | 1,559 | |||||||
27
Year Ended December 31 | ||||||||
2008 | 2007 | |||||||
£m | £m | |||||||
Cost of goods sold | 2,174 | 1,910 | ||||||
Distribution costs | 198 | 202 | ||||||
Administration and other expenses | 1,890 | 1,600 | ||||||
Other operating income | (102 | ) | (101 | ) | ||||
Total | 1,986 | 1,701 | ||||||
25
26
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||
North American | International | FT | Interactive | |||||||||||||||||||||||||
£m | Education | Education | Professional | Publishing | Data | Penguin | Total | |||||||||||||||||||||
Sales | 2,002 | 866 | 244 | 390 | 406 | 903 | 4,811 | |||||||||||||||||||||
42% | 18% | 5% | 8% | 8% | 19% | 100% | ||||||||||||||||||||||
Total operating profit | 258 | 113 | 35 | 67 | 112 | 91 | 676 | |||||||||||||||||||||
38% | 17% | 5% | 10% | 17% | 13% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired Intangibles | 45 | 22 | 1 | 7 | 9 | 2 | 86 | |||||||||||||||||||||
Adjusted operating profit: continuing Operations | 303 | 135 | 36 | 74 | 121 | 93 | 762 | |||||||||||||||||||||
Adjusted operating profit: discontinued Operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Total adjusted operating profit | 303 | 135 | 36 | 74 | 121 | 93 | 762 | |||||||||||||||||||||
40% | 17% | 5% | 10% | 16% | 12% | 100% |
27
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||
North American | International | FT | Interactive | |||||||||||||||||||||||||
£m | Education | Education | �� | Professional | Publishing | Data | Penguin | Total | ||||||||||||||||||||
Sales | 1,667 | 735 | 226 | 344 | 344 | 846 | 4,162 | |||||||||||||||||||||
40% | 18% | 5% | 8% | 8% | 21% | 100% | ||||||||||||||||||||||
Total operating profit | 253 | 82 | 26 | 50 | 90 | 73 | 574 | |||||||||||||||||||||
44% | 14% | 4% | 9% | 16% | 13% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired Intangibles | 20 | 10 | 1 | 6 | 7 | 1 | 45 | |||||||||||||||||||||
Adjusted operating profit: continuing Operations | 273 | 92 | 27 | 56 | 97 | 74 | 619 | |||||||||||||||||||||
Adjusted operating profit: discontinued Operations | — | — | 14 | 1 | — | — | 15 | |||||||||||||||||||||
Total adjusted operating profit | 273 | 92 | 41 | 57 | 97 | 74 | 634 | |||||||||||||||||||||
43% | 15% | 6% | 9% | 15% | 12% | 100% |
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31
32
33
Year Ended December 31 | ||||||||
2007 | 2006 | |||||||
£m | £m | |||||||
Cost of goods sold | 1,910 | 1,841 | ||||||
Distribution costs | 202 | 232 | ||||||
Administration and other expenses | 1,600 | 1,518 | ||||||
Other operating income | (101 | ) | (99 | ) | ||||
Total | 1,701 | 1,651 | ||||||
34
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29
Year Ended December 31, 2006 | ||||||||||||||||||||||||||||
Higher | FT | |||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | IDC | Penguin | Total | |||||||||||||||||||||
Sales | 1,455 | 795 | 341 | 366 | 332 | 848 | 4,137 | |||||||||||||||||||||
36% | 19% | 8% | 9% | 8% | 20% | 100% | ||||||||||||||||||||||
Total operating profit | 167 | 161 | 37 | 35 | 82 | 58 | 540 | |||||||||||||||||||||
31% | 30% | 7% | 6% | 15% | 11% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 17 | — | 1 | 2 | 7 | 8 | 35 | |||||||||||||||||||||
Other net gains and losses including associates | — | — | — | (4 | ) | — | — | (4 | ) | |||||||||||||||||||
Other net finance costs of associates | — | — | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||||
Adjusted operating profit: continuing operations | 184 | 161 | 38 | 32 | 89 | 66 | 570 | |||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 22 | — | — | — | 22 | |||||||||||||||||||||
Total adjusted operating profit | 184 | 161 | 60 | 32 | 89 | 66 | 592 | |||||||||||||||||||||
31% | 27% | 10% | 6% | 15% | 11% | 100% |
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||
North | ||||||||||||||||||||||||||||
American | International | FT | Interactive | |||||||||||||||||||||||||
£m | Education | Education | Professional | Publishing | Data | Penguin | Total | |||||||||||||||||||||
Sales | 1,667 | 735 | 226 | 344 | 344 | 846 | 4,162 | |||||||||||||||||||||
40% | 18% | 5% | 8% | 8% | 21% | 100% | ||||||||||||||||||||||
Total operating profit | 253 | 82 | 26 | 50 | 90 | 73 | 574 | |||||||||||||||||||||
44% | 14% | 4% | 9% | 16% | 13% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 20 | 10 | 1 | 6 | 7 | 1 | 45 | |||||||||||||||||||||
Adjusted operating profit: continuing operations | 273 | 92 | 27 | 56 | 97 | 74 | 619 | |||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 14 | 1 | — | — | 15 | |||||||||||||||||||||
Total adjusted operating profit | 273 | 92 | 41 | 57 | 97 | 74 | 634 | |||||||||||||||||||||
43% | 15% | 6% | 9% | 15% | 12% | 100% |
36
30
Year Ended December 31, 2005 | ||||||||||||||||||||||||||||
Higher | FT | |||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | IDC | Penguin | Total | |||||||||||||||||||||
Sales | 1,295 | 779 | 301 | 332 | 297 | 804 | 3,808 | |||||||||||||||||||||
34% | 20% | 8% | 9% | 8% | 21% | 100% | ||||||||||||||||||||||
Total operating profit | 142 | 156 | 25 | 58 | 75 | 60 | 516 | |||||||||||||||||||||
28% | 30% | 5% | 11% | 14% | 12% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 5 | — | — | 1 | 5 | — | 11 | |||||||||||||||||||||
Other net gains and losses including associates | — | — | — | (40 | ) | — | — | (40 | ) | |||||||||||||||||||
Other net finance costs of associates | — | — | — | 2 | — | — | 2 | |||||||||||||||||||||
Adjusted operating profit: continuing operations | 147 | 156 | 25 | 21 | 80 | 60 | 489 | |||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 20 | (3 | ) | — | — | 17 | ||||||||||||||||||||
Total adjusted operating profit | 147 | 156 | 45 | 18 | 80 | 60 | 506 | |||||||||||||||||||||
29% | 31% | 9% | 3% | 16% | 12% | 100% |
Year Ended December 31, 2006 | ||||||||||||||||||||||||||||
North | ||||||||||||||||||||||||||||
American | International | FT | Interactive | |||||||||||||||||||||||||
£m | Education | Education | Professional | Publishing | Data | Penguin | Total | |||||||||||||||||||||
Sales | 1,679 | 640 | 211 | 280 | 332 | 848 | 3,990 | |||||||||||||||||||||
42% | 16% | 5% | 7% | 8% | 22% | 100% | ||||||||||||||||||||||
Total operating profit | 266 | 70 | 16 | 30 | 82 | 58 | 522 | |||||||||||||||||||||
51% | 13% | 3% | 6% | 16% | 11% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 14 | 3 | 1 | 2 | 7 | 8 | 35 | |||||||||||||||||||||
Other net gains and losses including associates | — | — | — | (4) | — | — | (4) | |||||||||||||||||||||
Other net finance costs of associates | — | — | — | (1) | — | — | (1) | |||||||||||||||||||||
Adjusted operating profit: continuing operations | 280 | 73 | 17 | 27 | 89 | 66 | 552 | |||||||||||||||||||||
Adjusted operating profit: discontinued Operations | — | — | 35 | 5 | — | — | 40 | |||||||||||||||||||||
Total adjusted operating profit | 280 | 73 | 52 | 32 | 89 | 66 | 592 | |||||||||||||||||||||
47% | 12% | 9% | 6% | 15% | 11% | 100% |
37
31
38
32
39
33
40
Year ended | |||||||||
December 31 | |||||||||
2005 | 2004 | ||||||||
£m | £m | ||||||||
Cost of goods sold | 1,787 | 1,631 | |||||||
Distribution costs | 292 | 226 | |||||||
Administration and other expenses | 1,351 | 1,340 | |||||||
Other operating income | (84 | ) | (83 | ) | |||||
Total | 1,559 | 1,483 | |||||||
34
35
36
Year ended December 31, 2005 | ||||||||||||||||||||||||||||
Higher | FT | |||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | IDC | Penguin | Total | |||||||||||||||||||||
Sales | 1,295 | 779 | 301 | 332 | 297 | 804 | 3,808 | |||||||||||||||||||||
34% | 20% | 8% | 9% | 8% | 21% | 100% | ||||||||||||||||||||||
Total operating profit | 142 | 156 | 25 | 58 | 75 | 60 | 516 | |||||||||||||||||||||
28% | 30% | 5% | 11% | 14% | 12% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 5 | — | — | 1 | 5 | — | 11 | |||||||||||||||||||||
Other net gains and losses including associates | — | — | — | (40 | ) | — | — | (40 | ) | |||||||||||||||||||
Other net finance costs of associates | — | — | — | 2 | — | — | 2 | |||||||||||||||||||||
Adjusted operating profit: | ||||||||||||||||||||||||||||
continuing operations | 147 | 156 | 25 | 21 | 80 | 60 | 489 | |||||||||||||||||||||
Adjusted operating profit: | ||||||||||||||||||||||||||||
discontinued operations | — | — | 20 | (3 | ) | — | — | 17 | ||||||||||||||||||||
Total adjusted operating profit | 147 | 156 | 45 | 18 | 80 | 60 | 506 | |||||||||||||||||||||
29% | 31% | 9% | 3% | 16% | 12% | 100% |
37
Year ended December 31, 2004 | ||||||||||||||||||||||||||||
Higher | FT | |||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | IDC | Penguin | Total | |||||||||||||||||||||
Sales | 1,087 | 729 | 290 | 318 | 269 | 786 | 3,479 | |||||||||||||||||||||
31% | 21% | 8% | 9% | 8% | 23% | 100% | ||||||||||||||||||||||
Total operating profit | 112 | 133 | 20 | 8 | 62 | 47 | 382 | |||||||||||||||||||||
29% | 35% | 5% | 2% | 16% | 13% | 100% | ||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | — | — | — | — | 5 | — | 5 | |||||||||||||||||||||
Other net gains and losses including associates | (4 | ) | (4 | ) | (2 | ) | (4 | ) | — | 5 | (9 | ) | ||||||||||||||||
Other net finance costs of associates | — | — | — | — | — | — | — | |||||||||||||||||||||
Adjusted operating profit: | ||||||||||||||||||||||||||||
continuing operations | 108 | 129 | 18 | 4 | 67 | 52 | 378 | |||||||||||||||||||||
Adjusted operating profit: | ||||||||||||||||||||||||||||
discontinued operations | — | — | 22 | 26 | — | — | 48 | |||||||||||||||||||||
Total adjusted operating profit | 108 | 129 | 40 | 30 | 67 | 52 | 426 | |||||||||||||||||||||
25% | 30% | 9% | 7% | 16% | 13% | 100% |
38
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40
41
41
At December 31, 2006 | |||||||||||||||||||||
Less than | One to | Two to | After five | ||||||||||||||||||
Total | one year | two years | five years | years | |||||||||||||||||
£m | £m | £m | £m | £m | |||||||||||||||||
Gross borrowings: | |||||||||||||||||||||
Bank loans, overdrafts and commercial paper | 173 | 173 | — | — | — | ||||||||||||||||
Variable rate loan notes | — | — | — | — | — | ||||||||||||||||
Bonds | 1,566 | 421 | 105 | 444 | 596 | ||||||||||||||||
Lease obligations | 1,369 | 123 | 113 | 276 | 857 | ||||||||||||||||
Total | 3,108 | 717 | 218 | 720 | 1,453 | ||||||||||||||||
At December 31, 2008 | ||||||||||||||||||||
Less than | One to | Two to | After five | |||||||||||||||||
Total | one year | two years | five years | years | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Gross borrowings: | ||||||||||||||||||||
Bank loans, overdrafts and commercial paper | 228 | — | — | 228 | — | |||||||||||||||
Variable rate loan notes | — | — | — | — | — | |||||||||||||||
Bonds | 2,128 | 244 | — | 626 | 1,258 | |||||||||||||||
Finance lease obligations | 7 | 4 | 2 | 1 | — | |||||||||||||||
Operating lease obligations | 1,612 | 149 | 138 | 355 | 970 | |||||||||||||||
Total | 3,975 | 397 | 140 | 1,210 | 2,228 | |||||||||||||||
Borrowings |
42
42
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name | Age | Position | |||||
Glen Moreno | Chairman | ||||||
Marjorie Scardino | Chief Executive | ||||||
David Arculus | Non-executive Director | ||||||
David Bell | Director for People | ||||||
Terry Burns | Non-executive Director | ||||||
Patrick Cescau | Non-executive Director | ||||||
Chief Executive, | |||||||
Rona Fairhead | 47 | Chairman and Chief Executive, The FT Group | |||||
Robin Freestone | Chief Financial Officer | ||||||
Susan Fuhrman | Non-executive Director | ||||||
Ken Hydon | Non-executive Director | ||||||
John Makinson | Chairman and Chief Executive, | ||||||
Non-executive Director |
43
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Name | Pearson plc | Operating company | Personal objectives | |||||||||
Marjorie Scardino | 100 | % | — | — | ||||||||
David Bell | 90 | % | — | 10 | % | |||||||
Will Ethridge | 45 | % | 35 | % | 20 | % | ||||||
Rona Fairhead | 30 | % | 60 | % | 10 | % | ||||||
Robin Freestone | 90 | % | — | 10 | % | |||||||
John Makinson | 30 | % | 60 | % | 10 | % |
46
46
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47
48
48
49
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50
Fees payable from | ||||
Chairmanship of audit | 20,000 | |||
Chairmanship of personnel | 15,000 | |||
Membership of audit committee | 10,000 | |||
Membership of | 5,000 | |||
Senior independent | ||||
Salaries/ | Annual | |||||||||||||||||||
Fees | incentive(1) | Allowances(2) | Benefits | Total | ||||||||||||||||
£000 | £000 | £000 | £000 | £000 | ||||||||||||||||
Chairman | ||||||||||||||||||||
Glen Moreno | 425 | — | — | — | 425 | |||||||||||||||
Executive directors | ||||||||||||||||||||
Marjorie Scardino | 830 | 1,067 | 50 | 15 | 1,962 | |||||||||||||||
David Bell | 425 | 512 | — | 17 | 954 | |||||||||||||||
Rona Fairhead | 470 | 573 | — | 19 | 1,062 | |||||||||||||||
Robin Freestone (appointed June 12, 2006) | 209 | 243 | — | 8 | 460 | |||||||||||||||
John Makinson | 490 | 627 | 183 | 26 | 1,326 | |||||||||||||||
Senior management as a group | 2,849 | 3,022 | 233 | 85 | 6,189 | |||||||||||||||
50
Salaries/ | Annual | |||||||||||||||||||
Fees(1) | Incentive(2) | Allowances(3) | Benefits(4) | Total(5) | ||||||||||||||||
£000 | £000 | £000 | £000 | £000 | ||||||||||||||||
Non-executive Chairman | ||||||||||||||||||||
Glen Moreno | 450 | — | — | — | 450 | |||||||||||||||
Executive directors | ||||||||||||||||||||
Marjorie Scardino | 950 | 1,017 | 55 | 35 | 2,057 | |||||||||||||||
David Bell | 469 | 493 | — | 21 | 983 | |||||||||||||||
Will Ethridge (appointed 1 May 2008) | 361 | 810 | — | — | 1,171 | |||||||||||||||
Rona Fairhead | 506 | 494 | — | 36 | 1,036 | |||||||||||||||
Robin Freestone | 450 | 491 | — | 16 | 957 | |||||||||||||||
John Makinson | 525 | 500 | 183 | 32 | 1,240 | |||||||||||||||
Senior management as a group | 3,711 | 3,805 | 238 | 140 | 7,894 | |||||||||||||||
Notes: |
(1) | |
(2) | Will Ethridge’s annual incentive includes a special award of Pearson shares in recognition of his contributions in such areas as his leadership efforts on the Google settlement and his oversight of Pearson’s global content management programme. The after-tax amount will be invested in Pearson shares, which will be acquired and held under the annual bonus share matching plan in 2009. |
(3) | Allowances for Marjorie Scardino include |
Benefits include company car, car allowance and UK health |
51
tax free to employees. For Marjorie Scardino, benefits include £20,233 pension planning and financial advice. Marjorie Scardino, Rona Fairhead, David Bell and John Makinson have the use of a chauffeur. |
No amounts as compensation for loss of office and no expense allowances chargeable to UK income tax were paid during the year. |
Number of | Exercise | Earliest | ||||||||
Director | Options | (1) | Price | Exercise Date | Expiry Date | |||||
Marjorie Scardino(2) | 37,583 | c* | 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 | 241,366 | |||||||||
David Bell | 297 | b | 629.6p | 08/01/09 | 02/01/10 | |||||
821 | b | 690.4p | 08/01/10 | 02/01/11 | ||||||
18,705 | c* | 1372.4p | 06/08/02 | 06/08/09 | ||||||
18,705 | c* | 1647.5p | 06/08/02 | 06/08/09 | ||||||
16,350 | d* | 1421.0p | 05/09/02 | 05/09/11 | ||||||
16,350 | d* | 1421.0p | 05/09/03 | 05/09/11 | ||||||
16,350 | d* | 1421.0p | 05/09/04 | 05/09/11 | ||||||
16,350 | d* | 1421.0p | 05/09/05 | 05/09/11 | ||||||
Total | 103,928 | |||||||||
Will Ethridge | 10,802 | c* | 1372.4p | 06/08/02 | 08/06/09 | |||||
10,802 | c* | 1647.5p | 06/08/02 | 08/06/09 | ||||||
11,010 | d* | $21.00 | 05/09/02 | 09/05/11 | ||||||
11,010 | d* | $21.00 | 05/09/03 | 09/05/11 | ||||||
11,010 | d* | $21.00 | 05/09/04 | 09/05/11 | ||||||
11,010 | d* | $21.00 | 05/09/05 | 09/05/11 | ||||||
14,680 | d* | $11.97 | 11/01/02 | 11/01/11 | ||||||
14,680 | d* | $11.97 | 11/01/03 | 11/01/11 | ||||||
14,680 | d* | $11.97 | 11/01/04 | 11/01/11 | ||||||
Total | 109,684 | |||||||||
Rona Fairhead | 2,371 | b | 690.4p | 08/01/12 | 02/01/13 | |||||
20,000 | d* | 822.0p | 11/01/02 | 11/01/11 | ||||||
20,000 | d* | 822.0p | 11/01/03 | 11/01/11 | ||||||
20,000 | d* | 822.0p | 11/01/04 | 11/01/11 | ||||||
Total | 62,371 | |||||||||
52
Number of | Exercise | Earliest | ||||||||||||||||||
Director | Options | (1) | Price | Exercise Date | Expiry Date | |||||||||||||||
Robin Freestone | b | 02/01/12 | ||||||||||||||||||
Total | 1,757 | |||||||||||||||||||
John Makinson | ||||||||||||||||||||
4,178 | b | 424.8p | 08/01/ | 10 | 02/01/ | 11 | ||||||||||||||
c* | 1372.4p | 06/08/02 | 06/08/09 | |||||||||||||||||
c* | 1647.5p | 06/08/02 | 06/08/09 | |||||||||||||||||
d* | 1421.0p | 05/09/02 | 05/09/11 | |||||||||||||||||
d* | 1421.0p | 05/09/03 | 05/09/11 | |||||||||||||||||
d* | 1421.0p | 05/09/04 | 05/09/11 | |||||||||||||||||
d* | 1421.0p | 05/09/05 | 05/09/11 | |||||||||||||||||
Total | 126,272 | |||||||||||||||||||
51
Notes: | ||||||||||||||||||||
(1) | Shares under option are designated as:aexecutive;bworldwide save for shares;cpremium priced; anddlong-term incentive; and*where options are exercisable. |
a | Executive |
b | Worldwide save for shares |
c | Premium priced |
d | Long-term incentive |
(2) | In addition, Marjorie Scardino contributes US$1,000 per month (the maximum allowed) to the US employee stock purchase plan. The terms of this plan allow participants to make monthly contributions for one year and to acquire shares at the end of that period at a price that is the lower of the market price at the beginning or the end of the period, both less 15%. |
53
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Ordinary | Restricted | |||||||
As at March 31, 2007 | shares(1) | shares(2) | ||||||
Glen Moreno | 110,000 | — | ||||||
Marjorie Scardino | 216,777 | 1,668,675 | ||||||
David Arculus (appointed February 28, 2006) | 1,317 | — | ||||||
David Bell | 109,578 | 658,625 | ||||||
Terry Burns | 7,349 | — | ||||||
Patrick Cescau | 2,758 | — | ||||||
Rona Fairhead | 62,593 | 750,046 | ||||||
Robin Freestone (appointed June 12, 2006) | 2,089 | 153,435 | ||||||
Susan Fuhrman | 4,163 | — | ||||||
Ken Hydon (appointed February 28, 2006) | 6,317 | — | ||||||
John Makinson | 172,872 | 724,562 | ||||||
Reuben Mark (resigned April 21, 2006) | 16,908 | — | ||||||
Vernon Sankey (resigned April 21, 2006) | 5,563 | — | ||||||
Rana Talwar (resigned April 27, 2007) | 18,683 | — |
Ordinary | Restricted | |||||||
As at March 31, 2009 | shares(1) | shares(2) | ||||||
Glen Moreno | 210,000 | — | ||||||
Marjorie Scardino | 632,755 | 1,957,861 | ||||||
David Arculus | 11,740 | — | ||||||
David Bell | 250,348 | 593,970 | ||||||
Terry Burns | 10,290 | — | ||||||
Patrick Cescau | 4,144 | — | ||||||
Will Ethridge | 128,758 | 490,192 | ||||||
Rona Fairhead | 209,259 | 699,460 | ||||||
Robin Freestone | 44,379 | 400,216 | ||||||
Susan Fuhrman | 7,365 | — | ||||||
Ken Hydon | 8,559 | — | ||||||
John Makinson | 397,733 | 668,469 | ||||||
CK Prahalad | 969 | — |
Notes: |
(1) | Amounts include shares acquired by individuals under the annual bonus share matching plan and amounts purchased in the market by individuals. |
(2) | Restricted shares comprise awards made under the annual bonus share matching andlong-term incentive plans. The number of shares shown represents the maximum number of shares which may vest, subject to the performance conditions being fulfilled. |
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• | ||
• |
55
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Average number employed | 2006 | 2005 | 2004 | |||||||||
School | 11,064 | 10,133 | 10,403 | |||||||||
Higher Education | 4,368 | 4,196 | 4,087 | |||||||||
Professional | 3,754 | 3,809 | 3,368 | |||||||||
Penguin | 3,943 | 4,051 | 4,085 | |||||||||
FT Publishing | 2,285 | 1,952 | 1,989 | |||||||||
IDC | 2,200 | 1,956 | 1,826 | |||||||||
Other | 1,669 | 1,573 | 1,365 | |||||||||
Continuing operations | 29,283 | 27,670 | 27,123 | |||||||||
Discontinued operations | 5,058 | 4,533 | 5,963 | |||||||||
Total | 34,341 | 32,203 | 33,086 | |||||||||
Average number employed | 2008 | 2007 | 2006 | |||||||||
North American Education | 15,412 | 14,327 | 12,710 | |||||||||
International Education | 5,718 | 5,291 | 4,472 | |||||||||
Professional | 2,641 | 2,540 | 2,223 | |||||||||
Penguin | 4,112 | 4,163 | 3,943 | |||||||||
FT Publishing | 2,379 | 2,083 | 1,766 | |||||||||
Interactive Data | 2,413 | 2,300 | 2,200 | |||||||||
Other | 909 | 918 | 900 | |||||||||
Continuing operations | 33,584 | 31,622 | 28,214 | |||||||||
Discontinued operations | 96 | 1,070 | 6,127 | |||||||||
Total | 33,680 | 32,692 | 34,341 | |||||||||
55
• | on an annual basis for our five most recent fiscal years, |
56
• | 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 shares) | |||||||||||||
(In pence) | |||||||||||||
Five most recent fiscal years | |||||||||||||
2006 | 811 | 671 | 5,004,500 | ||||||||||
2005 | 695 | 608 | 5,296,700 | ||||||||||
2004 | 682 | 579 | 6,219,200 | ||||||||||
2003 | 680 | 430 | 6,631,800 | ||||||||||
2002 | 922 | 505 | 6,164,500 | ||||||||||
Most recent quarter and two most recent fiscal years | |||||||||||||
2007 First quarter | 842 | 762 | 5,864,200 | ||||||||||
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 | ||||||||||
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 | ||||||||||
Most recent six months | |||||||||||||
March 2007 | 872 | 783 | 8,538,000 | ||||||||||
February 2007 | 834 | 790 | 4,812,500 | ||||||||||
January 2007 | 842 | 762 | 6,380,300 | ||||||||||
December 2006 | 781 | 742 | 4,378,900 | ||||||||||
November 2006 | 789 | 751 | 3,509,000 | ||||||||||
October 2006 | 796 | 761 | 4,099,600 |
56
Ordinary shares | Average daily | |||||||||||
Reference period | High | Low | trading volume | |||||||||
(In pence) | ||||||||||||
(Ordinary shares) | ||||||||||||
Five most recent fiscal years | ||||||||||||
2008 | 733 | 519 | 4,758,300 | |||||||||
2007 | 915 | 695 | 6,405,600 | |||||||||
2006 | 811 | 671 | 5,004,500 | |||||||||
2005 | 695 | 608 | 5,296,700 | |||||||||
2004 | 682 | 579 | 6,219,200 | |||||||||
Most recent quarter and two most recent fiscal years | ||||||||||||
2008 Fourth quarter | 651 | 520 | 5,603,400 | |||||||||
Third quarter | 705 | 570 | 4,748,000 | |||||||||
Second quarter | 710 | 611 | 3,590,800 | |||||||||
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 | |||||||||
Most recent six months | ||||||||||||
February 2009 | 677 | 627 | 4,575,200 | |||||||||
January 2009 | 674 | 584 | 6,426,800 | |||||||||
December 2008 | 651 | 593 | 4,387,800 | |||||||||
November 2008 | 622 | 567 | 4,736,800 | |||||||||
October 2008 | 633 | 520 | 7,449,400 | |||||||||
September 2008 | 705 | 580 | 5,560,800 |
57
any requirement as to quorum at the meeting at which the matter is considered is met without counting the Director in question or any other interested Director; and |
(b) | the matter was agreed to without their voting or would have been agreed to if their votes had not been counted. |
(a) | may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise (directly or indirectly) interested; |
(b) | may act by himself or his firm in a professional capacity for the Company (otherwise than as auditor) and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; |
(c) | may be a director or other officer of, or employed by, or a party to a transaction or arrangement with, or otherwise interested in, any body corporate in which the Company is otherwise (directly or indirectly) interested. |
(a) | the acceptance, entry into or existence of which has been approved by the board (subject, in any such case, to any limits or conditions to which such approval was subject); or |
(b) | which he is permitted to hold or enter into by virtue of paragraph (a), (b) or (c) above; |
(a) | to disclose any such information to the board or to any Director or other officer or employee of the Company; and/or |
(b) | to use or apply any such information in performing his duties as a Director of the Company. |
(a) | absents himself from meetings of the board at which any matter relating to the conflict of interest or possible conflict of interest will or may be discussed or from the discussion of any such matter at a meeting or otherwise; and/or |
(b) | makes arrangements not to receive documents and information relating to any matter which gives rise to the conflict of interest or possible conflict of interest sent or supplied by the Companyand/or for such documents and information to be received and read by a professional adviser, |
58
• | the giving of any guarantee, security or indemnity in respect of money lent or obligations incurred by him or | |
• | the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation of | |
• | any proposal relating to | |
• | any proposal relating to another company in which he and any persons connected with him do not to his knowledge hold an interest in shares (as that term is used in sections 820 to 825 of the Companies Act 2006) representing one per cent. or more of either any class of the equity share capital, or the voting rights, in such company; | |
• | any proposal relating to an arrangement for the benefit of | |
• | any proposal concerning insurance that we propose to maintain or purchase for the benefit of directors or for the benefit of persons, including directors. |
57
• |
59
• | 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 ofone-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. |
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60
• | 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 thanone-tenth of the total voting rights of all shareholders having the right to vote at the meeting; or |
59
• | 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 thanone-tenth of the total sum paid up on all shares conferring that right. |
61
• | 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%, |
60
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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, | |
• | 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. |
62
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63
64
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
64
65
65
66
66
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
67
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
67
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
68
ITEM 16B. | CODE OF ETHICS |
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Auditors’ Remuneration | 2006 | 2005 | ||||||
£m | £m | |||||||
Audit fees | 5 | 4 | ||||||
Audit-related fees | 4 | — | ||||||
Tax fees | 1 | 1 | ||||||
All other fees | 1 | 2 |
68
Auditors’ Remuneration | 2008 | 2007 | ||||||
£m | £m | |||||||
Audit fees | 5 | 4 | ||||||
Tax fees | 2 | 2 | ||||||
All other fees | 1 | 1 |
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES |
Maximum | |||||||||||||||||||
number | |||||||||||||||||||
Total number of | of shares that | ||||||||||||||||||
units purchased | may yet be | ||||||||||||||||||
as part of publicly | purchased under | ||||||||||||||||||
Total number of | Average price | announced plans | the plans or | ||||||||||||||||
Period | shares purchased | paid per share | or programs | programs | |||||||||||||||
February 1, 2007 - February 28, 2007 | |||||||||||||||||||
£ | N/A | N/A | |||||||||||||||||
£ | |||||||||||||||||||
N/A | N/A | ||||||||||||||||||
December 1, | 1,400,000 | £7.31 | N/A | N/A | |||||||||||||||
June 1, 2008 - June 30, 2008 | 2,000,000 | £ | N/A | N/A |
ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING AUDITOR |
69
ITEM 16G. | CORPORATE GOVERNANCE |
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-6 | |||||
F-7 | |||||
F-1
F-1
F-2
F-2
F-3
Notes | 2006 | 2005 | 2004 | |||||||||||||
Continuing operations | ||||||||||||||||
Sales | 2 | 4,137 | 3,808 | 3,479 | ||||||||||||
Cost of goods sold | 5 | (1,917 | ) | (1,787 | ) | (1,631 | ) | |||||||||
Gross profit | 2,220 | 2,021 | 1,848 | |||||||||||||
Operating expenses | 5 | (1,704 | ) | (1,559 | ) | (1,483 | ) | |||||||||
Other net gains and losses | 4 | — | 40 | 9 | ||||||||||||
Share of results of joint ventures and associates | 13 | 24 | 14 | 8 | ||||||||||||
Operating profit | 2 | 540 | 516 | 382 | ||||||||||||
Finance costs | 7 | (133 | ) | (132 | ) | (96 | ) | |||||||||
Finance income | 7 | 59 | 62 | 17 | ||||||||||||
Profit before tax | 466 | 446 | 303 | |||||||||||||
Income tax | 8 | (11 | ) | (116 | ) | (55 | ) | |||||||||
Profit for the year from continuing operations | 455 | 330 | 248 | |||||||||||||
Profit for the year from discontinued operations | 3 | 14 | 314 | 36 | ||||||||||||
Profit for the year | 469 | 644 | 284 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 446 | 624 | 262 | |||||||||||||
Minority interest | 23 | 20 | 22 | |||||||||||||
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 | 55.9p | 78.2p | 32.9p | ||||||||||||
— diluted | 9 | 55.8p | 78.1p | 32.9p | ||||||||||||
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 | 54.1p | 38.9p | 29.0p | ||||||||||||
— diluted | 9 | 54.0p | 38.8p | 29.0p | ||||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||||
Continuing operations | ||||||||||||||||
Sales | 2 | 4,811 | 4,162 | 3,990 | ||||||||||||
Cost of goods sold | 4 | (2,174 | ) | (1,910 | ) | (1,841 | ) | |||||||||
Gross profit | 2,637 | 2,252 | 2,149 | |||||||||||||
Operating expenses | 4 | (1,986 | ) | (1,701 | ) | (1,651 | ) | |||||||||
Share of results of joint ventures and associates | 12 | 25 | 23 | 24 | ||||||||||||
Operating profit | 2 | 676 | 574 | 522 | ||||||||||||
Finance costs | 6 | (136 | ) | (150 | ) | (133 | ) | |||||||||
Finance income | 6 | 45 | 44 | 59 | ||||||||||||
Profit before tax | 585 | 468 | 448 | |||||||||||||
Income tax | 7 | (172 | ) | (131 | ) | (4 | ) | |||||||||
Profit for the year from continuing operations | 413 | 337 | 444 | |||||||||||||
(Loss)/gain for the year from discontinued operations | 3 | (90 | ) | (27 | ) | 25 | ||||||||||
Profit for the year | 323 | 310 | 469 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the company | 292 | 284 | 446 | |||||||||||||
Minority interest | 31 | 26 | 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 | 8 | 36.6p | 35.6p | 55.9p | ||||||||||||
— diluted | 8 | 36.6p | 35.6p | 55.8p | ||||||||||||
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 | 8 | 47.9p | 39.0p | 52.7p | ||||||||||||
— diluted | 8 | 47.9p | 39.0p | 52.6p | ||||||||||||
F-3
F-4
Notes | 2006 | 2005 | 2004 | |||||||||||||
Net exchange differences on translation of foreign operations | 27 | (417 | ) | 327 | (203 | ) | ||||||||||
Actuarial gains/(losses) on defined benefit pension and post-retirement medical plans | 24 | 107 | 26 | (61 | ) | |||||||||||
Taxation on items charged to equity | 8 | 12 | 12 | 9 | ||||||||||||
Net (expense)/income recognised directly in equity | (298 | ) | 365 | (255 | ) | |||||||||||
Profit for the year | 469 | 644 | 284 | |||||||||||||
Total recognised income and expense for the year | 171 | 1,009 | 29 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 148 | 989 | 7 | |||||||||||||
Minority interest | 23 | 20 | 22 | |||||||||||||
Effect of transition adjustment on adoption of IAS 39 | ||||||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | — | (12 | ) | — | ||||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||||
Net exchange differences on translation of foreign operations | 29 | 1,050 | 25 | (417 | ) | |||||||||||
Actuarial (losses)/gains on retirement benefit obligations — Group | 25 | (71 | ) | 80 | 107 | |||||||||||
Actuarial losses on retirement benefit obligations — associate | 12 | (3 | ) | — | — | |||||||||||
Taxation on items charged to equity | 7 | 2 | 29 | 12 | ||||||||||||
Net income recognised directly in equity | 978 | 134 | (298 | ) | ||||||||||||
Profit for the year | 323 | 310 | 469 | |||||||||||||
Total recognised income and expense for the year | 1,301 | 444 | 171 | |||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the company | 1,270 | 418 | 148 | |||||||||||||
Minority interest | 31 | 26 | 23 | |||||||||||||
Notes | 2006 | 2005 | ||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 11 | 348 | 384 | |||||||||
Intangible assets | 12 | 3,581 | 3,854 | |||||||||
Investments in joint ventures and associates | 13 | 20 | 36 | |||||||||
Deferred income tax assets | 14 | 417 | 385 | |||||||||
Financial assets — Derivative financial instruments | 16 | 36 | 79 | |||||||||
Other financial assets | 15 | 17 | 18 | |||||||||
Other receivables | 19 | 124 | 108 | |||||||||
4,543 | 4,864 | |||||||||||
Current assets | ||||||||||||
Intangible assets — Pre-publication | 17 | 402 | 426 | |||||||||
Inventories | 18 | 354 | 373 | |||||||||
Trade and other receivables | 19 | 953 | 1,031 | |||||||||
Financial assets — Derivative financial instruments | 16 | 50 | 4 | |||||||||
Financial assets — Marketable securities | 25 | — | ||||||||||
Cash and cash equivalents (excluding overdrafts) | 20 | 592 | 902 | |||||||||
2,376 | 2,736 | |||||||||||
Non-current assets classified as held for sale | 29 | 294 | — | |||||||||
2,670 | 2,736 | |||||||||||
Total assets | 7,213 | 7,600 | ||||||||||
Notes | 2008 | 2007 | ||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 10 | 423 | 355 | |||||||||
Intangible assets | 11 | 5,353 | 3,814 | |||||||||
Investments in joint ventures and associates | 12 | 23 | 20 | |||||||||
Deferred income tax assets | 13 | 372 | 328 | |||||||||
Financial assets — Derivative financial instruments | 16 | 181 | 23 | |||||||||
Retirement benefit assets | 25 | 49 | 62 | |||||||||
Other financial assets | 15 | 63 | 52 | |||||||||
Other receivables | 22 | 152 | 129 | |||||||||
6,616 | 4,783 | |||||||||||
Current assets | ||||||||||||
Intangible assets — Pre-publication | 20 | 695 | 450 | |||||||||
Inventories | 21 | 501 | 368 | |||||||||
Trade and other receivables | 22 | 1,342 | 946 | |||||||||
Financial assets — Derivative financial instruments | 16 | 3 | 28 | |||||||||
Financial assets — Marketable securities | 14 | 54 | 40 | |||||||||
Cash and cash equivalents (excluding overdrafts) | 17 | 685 | 560 | |||||||||
3,280 | 2,392 | |||||||||||
Non-current assets classified as held for sale | 31 | — | 117 | |||||||||
3,280 | 2,509 | |||||||||||
Total assets | 9,896 | 7,292 | ||||||||||
F-4
F-5
Notes | 2006 | 2005 | ||||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Financial liabilities—Borrowings | 21 | (1,148 | ) | (1,703 | ) | |||||||
Financial liabilities—Derivative financial instruments | 16 | (19 | ) | (22 | ) | |||||||
Deferred income tax liabilities | 14 | (245 | ) | (204 | ) | |||||||
Retirement benefit obligations | 24 | (250 | ) | (389 | ) | |||||||
Provisions for other liabilities and charges | 22 | (29 | ) | (31 | ) | |||||||
Other liabilities | 23 | (162 | ) | (151 | ) | |||||||
(1,853 | ) | (2,500 | ) | |||||||||
Current liabilities | ||||||||||||
Trade and other liabilities | 23 | (998 | ) | (974 | ) | |||||||
Financial liabilities—Borrowings | 21 | (595 | ) | (256 | ) | |||||||
Current income tax liabilities | (74 | ) | (104 | ) | ||||||||
Provisions for other liabilities and charges | 22 | (23 | ) | (33 | ) | |||||||
(1,690 | ) | (1,367 | ) | |||||||||
Liabilities directly associated with non-current assets classified as held for sale | 29 | (26 | ) | — | ||||||||
Total liabilities | (3,569 | ) | (3,867 | ) | ||||||||
Net assets | 3,644 | 3,733 | ||||||||||
Equity | ||||||||||||
Share capital | 25 | 202 | 201 | |||||||||
Share premium | 25 | 2,487 | 2,477 | |||||||||
Treasury shares | 26 | (189 | ) | (153 | ) | |||||||
Other reserves | 27 | (592 | ) | (175 | ) | |||||||
Retained earnings | 27 | 1,568 | 1,214 | |||||||||
Total equity attributable to equity holders of the Company | 3,476 | 3,564 | ||||||||||
Minority interest | 168 | 169 | ||||||||||
Total equity | 3,644 | 3,733 | ||||||||||
Notes | 2008 | 2007 | ||||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Financial liabilities — Borrowings | 18 | (2,019 | ) | (1,049 | ) | |||||||
Financial liabilities — Derivative financial instruments | 16 | (15 | ) | (16 | ) | |||||||
Deferred income tax liabilities | 13 | (447 | ) | (287 | ) | |||||||
Retirement benefit obligations | 25 | (167 | ) | (95 | ) | |||||||
Provisions for other liabilities and charges | 23 | (33 | ) | (44 | ) | |||||||
Other liabilities | 24 | (221 | ) | (190 | ) | |||||||
(2,902 | ) | (1,681 | ) | |||||||||
Current liabilities | ||||||||||||
Trade and other liabilities | 24 | (1,429 | ) | (1,050 | ) | |||||||
Financial liabilities — Borrowings | 18 | (344 | ) | (559 | ) | |||||||
Financial liabilities — Derivative financial instruments | 16 | (5 | ) | — | ||||||||
Current income tax liabilities | (136 | ) | (96 | ) | ||||||||
Provisions for other liabilities and charges | 23 | (56 | ) | (23 | ) | |||||||
(1,970 | ) | (1,728 | ) | |||||||||
Liabilities directly associated with non-current assets classified as held for sale | 31 | — | (9 | ) | ||||||||
Total liabilities | (4,872 | ) | (3,418 | ) | ||||||||
Net assets | 5,024 | 3,874 | ||||||||||
Equity | ||||||||||||
Share capital | 27 | 202 | 202 | |||||||||
Share premium | 27 | 2,505 | 2,499 | |||||||||
Treasury shares | 28 | (222 | ) | (216 | ) | |||||||
Other reserves | 29 | 586 | (514 | ) | ||||||||
Retained earnings | 29 | 1,679 | 1,724 | |||||||||
Total equity attributable to equity holders of the company | 4,750 | 3,695 | ||||||||||
Minority interest | 274 | 179 | ||||||||||
Total equity | 5,024 | 3,874 | ||||||||||
F-5
F-6
Notes | 2006 | 2005 | 2004 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Cash generated from operations | 31 | 621 | 653 | 524 | ||||||||||||
Interest paid | (106 | ) | (101 | ) | (98 | ) | ||||||||||
Tax paid | (59 | ) | (65 | ) | (45 | ) | ||||||||||
Net cash generated from operating activities | 456 | 487 | 381 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisition of subsidiaries, net of cash acquired | 28 | (363 | ) | (246 | ) | (41 | ) | |||||||||
Acquisition of joint ventures and associates | (4 | ) | (7 | ) | (10 | ) | ||||||||||
Purchase of property, plant and equipment (PPE) | (68 | ) | (76 | ) | (101 | ) | ||||||||||
Proceeds from sale of PPE | 8 | 3 | 4 | |||||||||||||
Purchase of intangible assets | (29 | ) | (24 | ) | (24 | ) | ||||||||||
Purchase of other financial assets | — | (2 | ) | (1 | ) | |||||||||||
Disposal of subsidiaries, net of cash disposed | 30 | 10 | 376 | 7 | ||||||||||||
Disposal of joint ventures and associates | — | 54 | 24 | |||||||||||||
Disposal of other financial assets | — | — | 17 | |||||||||||||
Interest received | 24 | 29 | 13 | |||||||||||||
Dividends received from joint ventures and associates | 45 | 14 | 12 | |||||||||||||
Net cash (used in)/generated from investing activities | (377 | ) | 121 | (100 | ) | |||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from issue of ordinary shares | 25 | 11 | 4 | 4 | ||||||||||||
Purchase of treasury shares | 26 | (36 | ) | (21 | ) | (10 | ) | |||||||||
Proceeds from borrowings | 84 | — | 473 | |||||||||||||
Short-term investments required | — | — | (5 | ) | ||||||||||||
Liquid resources acquired | (24 | ) | — | — | ||||||||||||
Repayments of borrowings | (145 | ) | (79 | ) | (524 | ) | ||||||||||
Finance lease principal payments | (3 | ) | (3 | ) | (2 | ) | ||||||||||
Dividends paid to Company’s shareholders | 10 | (220 | ) | (205 | ) | (195 | ) | |||||||||
Dividends paid to minority interests | (15 | ) | (17 | ) | (2 | ) | ||||||||||
Net cash used in financing activities | (348 | ) | (321 | ) | (261 | ) | ||||||||||
Effects of exchange rate changes on cash and cash equivalents | (44 | ) | 13 | (4 | ) | |||||||||||
Net (decrease)/increase in cash and cash equivalents | (313 | ) | 300 | 16 | ||||||||||||
Cash and cash equivalents at beginning of year | 844 | 544 | 528 | |||||||||||||
Cash and cash equivalents at end of year | 20 | 531 | 844 | 544 | ||||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net cash generated from operations | 33 | 894 | 659 | 621 | ||||||||||||
Interest paid | (87 | ) | (109 | ) | (106 | ) | ||||||||||
Tax paid | (89 | ) | (87 | ) | (59 | ) | ||||||||||
Net cash generated from operating activities | 718 | 463 | 456 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisition of subsidiaries, net of cash acquired | 30 | (395 | ) | (472 | ) | (363 | ) | |||||||||
Acquisition of joint ventures and associates | (5 | ) | (4 | ) | (4 | ) | ||||||||||
Purchase of investments | (1 | ) | — | — | ||||||||||||
Purchase of property, plant and equipment (PPE) | (75 | ) | (86 | ) | (68 | ) | ||||||||||
Proceeds from sale of investments | 5 | — | — | |||||||||||||
Proceeds from sale of PPE | 33 | 2 | 14 | 8 | ||||||||||||
Purchase of intangible assets | (45 | ) | (33 | ) | (29 | ) | ||||||||||
Disposal of subsidiaries, net of cash disposed | 32 | 111 | 469 | 10 | ||||||||||||
Interest received | 11 | 19 | 24 | |||||||||||||
Dividends received from joint ventures and associates | 23 | 32 | 45 | |||||||||||||
Net cash used in investing activities | (369 | ) | (61 | ) | (377 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from issue of ordinary shares | 27 | 6 | 12 | 11 | ||||||||||||
Purchase of treasury shares | (47 | ) | (72 | ) | (36 | ) | ||||||||||
Proceeds from borrowings | 455 | 272 | 84 | |||||||||||||
Liquid resources acquired | — | (15 | ) | (24 | ) | |||||||||||
Repayment of borrowings | (275 | ) | (391 | ) | (145 | ) | ||||||||||
Finance lease principal payments | (3 | ) | (2 | ) | (3 | ) | ||||||||||
Dividends paid to company’s shareholders | 9 | (257 | ) | (238 | ) | (220 | ) | |||||||||
Dividends paid to minority interest | (28 | ) | (10 | ) | (15 | ) | ||||||||||
Net cash used in financing activities | (149 | ) | (444 | ) | (348 | ) | ||||||||||
Effects of exchange rate changes on cash and cash equivalents | (103 | ) | 3 | (44 | ) | |||||||||||
Net increase/(decrease) in cash and cash equivalents | 97 | (39 | ) | (313 | ) | |||||||||||
Cash and cash equivalents at beginning of year | 492 | 531 | 844 | |||||||||||||
Cash and cash equivalents at end of year | 17 | 589 | 492 | 531 | ||||||||||||
F-6
F-7
Accounting policies |
a. | Basis of preparation |
F-7
F-8
• | ||
• | IFRS | |
• | ||
• | ‘Improvements to Financial Reporting Standards 2008’ (mostly effective for annual reporting periods beginning on or after 1 January 2009). This is the | |
• | IFRIC 16 ‘Hedges of a Net Investment in Foreign Operations’ (effective for annual reporting periods beginning on or after 1 October 2008). IFRIC 16 provides guidance on net investment hedging including which foreign currency risks within the Group qualify for hedging, and where the hedging instruments can be held within the Group. |
• |
F-8
• | Amendments to IAS 32 ‘Financial Instruments: Presentation’ and IAS 1 ‘Presentation of Financial Statements’ — Puttable Financial Instruments and Obligations arising on liquidation (effective for annual reporting periods beginning on or after 1 January 2009). The amendment requires puttable financial instruments, or instruments that impose on the | |
• | IFRIC | |
• | IFRIC | |
• | IFRIC |
F-9
• Intangible assets: | Goodwill | |
• Intangible assets: | Pre-publication assets | |
• Royalty advances | ||
• Taxation | ||
• Employee benefits: | ||
• Revenue |
F-9
F-10
F-10
F-11
F-11
F-12
F-12
F-13
F-13
F-14
F-14
F-15
F-15
F-16
F-16
2008 | ||||||||||||||||||||||||||||||||||||
North | ||||||||||||||||||||||||||||||||||||
American | International | FT | Interactive | |||||||||||||||||||||||||||||||||
Notes | Education | Education | Professional | Publishing | Data | Penguin | Corporate | Group | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 2,002 | 866 | 244 | 390 | 406 | 903 | — | 4,811 | ||||||||||||||||||||||||||||
Sales (inter-segment) | — | — | 4 | — | — | 22 | — | 26 | ||||||||||||||||||||||||||||
Adjusted operating profit | 303 | 135 | 36 | 74 | 121 | 93 | — | 762 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | (45 | ) | (22 | ) | (1 | ) | (7 | ) | (9 | ) | (2 | ) | — | (86 | ) | |||||||||||||||||||||
Operating profit | 258 | 113 | 35 | 67 | 112 | 91 | — | 676 | ||||||||||||||||||||||||||||
Finance costs | 6 | (136 | ) | |||||||||||||||||||||||||||||||||
Finance income | 6 | 45 | ||||||||||||||||||||||||||||||||||
Profit before tax | 585 | |||||||||||||||||||||||||||||||||||
Income tax | 7 | (172 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 413 | |||||||||||||||||||||||||||||||||||
Segment assets | 4,952 | 1,358 | 423 | 482 | 524 | 1,211 | 923 | 9,873 | ||||||||||||||||||||||||||||
Joint ventures | 12 | — | 8 | — | 2 | — | 3 | — | 13 | |||||||||||||||||||||||||||
Associates | 12 | — | 4 | — | 6 | — | — | — | 10 | |||||||||||||||||||||||||||
Assets — continuing operations | 4,952 | 1,370 | 423 | 490 | 524 | 1,214 | 923 | 9,896 | ||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total assets | 4,952 | 1,370 | 423 | 490 | 524 | 1,214 | 923 | 9,896 | ||||||||||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 12 | — | 5 | — | 19 | — | 1 | — | 25 | |||||||||||||||||||||||||||
Capital expenditure | 10, 11, 20 | 224 | 82 | 22 | 17 | 25 | 51 | — | 421 | |||||||||||||||||||||||||||
Depreciation | 10 | 25 | 12 | 8 | 13 | 13 | 9 | — | 80 | |||||||||||||||||||||||||||
Amortisation | 11, 20 | 219 | 69 | 12 | 12 | 12 | 36 | — | 360 | |||||||||||||||||||||||||||
F-17
F-17
Higher | FT | 2006 | ||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Penguin | Publishing | IDC | Corporate | Group | ||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,455 | 795 | 341 | 848 | 366 | 332 | — | 4,137 | ||||||||||||||||||||||||||||
Sales (inter-segment) | 1 | — | — | 18 | — | — | — | 19 | ||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 161 | 161 | 36 | 58 | 18 | 82 | — | 516 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 6 | — | 1 | — | 17 | — | — | 24 | ||||||||||||||||||||||||||||
Operating profit | 167 | 161 | 37 | 58 | 35 | 82 | — | 540 | ||||||||||||||||||||||||||||
Finance costs | 7 | (133 | ) | |||||||||||||||||||||||||||||||||
Finance income | 7 | 59 | ||||||||||||||||||||||||||||||||||
Profit before tax | 466 | |||||||||||||||||||||||||||||||||||
Income tax | 8 | (11 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 455 | |||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||
Operating profit | 167 | 161 | 37 | 58 | 35 | 82 | — | 540 | ||||||||||||||||||||||||||||
Adjustment to goodwill on recognition of pre-acquisition deferred tax | — | — | — | 7 | — | — | — | 7 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 17 | — | 1 | 1 | 2 | 7 | — | 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 | 38 | 66 | 32 | 89 | — | 570 | ||||||||||||||||||||||||||||
Segment assets | 2,684 | 1,347 | 580 | 954 | 317 | 314 | 703 | 6,899 | ||||||||||||||||||||||||||||
Joint ventures | 13 | 5 | — | — | 3 | 4 | — | — | 12 | |||||||||||||||||||||||||||
Associates | 13 | 4 | — | — | — | 4 | — | — | 8 | |||||||||||||||||||||||||||
Assets — continuing operations | 2,693 | 1,347 | 580 | 957 | 325 | 314 | 703 | 6,919 | ||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 294 | — | — | — | — | 294 | ||||||||||||||||||||||||||||
Total assets | 2,693 | 1,347 | 874 | 957 | 325 | 314 | 703 | 7,213 | ||||||||||||||||||||||||||||
Total liabilities | (662 | ) | (268 | ) | (177 | ) | (269 | ) | (300 | ) | (131 | ) | (1,762 | ) | (3,569 | ) | ||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Capital expenditure | 11, 12, 17 | 124 | 88 | 30 | 38 | 19 | 20 | — | 319 | |||||||||||||||||||||||||||
Depreciation | 11 | 21 | 8 | 19 | 7 | 9 | 13 | — | 77 | |||||||||||||||||||||||||||
Amortisation | 12, 17 | 117 | 78 | 21 | 34 | 4 | 7 | — | 261 | |||||||||||||||||||||||||||
2007 | ||||||||||||||||||||||||||||||||||||
North | ||||||||||||||||||||||||||||||||||||
American | International | FT | Interactive | |||||||||||||||||||||||||||||||||
Notes | Education | Education | Professional | Publishing | Data | Penguin | Corporate | Group | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,667 | 735 | 226 | 344 | 344 | 846 | — | 4,162 | ||||||||||||||||||||||||||||
Sales (inter-segment) | 1 | — | — | — | — | 19 | — | 20 | ||||||||||||||||||||||||||||
Adjusted operating profit | 273 | 92 | 27 | 56 | 97 | 74 | — | 619 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | (20 | ) | (10 | ) | (1 | ) | (6 | ) | (7 | ) | (1 | ) | — | (45 | ) | |||||||||||||||||||||
Operating profit | 253 | 82 | 26 | 50 | 90 | 73 | — | 574 | ||||||||||||||||||||||||||||
Finance costs | 6 | (150 | ) | |||||||||||||||||||||||||||||||||
Finance income | 6 | 44 | ||||||||||||||||||||||||||||||||||
Profit before tax | 468 | |||||||||||||||||||||||||||||||||||
Income tax | 7 | (131 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 337 | |||||||||||||||||||||||||||||||||||
Segment assets | 3,536 | 1,013 | 291 | 397 | 330 | 937 | 651 | 7,155 | ||||||||||||||||||||||||||||
Joint ventures | 12 | — | 5 | — | 4 | — | 2 | — | 11 | |||||||||||||||||||||||||||
Associates | 12 | 1 | 3 | — | 5 | — | — | — | 9 | |||||||||||||||||||||||||||
Assets — continuing operations | 3,537 | 1,021 | 291 | 406 | 330 | 939 | 651 | 7,175 | ||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 117 | — | — | — | — | 117 | ||||||||||||||||||||||||||||
Total assets | 3,537 | 1,021 | 408 | 406 | 330 | 939 | 651 | 7,292 | ||||||||||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 12 | — | 6 | 1 | 16 | — | — | — | 23 | |||||||||||||||||||||||||||
Capital expenditure | 10, 11, 20 | 136 | 109 | 20 | 28 | 19 | 44 | — | 356 | |||||||||||||||||||||||||||
Depreciation | 10 | 26 | 7 | 9 | 9 | 10 | 7 | — | 68 | |||||||||||||||||||||||||||
Amortisation | 11, 20 | 159 | 45 | 11 | 9 | 8 | 30 | — | 262 | |||||||||||||||||||||||||||
F-18
Higher | FT | 2005 | ||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Penguin | Publishing | IDC | Corporate | Group | ||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,295 | 779 | 301 | 804 | 332 | 297 | — | 3,808 | ||||||||||||||||||||||||||||
Sales (inter-segment) | — | — | — | 16 | — | — | — | 16 | ||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 138 | 156 | 24 | 60 | 49 | 75 | — | 502 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 4 | — | 1 | — | 9 | — | — | 14 | ||||||||||||||||||||||||||||
Operating profit | 142 | 156 | 25 | 60 | 58 | 75 | — | 516 | ||||||||||||||||||||||||||||
Finance costs | 7 | (132 | ) | |||||||||||||||||||||||||||||||||
Finance income | 7 | 62 | ||||||||||||||||||||||||||||||||||
Profit before tax | 446 | |||||||||||||||||||||||||||||||||||
Income tax | 8 | (116 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 330 | |||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||
Operating profit | 142 | 156 | 25 | 60 | 58 | 75 | — | 516 | ||||||||||||||||||||||||||||
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 | 25 | 60 | 21 | 80 | — | 489 | ||||||||||||||||||||||||||||
Segment assets | 2,347 | 1,648 | 1,179 | 960 | 154 | 291 | 985 | 7,564 | ||||||||||||||||||||||||||||
Joint ventures | 13 | 6 | — | — | 2 | 4 | — | — | 12 | |||||||||||||||||||||||||||
Associates | 13 | 6 | — | — | — | 18 | — | — | 24 | |||||||||||||||||||||||||||
Total assets | 2,359 | 1,648 | 1,179 | 962 | 176 | 291 | 985 | 7,600 | ||||||||||||||||||||||||||||
Total liabilities | (557 | ) | (341 | ) | (263 | ) | (280 | ) | (336 | ) | (109 | ) | (1,981 | ) | (3,867 | ) | ||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Capital expenditure | 11, 12, 17 | 114 | 96 | 43 | 34 | 14 | 19 | — | 320 | |||||||||||||||||||||||||||
Depreciation | 11 | 26 | 8 | 17 | 7 | 11 | 11 | — | 80 | |||||||||||||||||||||||||||
Amortisation | 12, 17 | 91 | 78 | 20 | 24 | 3 | 5 | — | 221 | |||||||||||||||||||||||||||
F-19
Higher | FT | 2004 | ||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Penguin | Publishing | IDC | Corporate | Group | ||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,087 | 729 | 290 | 786 | 318 | 269 | — | 3,479 | ||||||||||||||||||||||||||||
Sales (inter-segment) | — | — | — | 15 | — | — | — | 15 | ||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 109 | 133 | 20 | 46 | 4 | 62 | — | 374 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 3 | — | — | 1 | 4 | — | — | 8 | ||||||||||||||||||||||||||||
Operating profit | 112 | 133 | 20 | 47 | 8 | 62 | — | 382 | ||||||||||||||||||||||||||||
Finance costs | 7 | (96 | ) | |||||||||||||||||||||||||||||||||
Finance income | 7 | 17 | ||||||||||||||||||||||||||||||||||
Profit before tax | 303 | |||||||||||||||||||||||||||||||||||
Income tax | 8 | (55 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 248 | |||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||
Operating profit | 112 | 133 | 20 | 47 | 8 | 62 | — | 382 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | — | — | — | — | 5 | — | 5 | |||||||||||||||||||||||||||||
Other net gains and losses | (4 | ) | (4 | ) | (2 | ) | 5 | (4 | ) | — | — | (9 | ) | |||||||||||||||||||||||
Other net finance costs of associates | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 108 | 129 | 18 | 52 | 4 | 67 | — | 378 | ||||||||||||||||||||||||||||
Segment assets | 1,860 | 1,224 | 1,345 | 892 | 502 | 247 | 461 | 6,531 | ||||||||||||||||||||||||||||
Joint ventures | 13 | 7 | — | — | 5 | 2 | — | — | 14 | |||||||||||||||||||||||||||
Associates | 13 | 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 | 11, 12, 17 | 104 | 79 | 62 | 36 | 15 | 12 | — | 308 | |||||||||||||||||||||||||||
Depreciation | 11 | 25 | 9 | 16 | 9 | 16 | 9 | — | 84 | |||||||||||||||||||||||||||
Amortisation | 12, 17 | 74 | 65 | 18 | 29 | 2 | 5 | — | 193 | |||||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||||||||||
North | ||||||||||||||||||||||||||||||||||||
American | International | FT | Interactive | |||||||||||||||||||||||||||||||||
Notes | Education | Education | Professional | Publishing | Data | Penguin | Corporate | Group | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
Sales (external) | 1,679 | 640 | 211 | 280 | 332 | 848 | — | 3,990 | ||||||||||||||||||||||||||||
Sales (inter-segment) | — | — | 1 | — | — | 18 | — | 19 | ||||||||||||||||||||||||||||
Adjusted operating profit | 280 | 73 | 17 | 27 | 89 | 66 | — | 552 | ||||||||||||||||||||||||||||
Amortisation of acquired intangibles | (14 | ) | (3 | ) | (1 | ) | (2 | ) | (7 | ) | (8 | ) | — | (35 | ) | |||||||||||||||||||||
Other net gains and losses of associates | — | — | — | 4 | — | — | — | 4 | ||||||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||
Operating profit | 266 | 70 | 16 | 30 | 82 | 58 | — | 522 | ||||||||||||||||||||||||||||
Finance costs | 6 | (133 | ) | |||||||||||||||||||||||||||||||||
Finance income | 6 | 59 | ||||||||||||||||||||||||||||||||||
Profit before tax | 448 | |||||||||||||||||||||||||||||||||||
Income tax | 7 | (4 | ) | |||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 444 | |||||||||||||||||||||||||||||||||||
Segment assets | 3,401 | 795 | 415 | 317 | 314 | 954 | 703 | 6,899 | ||||||||||||||||||||||||||||
Joint ventures | — | 5 | — | 4 | — | 3 | — | 12 | ||||||||||||||||||||||||||||
Associates | — | 4 | — | 4 | — | — | — | 8 | ||||||||||||||||||||||||||||
Assets — continuing operations | 3,401 | 804 | 415 | 325 | 314 | 957 | 703 | 6,919 | ||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 294 | — | — | — | — | 294 | ||||||||||||||||||||||||||||
Total assets | 3,401 | 804 | 709 | 325 | 314 | 957 | 703 | 7,213 | ||||||||||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | — | 6 | 1 | 17 | — | — | — | 24 | ||||||||||||||||||||||||||||
Capital expenditure | 141 | 71 | 30 | 19 | 20 | 38 | — | 319 | ||||||||||||||||||||||||||||
Depreciation | 15 | 14 | 19 | 9 | 13 | 7 | — | 77 | ||||||||||||||||||||||||||||
Amortisation | 136 | 59 | 21 | 4 | 7 | 34 | — | 261 | ||||||||||||||||||||||||||||
F-20
F-19
Sales | Total assets | Capital expenditure | ||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | 2006 | 2005 | 2004 | ||||||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||
European countries | 1,089 | 951 | 820 | 1,608 | 1,711 | 1,112 | 70 | 63 | 79 | |||||||||||||||||||||||||||
North America | 2,642 | 2,451 | 2,309 | 4,908 | 5,476 | 4,716 | 231 | 242 | 208 | |||||||||||||||||||||||||||
Asia Pacific | 298 | 300 | 263 | 327 | 325 | 302 | 12 | 13 | 10 | |||||||||||||||||||||||||||
Other countries | 108 | 106 | 87 | 56 | 52 | 43 | 2 | 2 | 3 | |||||||||||||||||||||||||||
Total | 4,137 | 3,808 | 3,479 | 6,899 | 7,564 | 6,173 | 315 | 320 | 300 | |||||||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||||||||||||
European countries | 17 | 39 | 205 | 9 | — | 358 | 1 | — | 8 | |||||||||||||||||||||||||||
North America | 257 | 266 | 195 | 281 | — | — | 2 | — | — | |||||||||||||||||||||||||||
Other countries | 12 | 10 | 7 | 4 | — | — | 1 | — | — | |||||||||||||||||||||||||||
Total | 286 | 315 | 407 | 294 | — | 358 | 4 | — | 8 | |||||||||||||||||||||||||||
Joint ventures and associates | — | — | — | 20 | 36 | 47 | — | — | — | |||||||||||||||||||||||||||
Total | 4,423 | 4,123 | 3,886 | 7,213 | 7,600 | 6,578 | 319 | 320 | 308 | |||||||||||||||||||||||||||
Sales | Non-current assets | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||
UK | 754 | 721 | 659 | 701 | 724 | 545 | ||||||||||||||||||
Other European countries | 463 | 381 | 344 | 224 | 140 | 142 | ||||||||||||||||||
USA | 2,861 | 2,448 | 2,443 | 4,624 | 3,146 | 3,115 | ||||||||||||||||||
Canada | 167 | 143 | 142 | 209 | 183 | 163 | ||||||||||||||||||
Asia Pacific | 415 | 351 | 295 | 179 | 114 | 97 | ||||||||||||||||||
Other countries | 151 | 118 | 107 | 14 | 11 | 11 | ||||||||||||||||||
Total continuing | 4,811 | 4,162 | 3,990 | 5,951 | 4,318 | 4,073 | ||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||
UK | — | 1 | 17 | — | — | — | ||||||||||||||||||
Other European countries | — | 82 | 86 | — | — | — | ||||||||||||||||||
USA | 8 | 78 | 314 | — | 117 | 294 | ||||||||||||||||||
Canada | — | — | — | — | — | — | ||||||||||||||||||
Other countries | — | 6 | 16 | — | — | — | ||||||||||||||||||
Total discontinued | 8 | 167 | 433 | — | 117 | 294 | ||||||||||||||||||
Total | 4,819 | 4,329 | 4,423 | 5,951 | 4,435 | 4,367 | ||||||||||||||||||
F-21
Discontinued operations |
F-20
2006 | 2005 | 2004 | ||||||||||||||||||||||||||
Pearson | Pearson | Pearson | ||||||||||||||||||||||||||
Government | Government | 2005 | 2005 | Government | 2004 | 2004 | ||||||||||||||||||||||
Solutions | Solutions | Recoletos | Total | Solutions | Recoletos | Total | ||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||
Sales | 286 | 288 | 27 | 315 | 217 | 190 | 407 | |||||||||||||||||||||
�� | ||||||||||||||||||||||||||||
Operating profit/(loss) | 22 | 20 | (3 | ) | 17 | 22 | 26 | 48 | ||||||||||||||||||||
Net finance income | — | — | — | — | — | 3 | 3 | |||||||||||||||||||||
Profit/(loss) before tax | 22 | 20 | (3 | ) | 17 | 22 | 29 | 51 | ||||||||||||||||||||
Attributable tax (expense)/benefit | (8 | ) | (8 | ) | 1 | (7 | ) | (8 | ) | (7 | ) | (15 | ) | |||||||||||||||
Profit/(loss) after tax | 14 | 12 | (2 | ) | 10 | 14 | 22 | 36 | ||||||||||||||||||||
Profit on disposal of discontinued operations before tax | — | — | 306 | 306 | — | — | — | |||||||||||||||||||||
Attributable tax expense | — | — | (2 | ) | (2 | ) | — | — | — | |||||||||||||||||||
Profit for the year from discontinued operations | 14 | 12 | 302 | 314 | 14 | 22 | 36 | |||||||||||||||||||||
Operating cash flows | 20 | 22 | (6 | ) | 16 | 112 | 12 | 124 | ||||||||||||||||||||
Investing cash flows | (8 | ) | (13 | ) | — | (13 | ) | (5 | ) | 17 | 12 | |||||||||||||||||
Financing cash flows | (1 | ) | (1 | ) | — | (1 | ) | — | — | — | ||||||||||||||||||
Total cash flows | 11 | 8 | (6 | ) | 2 | 107 | 29 | 136 | ||||||||||||||||||||
2008 | ||||
Data | ||||
Management | ||||
All figures | ||||
in £ millions | ||||
Sales | 8 | |||
Operating profit | — | |||
Profit before tax | — | |||
Attributable tax expense | — | |||
Profit after tax | — | |||
Loss on disposal of discontinued operations before tax | (53 | ) | ||
Attributable tax expense | (37 | ) | ||
Loss for the year from discontinued operations | (90 | ) | ||
Operating cash flows | — | |||
Investing cash flows | — | |||
Financing cash flows | — | |||
Total cash flows | — | |||
2007 | ||||||||||||||||||||
Data | Government | |||||||||||||||||||
Management | Les Echos | Datamark | Solutions | Total | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Sales | 56 | 82 | — | 29 | 167 | |||||||||||||||
Operating profit | 12 | 1 | — | 2 | 15 | |||||||||||||||
Goodwill impairment | (97 | ) | — | — | — | (97 | ) | |||||||||||||
(Loss)/profit before tax | (85 | ) | 1 | — | 2 | (82 | ) | |||||||||||||
Attributable tax expense | (4 | ) | — | — | (1 | ) | (5 | ) | ||||||||||||
(Loss)/profit after tax | (89 | ) | 1 | — | 1 | (87 | ) | |||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | — | 165 | — | (19 | ) | 146 | ||||||||||||||
Attributable tax (expense)/benefit | — | — | 7 | (93 | ) | (86 | ) | |||||||||||||
(Loss)/profit for the year from discontinued operations | (89 | ) | 166 | 7 | (111 | ) | (27 | ) | ||||||||||||
Operating cash flows | 11 | 4 | — | (8 | ) | 7 | ||||||||||||||
Investing cash flows | (1 | ) | 4 | — | — | 3 | ||||||||||||||
Financing cash flows | (10 | ) | (7 | ) | — | (4 | ) | (21 | ) | |||||||||||
Total cash flows | — | 1 | — | (12 | ) | (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 on disposal of discontinued operations before tax | — | — | — | — | ||||||||||||
Attributable tax (expense)/benefit | — | — | — | — | ||||||||||||
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 | |||||||||||
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Profit on sale of interest in MarketWatch | — | 40 | — | |||||||||
Other items | — | — | 9 | |||||||||
Total other net gains and losses | — | 40 | 9 | |||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
By function: | ||||||||||||
Cost of goods sold | 2,174 | 1,910 | 1,841 | |||||||||
Operating expenses | ||||||||||||
Distribution costs | 198 | 202 | 232 | |||||||||
Administrative and other expenses | 1,890 | 1,600 | 1,518 | |||||||||
Other income | (102 | ) | (101 | ) | (99 | ) | ||||||
Total operating expenses | 1,986 | 1,701 | 1,651 | |||||||||
Total | 4,160 | 3,611 | 3,492 | |||||||||
F-22
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
By function: | ||||||||||||
Cost of goods sold | 1,917 | 1,787 | 1,631 | |||||||||
Operating expenses | ||||||||||||
Distribution costs | 299 | 292 | 226 | |||||||||
Administrative and other expenses | 1,504 | 1,351 | 1,340 | |||||||||
Other income | (99 | ) | (84 | ) | (83 | ) | ||||||
Total operating expenses | 1,704 | 1,559 | 1,483 | |||||||||
Total | 3,621 | 3,346 | 3,114 | |||||||||
Notes | 2006 | 2005 | 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
By nature: | ||||||||||||||||
Utilisation of inventory | 18 | 820 | 767 | 699 | ||||||||||||
Depreciation of property, plant and equipment | 11 | 71 | 76 | 74 | ||||||||||||
Amortisation of intangible assets — pre-publication | 17 | 210 | 192 | 168 | ||||||||||||
Amortisation of intangible assets — other | 12 | 48 | 26 | 24 | ||||||||||||
Employee benefit expense | 6 | 1,280 | 1,177 | 1,074 | ||||||||||||
Operating lease rentals | 125 | 111 | 126 | |||||||||||||
Other property costs | 121 | 84 | 69 | |||||||||||||
Royalties expensed | 360 | 363 | 331 | |||||||||||||
Advertising, promotion and marketing | 212 | 198 | 171 | |||||||||||||
Information technology costs | 90 | 81 | 73 | |||||||||||||
Other costs | 383 | 355 | 351 | |||||||||||||
Other income | (99 | ) | (84 | ) | (46 | ) | ||||||||||
Total | 3,621 | 3,346 | 3,114 | |||||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||||
All figures in £ millions | ||||||||||||||||
By nature: | ||||||||||||||||
Utilisation of inventory | 21 | 832 | 732 | 702 | ||||||||||||
Depreciation of property, plant and equipment | 10 | 80 | 65 | 68 | ||||||||||||
Amortisation of intangible assets — Pre-publication | 20 | 244 | 192 | 210 | ||||||||||||
Amortisation of intangible assets — Other | 11 | 116 | 70 | 48 | ||||||||||||
Employee benefit expense | 5 | 1,553 | 1,288 | 1,225 | ||||||||||||
Operating lease rentals | 134 | 129 | 122 | |||||||||||||
Other property costs | 116 | 122 | 121 | |||||||||||||
Royalties expensed | 415 | 365 | 360 | |||||||||||||
Advertising, promotion and marketing | 244 | 195 | 190 | |||||||||||||
Information technology costs | 76 | 70 | 71 | |||||||||||||
Other costs | 452 | 484 | 474 | |||||||||||||
Other income | (102 | ) | (101 | ) | (99 | ) | ||||||||||
Total | 4,160 | 3,611 | 3,492 | |||||||||||||
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Audit services | ||||||||||||
Fees payable to the Company’s auditor for the audit of parent company and consolidated accounts | 1 | 1 | 1 | |||||||||
Non-audit services | ||||||||||||
Fees payable to the Company’s auditor and its associates for other services: | ||||||||||||
— The audit of the Company’s subsidiaries pursuant to legislation | 4 | 3 | 3 | |||||||||
— Other services pursuant to legislation | 4 | — | — | |||||||||
— Tax services | 1 | 1 | 2 | |||||||||
— Services relating to corporate finance transactions | 1 | 1 | — | |||||||||
— All other services | — | 1 | — | |||||||||
11 | 7 | 6 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Fees payable to the company’s auditor for the audit of parent company and consolidated financial statements | 3 | 3 | 5 | |||||||||
The audit of the company’s subsidiaries pursuant to legislation | 2 | 1 | 4 | |||||||||
Tax services | 2 | 2 | 1 | |||||||||
Other services | 1 | 1 | 1 | |||||||||
Total | 8 | 7 | 11 | |||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act | 5 | 4 | 9 | |||||||||
Non-audit fees | 3 | 3 | 2 | |||||||||
Total | 8 | 7 | 11 | |||||||||
F-23
Employee information |
Notes | 2006 | 2005 | 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Employee benefit expense | ||||||||||||||||
Wages and salaries (including termination benefits and restructuring costs) | 1,080 | 993 | 903 | |||||||||||||
Social security costs | 111 | 100 | 89 | |||||||||||||
Share-based payment costs | 24 | 25 | 23 | 25 | ||||||||||||
Pension costs — defined contribution plans | 24 | 36 | 35 | 32 | ||||||||||||
Pension costs — defined benefit plans | 24 | 29 | 25 | 24 | ||||||||||||
Other post-retirement benefits | 24 | (1 | ) | 1 | 1 | |||||||||||
1,280 | 1,177 | 1,074 | ||||||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Employee benefit expense | ||||||||||||||||
Wages and salaries (including termination benefits and restructuring costs) | 1,317 | 1,087 | 1,035 | |||||||||||||
Social security costs | 119 | 100 | 101 | |||||||||||||
Share-based payment costs | 26 | 33 | 30 | 25 | ||||||||||||
Pension costs — defined contribution plans | 25 | 41 | 39 | 36 | ||||||||||||
Pension costs — defined benefit plans | 25 | 37 | 31 | 29 | ||||||||||||
Other post-retirement benefits | 25 | 6 | 1 | (1 | ) | |||||||||||
1,553 | 1,288 | 1,225 | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Average number employed) | ||||||||||||
School | 11,064 | 10,133 | 10,403 | |||||||||
Higher Education | 4,368 | 4,196 | 4,087 | |||||||||
Professional | 3,754 | 3,809 | 3,368 | |||||||||
Penguin | 3,943 | 4,051 | 4,085 | |||||||||
FT Publishing | 2,285 | 1,952 | 1,989 | |||||||||
IDC | 2,200 | 1,956 | 1,826 | |||||||||
Other | 1,669 | 1,573 | 1,365 | |||||||||
Continuing operations | 29,283 | 27,670 | 27,123 | |||||||||
Discontinued operations | 5,058 | 4,533 | 5,963 | |||||||||
34,341 | 32,203 | 33,086 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
Average number employed | ||||||||||||
Employee numbers | ||||||||||||
North American Education | 15,412 | 14,327 | 12,710 | |||||||||
International Education | 5,718 | 5,291 | 4,472 | |||||||||
Professional | 2,641 | 2,540 | 2,223 | |||||||||
FT Publishing | 2,379 | 2,083 | 1,766 | |||||||||
Interactive Data | 2,413 | 2,300 | 2,200 | |||||||||
Penguin | 4,112 | 4,163 | 3,943 | |||||||||
Other | 909 | 918 | 900 | |||||||||
Continuing operations | 33,584 | 31,622 | 28,214 | |||||||||
Discontinued operations | 96 | 1,070 | 6,127 | |||||||||
33,680 | 32,692 | 34,341 | ||||||||||
F-24
F-24
Net finance costs |
Notes | 2006 | 2005 | 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Interest payable | (117 | ) | (98 | ) | (91 | ) | ||||||||||
Finance costs re employee benefits | 24 | — | (7 | ) | (5 | ) | ||||||||||
Net foreign exchange losses | (2 | ) | (9 | ) | — | |||||||||||
Other losses on financial instruments in a hedging relationship: | ||||||||||||||||
— fair value hedges | — | (1 | ) | — | ||||||||||||
— net investment hedges | (2 | ) | — | — | ||||||||||||
Other losses on financial instruments not in a hedging relationship: | ||||||||||||||||
— derivatives | (12 | ) | (17 | ) | — | |||||||||||
Finance costs | (133 | ) | (132 | ) | (96 | ) | ||||||||||
Interest receivable | 23 | 21 | 17 | |||||||||||||
Finance income re employee benefits | 24 | 4 | — | — | ||||||||||||
Net foreign exchange gains | 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 | 8 | 7 | — | |||||||||||||
— derivatives | 3 | 9 | — | |||||||||||||
Finance income | 59 | 62 | 17 | |||||||||||||
Net finance costs | (74 | ) | (70 | ) | (79 | ) | ||||||||||
Analysed as: | ||||||||||||||||
Net interest payable | (94 | ) | (77 | ) | (74 | ) | ||||||||||
Finance income/(costs) re employee benefits | 24 | 4 | (7 | ) | (5 | ) | ||||||||||
Net finance costs reflected in adjusted earnings | (90 | ) | (84 | ) | (79 | ) | ||||||||||
Other net finance income | 16 | 14 | — | |||||||||||||
Total net finance costs | (74 | ) | (70 | ) | (79 | ) | ||||||||||
F-25
Notes | 2008 | 2007 | 2006 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Interest payable | (106 | ) | (114 | ) | (117 | ) | ||||||||||
Net foreign exchange losses | (11 | ) | (25 | ) | (2 | ) | ||||||||||
Other losses on financial instruments in a hedging relationship: | ||||||||||||||||
— fair value hedges | (7 | ) | (1 | ) | — | |||||||||||
— net investment hedges | — | (1 | ) | (2 | ) | |||||||||||
Other losses on financial instruments not in a hedging relationship: | ||||||||||||||||
— derivatives | (12 | ) | (9 | ) | (12 | ) | ||||||||||
Finance costs | (136 | ) | (150 | ) | (133 | ) | ||||||||||
Interest receivable | 17 | 19 | 23 | |||||||||||||
Finance income in respect of employee benefits | 25 | 8 | 10 | 4 | ||||||||||||
Net foreign exchange gains | — | 8 | 21 | |||||||||||||
Other gains on financial instruments in a hedging relationship: | ||||||||||||||||
— fair value hedges | 2 | — | — | |||||||||||||
— net investment hedges | 1 | — | — | |||||||||||||
Other gains on financial instruments not in a hedging relationship: | ||||||||||||||||
— amortisation of transitional adjustment on bonds | 1 | 1 | 8 | |||||||||||||
— derivatives | 16 | 6 | 3 | |||||||||||||
Finance income | 45 | 44 | 59 | |||||||||||||
Net finance costs | (91 | ) | (106 | ) | (74 | ) | ||||||||||
Income tax |
Notes | 2006 | 2005 | 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Current tax | ||||||||||||||||
Charge in respect of current year | (88 | ) | (68 | ) | (57 | ) | ||||||||||
Recognition of previously unrecognised trading losses | 23 | — | — | |||||||||||||
Other adjustments in respect of prior years | 35 | (1 | ) | 25 | ||||||||||||
Total current tax charge | (30 | ) | (69 | ) | (32 | ) | ||||||||||
Deferred tax | ||||||||||||||||
In respect of timing differences | (73 | ) | (66 | ) | (46 | ) | ||||||||||
Recognition of previously unrecognised capital losses | 76 | — | — | |||||||||||||
Recognition of previously unrecognised trading losses | 37 | — | — | |||||||||||||
Other adjustments in respect of prior years | (21 | ) | 19 | 23 | ||||||||||||
Total deferred tax benefit/(charge) | 14 | 19 | (47 | ) | (23 | ) | ||||||||||
Total tax charge | (11 | ) | (116 | ) | (55 | ) | ||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Current tax | ||||||||||||||||
Charge in respect of current year | (89 | ) | (71 | ) | (81 | ) | ||||||||||
Recognition of previously unrecognised trading losses | — | — | 23 | |||||||||||||
Other adjustments in respect of prior years | 10 | 27 | 35 | |||||||||||||
Total current tax charge | (79 | ) | (44 | ) | (23 | ) | ||||||||||
Deferred tax | ||||||||||||||||
In respect of timing differences | (97 | ) | (96 | ) | (73 | ) | ||||||||||
Recognition of previously unrecognised capital losses | — | — | 76 | |||||||||||||
Recognition of previously unrecognised trading losses | — | — | 37 | |||||||||||||
Other adjustments in respect of prior years | 4 | 9 | (21 | ) | ||||||||||||
Total deferred tax charge | 13 | (93 | ) | (87 | ) | 19 | ||||||||||
Total tax charge | (172 | ) | (131 | ) | (4 | ) | ||||||||||
F-25
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Profit before tax | 466 | 446 | 303 | |||||||||
Tax calculated at UK rate | (140 | ) | (134 | ) | (91 | ) | ||||||
Effect of overseas tax rates | (19 | ) | (20 | ) | (6 | ) | ||||||
Joint venture and associate income reported net of tax | 7 | 5 | 2 | |||||||||
Income not subject to tax | 5 | 16 | 6 | |||||||||
Expenses not deductible for tax purposes | (18 | ) | (9 | ) | (5 | ) | ||||||
Utilisation of previously unrecognised tax losses | 7 | 11 | 5 | |||||||||
Recognition of previously unrecognised tax losses | 136 | — | — | |||||||||
Unutilised tax losses | (3 | ) | (3 | ) | (14 | ) | ||||||
Prior year adjustments | 14 | 18 | 48 | |||||||||
Total tax charge | (11 | ) | (116 | ) | (55 | ) | ||||||
UK | (15 | ) | (26 | ) | 5 | |||||||
Overseas | 4 | (90 | ) | (60 | ) | |||||||
Total tax charge | (11 | ) | (116 | ) | (55 | ) | ||||||
F-26
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Profit before tax | 585 | 468 | 448 | |||||||||
Tax calculated at UK rate (2008: 28.5%, 2007: 30%) | (167 | ) | (141 | ) | (135 | ) | ||||||
Effect of overseas tax rates | (29 | ) | (25 | ) | (17 | ) | ||||||
Joint venture and associate income reported net of tax | 7 | 7 | 7 | |||||||||
Net expense not deductible for tax purposes | (1 | ) | (9 | ) | (13 | ) | ||||||
Utilisation of previously unrecognised tax losses | 4 | 3 | 7 | |||||||||
Recognition of previously unrecognised tax losses | — | — | 136 | |||||||||
Unutilised tax losses | — | (2 | ) | (3 | ) | |||||||
Prior year adjustments | 14 | 36 | 14 | |||||||||
Total tax charge | (172 | ) | (131 | ) | (4 | ) | ||||||
UK | (53 | ) | (42 | ) | (15 | ) | ||||||
Overseas | (119 | ) | (89 | ) | 11 | |||||||
Total tax charge | (172 | ) | (131 | ) | (4 | ) | ||||||
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Deferred tax on share based payments | 2 | 3 | 4 | |||||||||
Deferred tax on net investment hedges | 3 | — | — | |||||||||
Deferred tax on actuarial gains and losses | 9 | — | — | |||||||||
Current tax on foreign exchange gains and losses | (2 | ) | 9 | 5 | ||||||||
12 | 12 | 9 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Share-based payments | (7 | ) | 7 | 2 | ||||||||
Pension contributions and actuarial gains and losses | 10 | 28 | 9 | |||||||||
Net investment hedges and other foreign exchange gains and losses | (1 | ) | (6 | ) | 1 | |||||||
�� | ||||||||||||
2 | 29 | 12 | ||||||||||
Earnings per share |
F-26
Notes | 2006 | 2005 | 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Earnings | 446 | 624 | 262 | |||||||||||||
Adjustments to exclude profit for the year from discontinued operations: | ||||||||||||||||
Profit for the year from discontinued operations | 3 | (14 | ) | (314 | ) | (36 | ) | |||||||||
Majority interest share of above | — | — | 5 | |||||||||||||
Earnings — continuing operations | 432 | 310 | 231 | |||||||||||||
Earnings | 446 | 624 | 262 | |||||||||||||
Weighted average number of shares (millions) | 798.4 | 797.9 | 795.6 | |||||||||||||
Effect of dilutive share options (millions) | 1.5 | 1.1 | 1.1 | |||||||||||||
Weighted average number of shares (millions) for diluted earnings | 799.9 | 799.0 | 796.7 | |||||||||||||
2006 | 2005 | 2004 | ||||||||||
Earnings per share from continuing and discontinued operations | ||||||||||||
Basic | 55.9 | p | 78.2 | p | 32.9 | p | ||||||
Diluted | 55.8 | p | 78.1 | p | 32.9 | p | ||||||
Earnings per share from continuing operations | ||||||||||||
Basic | 54.1 | p | 38.9 | p | 29.0 | p | ||||||
Diluted | 54.0 | p | 38.8 | p | 29.0 | p | ||||||
Earnings per share from discontinued operations | ||||||||||||
Basic | 1.8 | p | 39.3 | p | 3.9 | p | ||||||
Diluted | 1.8 | p | 39.3 | p | 3.9 | p | ||||||
F-27
Notes | 2008 | 2007 | 2006 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Profit for the year from continuing operations | 413 | 337 | 444 | |||||||||||||
Minority interest | (31 | ) | (26 | ) | (23 | ) | ||||||||||
Earnings from continuing operations | 382 | 311 | 421 | |||||||||||||
(Loss)/profit for the year from discontinued operations | 3 | (90 | ) | (27 | ) | 25 | ||||||||||
Earnings | 292 | 284 | 446 | |||||||||||||
Weighted average number of shares (millions) | 797.0 | 796.8 | 798.4 | |||||||||||||
Effect of dilutive share options (millions) | 0.5 | 1.3 | 1.5 | |||||||||||||
Weighted average number of shares (millions) for diluted earnings | 797.5 | 798.1 | 799.9 | |||||||||||||
Earnings per share from continuing and discontinued operations | ||||||||||||||||
Basic | 36.6p | 35.6p | 55.9p | |||||||||||||
Diluted | 36.6p | 35.6p | 55.8p | |||||||||||||
Earnings per share from continuing operations | ||||||||||||||||
Basic | 47.9p | 39.0p | 52.7p | |||||||||||||
Diluted | 47.9p | 39.0p | 52.6p | |||||||||||||
Earnings per share from discontinued operations | ||||||||||||||||
Basic | (11.3p | ) | (3.4p | ) | 3.2p | |||||||||||
Dividends |
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Final paid in respect of prior year 17p (2005: 15.7p; 2004: 14.8p) | 136 | 125 | 119 | |||||||||
Interim paid in respect of current year 10.5p (2005: 10p; 2004: 9.7p) | 84 | 80 | 76 | |||||||||
220 | 205 | 195 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Final paid in respect of prior year 20.5p (2007: 18.8p; 2006: 17p) | 163 | 150 | 136 | |||||||||
Interim paid in respect of current year 11.8p (2007: 11.1p; 2006: 10.5p) | 94 | 88 | 84 | |||||||||
257 | 238 | 220 | ||||||||||
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 2005 | 280 | 604 | 13 | 897 | ||||||||||||
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 | 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 | ||||||||||||
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Cost | ||||||||||||||||
At 1 January 2007 | 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 | ||||||||||||
Exchange differences | 54 | 138 | 6 | 198 | ||||||||||||
Additions | 6 | 67 | 6 | 79 | ||||||||||||
Disposals | (7 | ) | (38 | ) | — | (45 | ) | |||||||||
Acquisition through business combination | 2 | 29 | 2 | 33 | ||||||||||||
Reclassifications | 2 | 21 | (23 | ) | — | |||||||||||
At 31 December 2008 | 355 | 839 | 7 | 1,201 | ||||||||||||
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2007 | (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 | ) | |||||||||
Exchange differences | (30 | ) | (102 | ) | — | (132 | ) | |||||||||
Charge for the year | (19 | ) | (61 | ) | — | (80 | ) | |||||||||
Disposals | 6 | 36 | — | 42 | ||||||||||||
Acquisition through business combination | (1 | ) | (26 | ) | — | (27 | ) | |||||||||
At 31 December 2008 | (170 | ) | (608 | ) | — | (778 | ) | |||||||||
Carrying amounts | ||||||||||||||||
At 1 January 2007 | 185 | 152 | 11 | 348 | ||||||||||||
At 31 December 2007 | 172 | 167 | 16 | 355 | ||||||||||||
At 31 December 2008 | 185 | 231 | 7 | 423 | ||||||||||||
F-28
F-28
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2005 | (106 | ) | (436 | ) | — | (542 | ) | |||||||||
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 | (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 | ) | |||||||||
Carrying amounts | ||||||||||||||||
At 1 January 2005 | 174 | 168 | 13 | 355 | ||||||||||||
At 31 December 2005 | 198 | 179 | 7 | 384 | ||||||||||||
At 31 December 2006 | 185 | 152 | 11 | 348 | ||||||||||||
F-29
Intangible assets |
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
At 1 January 2005 | 3,160 | 181 | 10 | 46 | 56 | 3,397 | ||||||||||||||||||
Exchange differences | 345 | 15 | 2 | 4 | 6 | 366 | ||||||||||||||||||
Transfers | — | (13 | ) | — | — | — | (13 | ) | ||||||||||||||||
Additions | — | 24 | — | — | — | 24 | ||||||||||||||||||
Disposals | (6 | ) | (10 | ) | — | — | — | (16 | ) | |||||||||||||||
Acquisition through business combination | 155 | — | 56 | 33 | 89 | 244 | ||||||||||||||||||
At 31 December 2005 | 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 | ||||||||||||||||||
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Amortisation | ||||||||||||||||||||||||
At 1 January 2005 | — | (111 | ) | — | (8 | ) | (8 | ) | (119 | ) | ||||||||||||||
Exchange differences | — | (10 | ) | — | — | — | (10 | ) | ||||||||||||||||
Charge for the year | — | (18 | ) | (5 | ) | (6 | ) | (11 | ) | (29 | ) | |||||||||||||
Disposals | — | 10 | — | — | — | 10 | ||||||||||||||||||
At 31 December 2005 | — | (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 | ) | |||||||||||||
Carrying amounts | ||||||||||||||||||||||||
At 1 January 2005 | 3,160 | 70 | 10 | 38 | 48 | 3,278 | ||||||||||||||||||
At 31 December 2005 | 3,654 | 68 | 63 | 69 | 132 | 3,854 | ||||||||||||||||||
At 31 December 2006 | 3,271 | 66 | 81 | 163 | 244 | 3,581 | ||||||||||||||||||
Acquired | ||||||||||||||||||||||||||||
customer | Acquired | Acquired | Other | |||||||||||||||||||||||||
lists & | trademarks | publishing | intangibles | |||||||||||||||||||||||||
Goodwill | Software | relationships | & brands | rights | acquired | Total | ||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||
At 1 January 2007 | 3,271 | 201 | 113 | 26 | 96 | 53 | 3,760 | |||||||||||||||||||||
Exchange differences | (4 | ) | (2 | ) | — | 1 | 3 | — | (2 | ) | ||||||||||||||||||
Additions — internal development | — | 20 | — | — | — | — | 20 | |||||||||||||||||||||
Additions — purchased | — | 13 | — | — | — | — | 13 | |||||||||||||||||||||
Disposals | (34 | ) | (19 | ) | (2 | ) | — | (3 | ) | 2 | (56 | ) | ||||||||||||||||
Acquisition through business combination | 304 | 4 | 76 | 35 | 40 | 44 | 503 | |||||||||||||||||||||
Transfer to non-current assets held for sale | (194 | ) | — | — | — | — | — | (194 | ) | |||||||||||||||||||
At 31 December 2007 | 3,343 | 217 | 187 | 62 | 136 | 99 | 4,044 | |||||||||||||||||||||
Exchange differences | 1,082 | 71 | 77 | 24 | 31 | 62 | 1,347 | |||||||||||||||||||||
Additions — internal development | — | 29 | — | — | — | — | 29 | |||||||||||||||||||||
Additions — purchased | — | 16 | — | — | — | — | 16 | |||||||||||||||||||||
Disposals | (8 | ) | (27 | ) | — | — | — | — | (35 | ) | ||||||||||||||||||
Acquisition through business combination | 153 | 17 | 77 | 42 | — | 97 | 386 | |||||||||||||||||||||
Disposal through business disposal | — | (1 | ) | — | — | (2 | ) | — | (3 | ) | ||||||||||||||||||
Transfer to Pre-publication | — | (12 | ) | — | — | — | — | (12 | ) | |||||||||||||||||||
At 31 December 2008 | 4,570 | 310 | 341 | 128 | 165 | 258 | 5,772 | |||||||||||||||||||||
F-29
F-30
Acquired | ||||||||||||||||||||||||||||
customer | Acquired | Acquired | Other | |||||||||||||||||||||||||
lists & | trademarks | publishing | intangibles | |||||||||||||||||||||||||
Goodwill | Software | relationships | & brands | rights | acquired | Total | ||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||
Amortisation | ||||||||||||||||||||||||||||
At 1 January 2007 | — | (135 | ) | (15 | ) | (1 | ) | (15 | ) | (13 | ) | (179 | ) | |||||||||||||||
Exchange differences | — | 1 | — | — | — | 1 | 2 | |||||||||||||||||||||
Charge for the year | — | (25 | ) | (13 | ) | (3 | ) | (17 | ) | (12 | ) | (70 | ) | |||||||||||||||
Disposals | — | 19 | — | — | — | — | 19 | |||||||||||||||||||||
Acquisition through business combination | — | (2 | ) | — | — | — | — | (2 | ) | |||||||||||||||||||
Transfer to non-current assets held for sale | — | — | — | — | — | — | — | |||||||||||||||||||||
At 31 December 2007 | — | (142 | ) | (28 | ) | (4 | ) | (32 | ) | (24 | ) | (230 | ) | |||||||||||||||
Exchange differences | — | (50 | ) | (15 | ) | (3 | ) | (13 | ) | (12 | ) | (93 | ) | |||||||||||||||
Charge for the year | — | (30 | ) | (24 | ) | (10 | ) | (25 | ) | (27 | ) | (116 | ) | |||||||||||||||
Disposals | — | 27 | — | — | — | — | 27 | |||||||||||||||||||||
Acquisition through business combination | — | (13 | ) | — | — | — | — | (13 | ) | |||||||||||||||||||
Disposal through business disposal | — | 1 | — | — | 1 | — | 2 | |||||||||||||||||||||
Transfer to Pre-publication | — | 4 | — | — | — | — | 4 | |||||||||||||||||||||
At 31 December 2008 | — | (203 | ) | (67 | ) | (17 | ) | (69 | ) | (63 | ) | (419 | ) | |||||||||||||||
Carrying amounts | ||||||||||||||||||||||||||||
At 1 January 2007 | 3,271 | 66 | 98 | 25 | 81 | 40 | 3,581 | |||||||||||||||||||||
At 31 December 2007 | 3,343 | 75 | 159 | 58 | 104 | 75 | 3,814 | |||||||||||||||||||||
At 31 December 2008 | 4,570 | 107 | 274 | 111 | 96 | 195 | 5,353 | |||||||||||||||||||||
F-30
Notes | 2008 | 2007 | ||||||||||
All figures in £ millions | ||||||||||||
US School Curriculum | 937 | 677 | ||||||||||
US School Assessment and Information | 722 | 414 | ||||||||||
US Higher Education | 1,164 | 839 | ||||||||||
Canada | 173 | 155 | ||||||||||
International Education Publishing | 315 | 270 | ||||||||||
International Education Assessment and Testing | 241 | 194 | ||||||||||
Professional Publishing | 15 | 10 | ||||||||||
Professional Assessment and Testing | 254 | 181 | ||||||||||
Pearson Education total | 3,821 | 2,740 | ||||||||||
Financial Times | 46 | 12 | ||||||||||
Mergermarket | 130 | 126 | ||||||||||
Interactive Data | 208 | 147 | ||||||||||
FT Group total | 384 | 285 | ||||||||||
Penguin US | 216 | 155 | ||||||||||
Penguin UK | 95 | 111 | ||||||||||
Pearson Australia | 54 | 52 | ||||||||||
Penguin total | 365 | 318 | ||||||||||
Total goodwill — continuing operations | 4,570 | 3,343 | ||||||||||
Goodwill held for sale | 31 | — | 96 | |||||||||
Total goodwill | 4,570 | 3,439 | ||||||||||
Notes | ||||||||||||
2006 | 2005 | |||||||||||
) | ||||||||||||
(All figures | ||||||||||||
in £ millions | ||||||||||||
Higher Education | 780 | 903 | ||||||||||
School Book | 683 | 714 | ||||||||||
School Assessment and Testing | 342 | 310 | ||||||||||
School Technology | 356 | 408 | ||||||||||
Other Assessment and Testing | 490 | 531 | ||||||||||
Other Government Solutions | — | 249 | ||||||||||
Other Book | 56 | 57 | ||||||||||
Pearson Education total | 2,707 | 3,172 | ||||||||||
Penguin US | 156 | 179 | ||||||||||
Penguin UK | 114 | 114 | ||||||||||
Pearson Australia | 44 | 47 | ||||||||||
Penguin total | 314 | 340 | ||||||||||
IDC | 149 | 138 | ||||||||||
Mergermarket | 28 | 97 | — | |||||||||
Other FT Publishing | 4 | 4 | ||||||||||
FT Publishing total | 101 | 4 | ||||||||||
Total goodwill — continuing operations | 3,271 | 3,654 | ||||||||||
Goodwill held for sale | 29 | 221 | — | |||||||||
Total goodwill | 3,492 | 3,654 | ||||||||||
F-31
12. |
F-31
Investments in joint ventures and associates |
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
At beginning of year | 12 | 14 | ||||||
Exchange differences | (3 | ) | (3 | ) | ||||
Share of profit/(loss) after tax | 3 | (1 | ) | |||||
Dividends | (4 | ) | (4 | ) | ||||
Additions and further investment | 4 | 6 | ||||||
At end of year | 12 | 12 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
At beginning of year | 11 | 12 | ||||||
Exchange differences | (4 | ) | — | |||||
Share of profit after tax | 6 | 4 | ||||||
Dividends | (5 | ) | (8 | ) | ||||
Additions and further investment | 5 | 3 | ||||||
At end of year | 13 | 11 | ||||||
F-32
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Assets | ||||||||
Non-current assets | 3 | 3 | ||||||
Current assets | 24 | 26 | ||||||
Liabilities | ||||||||
Current liabilities | (15 | ) | (17 | ) | ||||
Net assets | 12 | 12 | ||||||
Income | 52 | 46 | ||||||
Expenses | (49 | ) | (47 | ) | ||||
Profit/(loss)after income tax | 3 | (1 | ) | |||||
F-32
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Assets | ||||||||
Non-current assets | 6 | 3 | ||||||
Current assets | 21 | 23 | ||||||
Liabilities | ||||||||
Current liabilities | (14 | ) | (15 | ) | ||||
Net assets | 13 | 11 | ||||||
Income | 36 | 61 | ||||||
Expenses | (30 | ) | (57 | ) | ||||
Profit after income tax | 6 | 4 | ||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
At beginning of year | 24 | 33 | ||||||
Exchange differences | (1 | ) | — | |||||
Share of profit after tax | 21 | 15 | ||||||
Dividends | (41 | ) | (10 | ) | ||||
Disposals | — | (14 | ) | |||||
Distribution from associate in excess of carrying value | 5 | — | ||||||
At end of year | 8 | 24 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
At beginning of year | 9 | 8 | ||||||
Exchange differences | (5 | ) | (1 | ) | ||||
Share of profit after tax | 19 | 19 | ||||||
Dividends | (16 | ) | (24 | ) | ||||
Additions | — | 1 | ||||||
Distribution from associate in excess of carrying value | 6 | 6 | ||||||
Actuarial losses on retirement benefit obligations | (3 | ) | — | |||||
At end of year | 10 | 9 | ||||||
% | ||||||||||||||||||||||||
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 | |||||||||||||||||||
% | ||||||||||||||||||||||||
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 | |||||||||||||||||||
% | ||||||||||||||||||||||||
2008 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 86 | (86 | ) | 149 | 16 | |||||||||||||||||
Other | 35 | (25 | ) | 42 | 3 | |||||||||||||||||||
Total | 121 | (111 | ) | 191 | 19 | |||||||||||||||||||
% | ||||||||||||||||||||||||
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 | |||||||||||||||||||
F-33
Deferred income tax |
2006 | 2005 | |||||||
(All figures in £ | ||||||||
millions) | ||||||||
Deferred tax assets | ||||||||
Deferred tax assets to be recovered after more than 12 months | 288 | 343 | ||||||
Deferred tax assets to be recovered within 12 months | 129 | 42 | ||||||
417 | 385 | |||||||
Deferred tax liabilities | ||||||||
Deferred tax liabilities to be settled after more than 12 months | (245 | ) | (204 | ) | ||||
Deferred tax liabilities to be settled within 12 months | — | — | ||||||
(245 | ) | (204 | ) | |||||
Net deferred tax | 172 | 181 | ||||||
F-33
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Deferred income tax assets | ||||||||
Deferred income tax assets to be recovered after more than 12 months | 341 | 262 | ||||||
Deferred income tax assets to be recovered within 12 months | 31 | 66 | ||||||
372 | 328 | |||||||
Deferred income tax liabilities | ||||||||
Deferred income tax liabilities to be settled after more than 12 months | (447 | ) | (287 | ) | ||||
Deferred income tax liabilities to be settled within 12 months | — | — | ||||||
(447 | ) | (287 | ) | |||||
Net deferred income tax | (75 | ) | 41 | |||||
Notes | 2006 | 2005 | ||||||||||
(All figures in | ||||||||||||
£ millions) | ||||||||||||
At beginning of year | 181 | 220 | ||||||||||
Transition adjustment on adoption of IAS 39 | — | 5 | ||||||||||
Exchange differences | (16 | ) | 21 | |||||||||
Acquisition through business combination | 28 | (26 | ) | (21 | ) | |||||||
Income statement release/(charge) | 8 | 19 | (47 | ) | ||||||||
Tax benefit to equity | 14 | 3 | ||||||||||
At end of year | 172 | 181 | ||||||||||
Notes | 2008 | 2007 | ||||||||||
All figures in £ millions | ||||||||||||
At beginning of year | 41 | 172 | ||||||||||
Exchange differences | (12 | ) | (4 | ) | ||||||||
Income statement charge | 7 | (93 | ) | (87 | ) | |||||||
Acquisition through business combination | 30 | (4 | ) | (45 | ) | |||||||
Disposal through business disposal | 32 | — | 2 | |||||||||
Tax (charge)/benefit to equity | (7 | ) | 3 | |||||||||
At end of year | (75 | ) | 41 | |||||||||
F-34
Goodwill | ||||||||||||||||||||
Capital | Trading | and | ||||||||||||||||||
losses | losses | intangibles | Other | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Deferred income tax assets | ||||||||||||||||||||
At 1 January 2005 | — | 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 | |||||||||||||||
Exchange differences | — | (17 | ) | (4 | ) | (21 | ) | (42 | ) | |||||||||||
Income statement release/(charge) | 76 | 12 | (6 | ) | (19 | ) | 63 | |||||||||||||
Tax benefit to equity | — | — | — | 11 | 11 | |||||||||||||||
At 31 December 2006 | 76 | 129 | 25 | 187 | 417 | |||||||||||||||
F-34
Capital | Trading | Goodwill and | Returns | |||||||||||||||||||||
losses | losses | intangibles | provisions | Other | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Deferred income tax assets | ||||||||||||||||||||||||
At 1 January 2007 | 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 | ||||||||||||||||||
Exchange differences | — | 19 | 6 | 28 | 40 | 93 | ||||||||||||||||||
Acquisition through business combination | — | 2 | — | — | — | 2 | ||||||||||||||||||
Income statement charge | — | (35 | ) | (6 | ) | (1 | ) | (3 | ) | (45 | ) | |||||||||||||
Tax charge to equity | — | — | — | — | (6 | ) | (6 | ) | ||||||||||||||||
At 31 December 2008 | — | 73 | 20 | 106 | 173 | 372 | ||||||||||||||||||
Goodwill and | ||||||||||||
intangibles | Other | Total | ||||||||||
(All figures in £ millions) | ||||||||||||
Deferred income tax liabilities | ||||||||||||
At 1 January 2005 | (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 | ) | ||||||
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 | ) | ||||||
Goodwill and | ||||||||||||
intangibles | Other | Total | ||||||||||
All figures in £ millions | ||||||||||||
Deferred income tax liabilities | ||||||||||||
At 1 January 2007 | (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 | ) | ||||||
Exchange differences | (73 | ) | (32 | ) | (105 | ) | ||||||
Acquisition through business combination | (5 | ) | (1 | ) | (6 | ) | ||||||
Income statement charge | (26 | ) | (22 | ) | (48 | ) | ||||||
Tax charge to equity | — | (1 | ) | (1 | ) | |||||||
At 31 December 2008 | (318 | ) | (129 | ) | (447 | ) | ||||||
F-35
Classification of financial instruments |
2008 | ||||||||||||||||||||||||||||||||
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 | 15 | 63 | — | — | — | — | 63 | 63 | ||||||||||||||||||||||||
Cash and cash equivalents | 17 | — | — | — | 685 | — | 685 | 685 | ||||||||||||||||||||||||
Marketable securities | 54 | — | — | — | 54 | 54 | ||||||||||||||||||||||||||
Derivative financial instruments | 16 | — | 23 | 161 | — | — | 184 | 184 | ||||||||||||||||||||||||
Trade receivables | 22 | — | — | — | 1,030 | — | 1,030 | 1,030 | ||||||||||||||||||||||||
Total financial assets | 117 | 23 | 161 | 1,715 | — | 2,016 | 2,016 | |||||||||||||||||||||||||
Derivative financial instruments | 16 | — | (20 | ) | — | — | — | (20 | ) | (20 | ) | |||||||||||||||||||||
Trade payables | 24 | — | — | — | — | (450 | ) | (450 | ) | (450 | ) | |||||||||||||||||||||
Bank loans and overdrafts | 18 | — | — | — | — | (228 | ) | (228 | ) | (228 | ) | |||||||||||||||||||||
Borrowings due within one year | 18 | — | — | — | — | (248 | ) | (248 | ) | (247 | ) | |||||||||||||||||||||
Borrowings due after more than one year | 18 | — | — | — | — | (1,887 | ) | (1,887 | ) | (1,620 | ) | |||||||||||||||||||||
Total financial liabilities | — | (20 | ) | — | — | (2,813 | ) | (2,833 | ) | (2,565 | ) | |||||||||||||||||||||
F-36
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 | 15 | 52 | — | — | — | — | 52 | 52 | ||||||||||||||||||||||||
Cash and cash equivalents | 17 | — | — | — | 560 | — | 560 | 560 | ||||||||||||||||||||||||
Marketable securities | 40 | — | — | — | — | 40 | 40 | |||||||||||||||||||||||||
Derivative financial instruments | 16 | — | 16 | 35 | — | — | 51 | 51 | ||||||||||||||||||||||||
Trade receivables | 22 | — | — | — | 750 | — | 750 | 750 | ||||||||||||||||||||||||
Total financial assets | 92 | 16 | 35 | 1,310 | — | 1,453 | 1,453 | |||||||||||||||||||||||||
Derivative financial instruments | 16 | — | (8 | ) | (8 | ) | — | — | (16 | ) | (16 | ) | ||||||||||||||||||||
Trade payables | 24 | — | — | — | — | (342 | ) | (342 | ) | (342 | ) | |||||||||||||||||||||
Bank loans and overdrafts | 18 | — | — | — | — | (444 | ) | (444 | ) | (444 | ) | |||||||||||||||||||||
Borrowings due within one year | 18 | — | — | — | — | �� | (115 | ) | (115 | ) | (112 | ) | ||||||||||||||||||||
Borrowings due after more than one year | 18 | — | — | — | — | (1,049 | ) | (1,049 | ) | (1,046 | ) | |||||||||||||||||||||
Total financial liabilities | — | (8 | ) | (8 | ) | — | (1,950 | ) | (1,966 | ) | (1,960 | ) | ||||||||||||||||||||
F-37
15. | Other financial assets |
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
At beginning of year | 18 | 15 | ||||||
Exchange differences | (1 | ) | 1 | |||||
Additions | — | 4 | ||||||
Disposals | — | (2 | ) | |||||
At end of year | 17 | 18 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
At beginning of year | 52 | 17 | ||||||
Exchange differences | 18 | — | ||||||
Acquisition of investments | 1 | — | ||||||
Disposal of investments | (8 | ) | — | |||||
Equity interest received on sale of Government Solutions | — | 35 | ||||||
At end of year | 63 | 52 | ||||||
F-35
Derivative financial instruments |
2006 | ||||||||||||
Gross | ||||||||||||
notional | ||||||||||||
amounts | Assets | Liabilities | ||||||||||
(All figures in £ millions) | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 953 | 20 | (17 | ) | ||||||||
Interest rate derivatives — not in a hedge relationship | 1,026 | 9 | (2 | ) | ||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 230 | 40 | — | |||||||||
Cross currency rate derivatives — not in a hedge relationship | 180 | 17 | — | |||||||||
Total | 2,389 | 86 | (19 | ) | ||||||||
Analysed as expiring: | ||||||||||||
In less than one year | 976 | 50 | — | |||||||||
Later than one year and not later than five years | 1,005 | 26 | (4 | ) | ||||||||
Later than five years | 408 | 10 | (15 | ) | ||||||||
Total | 2,389 | 86 | (19 | ) | ||||||||
2005 | ||||||||||||
Gross | ||||||||||||
notional | ||||||||||||
amounts | Assets | Liabilities | ||||||||||
(All figures in £ millions) | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 1,109 | 31 | (16 | ) | ||||||||
Interest rate derivatives — not in a hedge relationship | 1,330 | 18 | (6 | ) | ||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 230 | 13 | — | |||||||||
Cross currency rate derivatives — not in a hedge relationship | 180 | 21 | — | |||||||||
Total | 2,849 | 83 | (22 | ) | ||||||||
Analysed as expiring: | ||||||||||||
In less than one year | 250 | 4 | — | |||||||||
Later than one year and not later than five years | 1,823 | 57 | (8 | ) | ||||||||
Later than five years | 776 | 22 | (14 | ) | ||||||||
Total | 2,849 | 83 | (22 | ) | ||||||||
2008 | 2007 | |||||||||||||||||||||||
Gross notional | Gross notional | |||||||||||||||||||||||
amounts | Assets | Liabilities | amounts | Assets | Liabilities | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 1,232 | 161 | — | 522 | 18 | (8 | ) | |||||||||||||||||
Interest rate derivatives — not in a hedge relationship | 1,033 | 23 | (20 | ) | 796 | 7 | (8 | ) | ||||||||||||||||
Cross currency rate derivatives — in a net investment hedge relationship | — | — | — | 100 | 17 | — | ||||||||||||||||||
Cross currency rate derivatives — not in a hedge relationship | — | — | — | 50 | 9 | — | ||||||||||||||||||
Total | 2,265 | 184 | (20 | ) | 1,468 | 51 | (16 | ) | ||||||||||||||||
Analysed as expiring: | ||||||||||||||||||||||||
In less than one year | 487 | 3 | (5 | ) | 320 | 28 | — | |||||||||||||||||
Later than one year and not later than five years | 859 | 47 | (15 | ) | 796 | 13 | (8 | ) | ||||||||||||||||
Later than five years | 919 | 134 | — | 352 | 10 | (8 | ) | |||||||||||||||||
Total | 2,265 | 184 | (20 | ) | 1,468 | 51 | (16 | ) | ||||||||||||||||
F-38
F-36
2006 | ||||||||||||
Net carrying | 1% rate | 1% rate | ||||||||||
amount | increase | decrease | ||||||||||
(All figures in £ millions) | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 3 | (28 | ) | 31 | ||||||||
Interest rate derivatives — not in a hedge relationship | 7 | 1 | (1 | ) | ||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 40 | — | — | |||||||||
Cross currency rate derivatives — not in a hedge relationship | 17 | (1 | ) | 1 | ||||||||
Total | 67 | (28 | ) | 31 | ||||||||
Effect of fair value hedge accounting | — | 28 | (31 | ) | ||||||||
Sensitivity after the application of hedge accounting | 67 | — | — | |||||||||
F-37
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Cost | ||||||||
At beginning of year | 1,357 | 1,109 | ||||||
Exchange differences | (148 | ) | 112 | |||||
Transfers | 6 | — | ||||||
Additions | 213 | 222 | ||||||
Disposals | (280 | ) | (113 | ) | ||||
Acquisition through business combination | 4 | 27 | ||||||
At end of year | 1,152 | 1,357 | ||||||
Amortisation | ||||||||
At beginning of year | (931 | ) | (753 | ) | ||||
Exchange differences | 111 | (87 | ) | |||||
Charge for the year | (210 | ) | (192 | ) | ||||
Disposals | 280 | 113 | ||||||
Acquisition through business combination | — | (12 | ) | |||||
At end of year | (750 | ) | (931 | ) | ||||
Carrying amounts | ||||||||
At end of year | 402 | 426 | ||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Raw materials | 26 | 23 | ||||||
Work in progress | 28 | 43 | ||||||
Finished goods | 300 | 307 | ||||||
354 | 373 | |||||||
F-38
2006 | 2005 | |||||||
(All figures in £ | ||||||||
millions) | ||||||||
Current | ||||||||
Trade receivables | 768 | 825 | ||||||
Royalty advances | 91 | 124 | ||||||
Prepayments and accrued income | 34 | 38 | ||||||
Other receivables | 58 | 42 | ||||||
Receivables from related parties | 2 | 2 | ||||||
953 | 1,031 | |||||||
Non-current | ||||||||
Royalty advances | 80 | 67 | ||||||
Prepayments and accrued income | 4 | 4 | ||||||
Other receivables | 40 | 37 | ||||||
124 | 108 | |||||||
Cash and cash equivalents (excluding overdrafts) |
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Cash at bank and in hand | 421 | 393 | ||||||
Short-term bank deposits | 171 | 509 | ||||||
592 | 902 | |||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Cash at bank and in hand | 528 | 439 | ||||||
Short-term bank deposits | 157 | 121 | ||||||
685 | 560 | |||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Cash and cash equivalents | 592 | 902 | ||||||
Bank overdrafts | (61 | ) | (58 | ) | ||||
531 | 844 | |||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Cash and cash equivalents | 685 | 560 | ||||||
Bank overdrafts | (96 | ) | (68 | ) | ||||
589 | 492 | |||||||
F-39
F-39
Financial liabilities — Borrowings |
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Non-current | ||||||||
6.125% Euro Bonds 2007 (nominal amount€591m) | — | 436 | ||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | 105 | 107 | ||||||
4.7% US Dollar Bonds 2009 (nominal amount $350m) | 178 | 203 | ||||||
7% Global Dollar Bonds 2011 (nominal amount $500m) | 266 | 307 | ||||||
7% Sterling Bonds 2014 (nominal amount £250m) | 251 | 250 | ||||||
5.7% US Dollar Bonds 2014 (nominal amount $400m) | 206 | 238 | ||||||
4.625% US Dollar notes 2018 (nominal amount $300m) | 139 | 161 | ||||||
Finance lease liabilities | 3 | 1 | ||||||
1,148 | 1,703 | |||||||
Current | ||||||||
Due within one year or on demand: | ||||||||
Bank loans and overdrafts | 173 | 102 | ||||||
7.375% US Dollar notes 2006 | — | 152 | ||||||
6.125% Euro Bonds 2007 (nominal amount€591m) | 421 | — | ||||||
Finance lease liabilities | 1 | 2 | ||||||
595 | 256 | |||||||
Total borrowings | 1,743 | 1,959 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Non-current | ||||||||
Bank loans and overdrafts | 132 | — | ||||||
4.7% US Dollar Bonds 2009 (nominal amount $350m) | — | 176 | ||||||
7% Global Dollar Bonds 2011 (nominal amount $500m) | 368 | 264 | ||||||
5.5% Global Dollar Bonds 2013 (nominal amount $350m) | 258 | — | ||||||
5.7% US Dollar Bonds 2014 (nominal amount $400m) | 322 | 211 | ||||||
7% Sterling Bonds 2014 (nominal amount £250m) | 254 | 251 | ||||||
6.25% Global Dollar Bonds 2018 (nominal amount $550m) | 445 | — | ||||||
4.625% US Dollar notes 2018 (nominal amount $300m) | 237 | 143 | ||||||
Finance lease liabilities | 3 | 4 | ||||||
2,019 | 1,049 | |||||||
Current | ||||||||
Due within one year or on demand: | ||||||||
Bank loans and overdrafts | 96 | 444 | ||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | — | 105 | ||||||
4.7% US Dollar Bonds 2009 (nominal amount $350m) | 244 | — | ||||||
Loan notes | — | 8 | ||||||
Finance lease liabilities | 4 | 2 | ||||||
344 | 559 | |||||||
Total borrowings | 2,363 | 1,608 | ||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Between one and two years | 107 | 437 | ||||||
Between two and five years | 445 | 310 | ||||||
Over five years | 596 | 956 | ||||||
1,148 | 1,703 | |||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Between one and two years | 2 | 178 | ||||||
Between two and five years | 759 | 266 | ||||||
Over five years | 1,258 | 605 | ||||||
2,019 | 1,049 | |||||||
F-40
F-40
One to | More than | |||||||||||||||
Total | One year | five years | five years | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Carrying value of borrowings | 1,743 | 595 | 552 | 596 | ||||||||||||
Effect of rate derivatives | — | 629 | (221 | ) | (408 | ) | ||||||||||
1,743 | 1,224 | 331 | 188 | |||||||||||||
Carrying | Market | Carrying | Market | |||||||||||||||||
Effective | amount | value | amount | value | ||||||||||||||||
interest Rate | 2006 | 2006 | 2005 | 2005 | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
6.125% Euro Bonds 2007 | 6.18 | % | — | — | 436 | 419 | ||||||||||||||
10.5% Sterling Bonds 2008 | 10.53 | % | 105 | 106 | 107 | 113 | ||||||||||||||
4.7% US Dollar Bonds 2009 | 4.86 | % | 178 | 176 | 203 | 200 | ||||||||||||||
7% Global Dollar Bonds 2011 | 7.16 | % | 266 | 269 | 307 | 310 | ||||||||||||||
7% Sterling Bonds 2014 | 7.20 | % | 251 | 265 | 250 | 282 | ||||||||||||||
5.7% US Dollar Bonds 2014 | 5.88 | % | 206 | 203 | 238 | 234 | ||||||||||||||
4.625% US Dollar notes 2018 | 4.69 | % | 139 | 135 | 161 | 155 | ||||||||||||||
Finance lease liabilities | n/a | 3 | 3 | 1 | 1 | |||||||||||||||
1,148 | 1,157 | 1,703 | 1,714 | |||||||||||||||||
2008 | 2007 | |||||||||||||||||||
Effective | Carrying | Carrying | ||||||||||||||||||
interest rate | value | Market value | value | Market value | ||||||||||||||||
Bank loans and overdrafts | n/a | 228 | 228 | 444 | 444 | |||||||||||||||
Loan notes | n/a | — | — | 8 | 8 | |||||||||||||||
10.5% Sterling Bonds 2008 | 10.53 | % | — | — | 105 | 102 | ||||||||||||||
4.7% US Dollar Bonds 2009 | 4.86 | % | 244 | 243 | 176 | 176 | ||||||||||||||
7% Global Dollar Bonds 2011 | 7.16 | % | 368 | 349 | 264 | 267 | ||||||||||||||
5.5% Global Dollar Bonds 2013 | 5.76 | % | 258 | 227 | — | — | ||||||||||||||
5.7% US Dollar Bonds 2014 | 5.88 | % | 322 | 262 | 211 | 203 | ||||||||||||||
7% Sterling Bonds 2014 | 7.20 | % | 254 | 258 | 251 | 261 | ||||||||||||||
6.25% Global Dollar Bonds 2018 | 6.46 | % | 445 | 352 | — | — | ||||||||||||||
4.625% US Dollar notes 2018 | 4.69 | % | 237 | 169 | 143 | 135 | ||||||||||||||
Finance lease liabilities | n/a | 7 | 7 | 6 | 6 | |||||||||||||||
2,363 | 2,095 | 1,608 | 1,602 | |||||||||||||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
US dollar | 966 | 1,165 | ||||||
Sterling | 356 | 357 | ||||||
Euro | 421 | 437 | ||||||
1,743 | 1,959 | |||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Finance lease liabilities — minimum lease payments | ||||||||
Not later than one year | 1 | 2 | ||||||
Later than one year and not later than five years | 3 | 1 | ||||||
Later than five years | — | — | ||||||
Future finance charges on finance leases | — | — | ||||||
Present value of finance lease liabilities | 4 | 3 | ||||||
F-41
2008 2007 All figures in £ millions US dollar 2,081 1,251 Sterling 277 357 Euro 5 — 2,363 1,608
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Not later than one year | 1 | 2 | ||||||
Later than one year and not later than five years | 3 | 1 | ||||||
Later than five years | — | — | ||||||
4 | 3 | |||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Floating rate | ||||||||
— expiring within one year | — | — | ||||||
— expiring beyond one year | 894 | 786 | ||||||
894 | 786 | |||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Floating rate | ||||||||
— expiring within one year | — | — | ||||||
— expiring beyond one year | 1,085 | 1,007 | ||||||
1,085 | 1,007 | |||||||
F-41
Financial liabilities — Borrowings continued |
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Finance lease liabilities — minimum lease payments | ||||||||
Not later than one year | 4 | 2 | ||||||
Later than one year and not later than two years | 2 | 2 | ||||||
Later than two years and not later than three years | 1 | 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 | 7 | 6 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Not later than one year | 4 | 2 | ||||||
Later than one year and not later than five years | 3 | 4 | ||||||
Later than five years | — | — | ||||||
7 | 6 | |||||||
19. | Financial risk management |
F-42
F-43
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Cash and cash equivalents | 685 | 560 | ||||||
Marketable securities | 54 | 40 | ||||||
Derivative financial instruments | 164 | 35 | ||||||
Bank loans, overdrafts and loan notes | (228 | ) | (452 | ) | ||||
Bonds | (2,128 | ) | (1,150 | ) | ||||
Finance lease liabilities | (7 | ) | (6 | ) | ||||
Net debt | (1,460 | ) | (973 | ) | ||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Fixed rate | 781 | 567 | ||||||
Floating rate | 679 | 406 | ||||||
Total | 1,460 | 973 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
US dollar | 2,081 | 1,401 | ||||||
Sterling | 277 | 207 | ||||||
Euro | 5 | — | ||||||
Total | 2,363 | 1,608 | ||||||
Less than | One to | More than | ||||||||||||||
one year | five years | five years | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Re-pricing profile of borrowings | 476 | 629 | 1,258 | 2,363 | ||||||||||||
Effect of rate derivatives | 1,173 | (254 | ) | (919 | ) | — | ||||||||||
Total | 1,649 | 375 | 339 | 2,363 | ||||||||||||
F-44
2008 | ||||||||||||||||
USD | GBP | EUR | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Not later than one year | 311 | 17 | — | 328 | ||||||||||||
Later than one year and not later than five years | 884 | 65 | — | 949 | ||||||||||||
Later than five years | 954 | 266 | — | 1,220 | ||||||||||||
Total | 2,149 | 348 | — | 2,497 | ||||||||||||
Analysed as: | ||||||||||||||||
Revolving credit facilities and commercial paper | 141 | — | — | 141 | ||||||||||||
Bonds | 2,237 | 355 | — | 2,592 | ||||||||||||
Rate derivatives — inflows | (392 | ) | (21 | ) | — | (413 | ) | |||||||||
Rate derivatives — outflows | 163 | 14 | — | 177 | ||||||||||||
Total | 2,149 | 348 | — | 2,497 | ||||||||||||
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 | ||||||||||||
F-45
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 figures in £ millions | ||||||||||||||||||||
Investments in unlisted securities | 63 | — | — | (2 | ) | 3 | ||||||||||||||
Cash and cash equivalents | 685 | — | — | (41 | ) | 50 | ||||||||||||||
Marketable securities | 54 | — | — | (5 | ) | 6 | ||||||||||||||
Derivative financial instruments | 164 | (80 | ) | 88 | (15 | ) | 18 | |||||||||||||
Bonds | (2,128 | ) | 77 | (84 | ) | 155 | (189 | ) | ||||||||||||
Other borrowings | (235 | ) | — | — | 19 | (24 | ) | |||||||||||||
Other net financial assets | 580 | — | — | (46 | ) | 57 | ||||||||||||||
Total financial instruments | (817 | ) | (3 | ) | 4 | 65 | (79 | ) | ||||||||||||
F-46
20. | Intangible assets — Pre-publication |
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Cost | ||||||||
At beginning of year | 1,264 | 1,152 | ||||||
Exchange differences | 494 | (7 | ) | |||||
Additions | 297 | 230 | ||||||
Disposals | (345 | ) | (125 | ) | ||||
Acquisition through business combination | 78 | 19 | ||||||
Transfer from software | 12 | — | ||||||
Transfer to non-current assets held for sale | — | (5 | ) | |||||
At end of year | 1,800 | 1,264 | ||||||
Amortisation | ||||||||
At beginning of year | (814 | ) | (750 | ) | ||||
Exchange differences | (337 | ) | 1 | |||||
Charge for the year | (244 | ) | (192 | ) | ||||
Disposals | 345 | 125 | ||||||
Acquisition through business combination | (51 | ) | (1 | ) | ||||
Transfer from software | (4 | ) | — | |||||
Transfer to non-current assets held for sale | — | 3 | ||||||
At end of year | (1,105 | ) | (814 | ) | ||||
Carrying amounts | ||||||||
At end of year | 695 | 450 | ||||||
F-47
21. | Inventories |
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Raw materials | 31 | 24 | ||||||
Work in progress | 29 | 30 | ||||||
Finished goods | 441 | 314 | ||||||
501 | 368 | |||||||
22. | Trade and other receivables |
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Current | ||||||||
Trade receivables | 1,030 | 750 | ||||||
Royalty advances | 111 | 84 | ||||||
Prepayments and accrued income | 62 | 48 | ||||||
Other receivables | 135 | 59 | ||||||
Receivables from related parties | 4 | 5 | ||||||
1,342 | 946 | |||||||
Non-current | ||||||||
Royalty advances | 102 | 68 | ||||||
Prepayments and accrued income | 3 | 4 | ||||||
Other receivables | 47 | 57 | ||||||
152 | 129 | |||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
At beginning of year | (52 | ) | (46 | ) | ||||
Exchange differences | (18 | ) | (1 | ) | ||||
Income statement movements | (27 | ) | (19 | ) | ||||
Utilised | 27 | 15 | ||||||
Acquisition through business combination | (2 | ) | (3 | ) | ||||
Disposal through business disposal | — | 2 | ||||||
At end of year | (72 | ) | (52 | ) | ||||
F-48
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Within due date | 1,110 | 819 | ||||||
Up to three months past due date | 248 | 171 | ||||||
Three to six months past due date | 60 | 51 | ||||||
Six to nine months past due date | 21 | 12 | ||||||
Nine to 12 months past due date | 15 | 19 | ||||||
More than 12 months past due date | 20 | 19 | ||||||
Total trade receivables | 1,474 | 1,091 | ||||||
Less: provision for bad and doubtful debts | (72 | ) | (52 | ) | ||||
Less: provision for sales returns | (372 | ) | (281 | ) | ||||
Transfer to non-current assets held for sale | — | (8 | ) | |||||
Net trade receivables | 1,030 | 750 | ||||||
23. | Provisions for other liabilities and charges |
Deferred | Re- | |||||||||||||||||||||||
consideration | Integration | organizations | Leases | Other | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
At 1 January 2006 | 26 | 3 | 5 | 12 | 18 | 64 | ||||||||||||||||||
Exchange differences | — | — | — | (2 | ) | (2 | ) | (4 | ) | |||||||||||||||
Charged to consolidated income statement | ||||||||||||||||||||||||
— Additional provisions | — | — | 1 | 4 | 7 | 12 | ||||||||||||||||||
— Unused amounts reversed | (9 | ) | — | (2 | ) | — | (4 | ) | (15 | ) | ||||||||||||||
On acquisition | 17 | — | — | — | 3 | 20 | ||||||||||||||||||
Utilised during year | (9 | ) | (1 | ) | (3 | ) | (2 | ) | (10 | ) | (25 | ) | ||||||||||||
At 31 December 2006 | 25 | 2 | 1 | 12 | 12 | 52 | ||||||||||||||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Analysis of provisions | ||||||||
Non-current | 29 | 31 | ||||||
Current | 23 | 33 | ||||||
52 | 64 | |||||||
F-42
Deferred | ||||||||||||||||
consideration | Leases | Other | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
At 1 January 2008 | 37 | 9 | 21 | 67 | ||||||||||||
Exchange differences | 5 | 2 | 9 | 16 | ||||||||||||
Charged to income statement | 2 | — | 7 | 9 | ||||||||||||
Released to income statement | — | (1 | ) | (5 | ) | (6 | ) | |||||||||
Acquisition through business combination — current year | 3 | — | 16 | 19 | ||||||||||||
Acquisition through business combination — prior year adjustments | (4 | ) | — | 7 | 3 | |||||||||||
Utilised | — | (2 | ) | (17 | ) | (19 | ) | |||||||||
At 31 December 2008 | 43 | 8 | 38 | 89 | ||||||||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Analysis of provisions | ||||||||
Non-current | 33 | 44 | ||||||
Current | 56 | 23 | ||||||
89 | 67 | |||||||
F-49
Trade and other liabilities |
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Trade payables | 343 | 348 | ||||||
Social security and other taxes | 18 | 21 | ||||||
Accruals | 345 | 363 | ||||||
Deferred income | 276 | 237 | ||||||
Other liabilities | 178 | 156 | ||||||
1,160 | 1,125 | |||||||
Less: non-current portion | ||||||||
Accruals | 24 | 15 | ||||||
Deferred income | 47 | 51 | ||||||
Other liabilities | 91 | 85 | ||||||
162 | 151 | |||||||
Current portion | 998 | 974 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Trade payables | 450 | 342 | ||||||
Social security and other taxes | 35 | 23 | ||||||
Accruals | 501 | 402 | ||||||
Deferred income | 444 | 290 | ||||||
Interest payable | 10 | — | ||||||
Dividends payable to minority interest | 5 | 12 | ||||||
Other liabilities | 205 | 171 | ||||||
1,650 | 1,240 | |||||||
Less: non-current portion | ||||||||
Accruals | 42 | 30 | ||||||
Deferred income | 87 | 58 | ||||||
Interest payable | 1 | — | ||||||
Other liabilities | 91 | 102 | ||||||
221 | 190 | |||||||
Current portion | 1,429 | 1,050 | ||||||
• | multi-year obligations to deliver workbooks to adoption customers in school businesses; | |
• | advance payments in assessment and testing 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-50
F-43
2006 | 2006 | 2005 | 2005 | 2004 | 2004 | |||||||||||||||||||
UK Group | Other | UK Group | Other | UK Group | Other | |||||||||||||||||||
% | plan | plans | plan | plans | plan | plans | ||||||||||||||||||
Inflation | 3.00 | 2.91 | 2.80 | 2.95 | 2.80 | 2.98 | ||||||||||||||||||
Expected rate of increase in salaries | 4.70 | 4.37 | 4.50 | 4.43 | 4.80 | 4.44 | ||||||||||||||||||
Expected rate of increase for pensions in payment and deferred pensions | 2.10 to 4.60 | — | 2.50 to 4.00 | — | 2.80 to 4.00 | — | ||||||||||||||||||
Rate used to discount plan liabilities | 5.20 | 5.70 | 4.85 | 5.54 | 5.40 | 5.84 | ||||||||||||||||||
Expected return on assets | 6.40 | 7.18 | 6.40 | 7.31 | 6.60 | 7.23 | ||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||
UK Group | Other | UK Group | Other | UK Group | Other | |||||||||||||||||||||||||||||||
plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB | ||||||||||||||||||||||||||||
% | ||||||||||||||||||||||||||||||||||||
Inflation | 2.80 | 2.80 | 2.80 | 3.30 | 2.93 | 3.00 | 3.00 | 2.91 | 3.00 | |||||||||||||||||||||||||||
Rate used to discount plan liabilities | 6.40 | 6.25 | 6.25 | 5.80 | 6.01 | 6.05 | 5.20 | 5.70 | 5.85 | |||||||||||||||||||||||||||
Expected return on assets | 6.33 | 7.60 | — | 6.50 | 7.27 | — | 6.40 | 7.18 | — | |||||||||||||||||||||||||||
Expected rate of increase in salaries | 4.30 | 4.50 | — | 5.00 | 4.36 | — | 4.70 | 4.37 | — | |||||||||||||||||||||||||||
Expected rate of increase for pensions in payment and deferred pensions | 2.30 to 4.20 | — | — | 2.50 to 4.30 | — | — | 2.10 to 4.60 | — | — | |||||||||||||||||||||||||||
Initial rate of increase in healthcare rate | — | — | 9.00 | — | — | 9.50 | — | — | 10.00 | |||||||||||||||||||||||||||
Ultimate rate of increase in healthcare rate | — | — | 5.00 | — | — | 5.00 | — | — | 5.00 | |||||||||||||||||||||||||||
2006 | 2005 | |||||||
Male | 20.9 | 19.5 | ||||||
Female | 21.3 | 21.5 | ||||||
2006 | 2005 | |||||||
Male | 22.2 | 20.2 | ||||||
Female | 22.5 | 22.1 | ||||||
Defined | ||||||||||||||||||||
UK Group | benefit | Defined | 2006 | |||||||||||||||||
plan | other | Sub Total | contribution | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Current service cost | 27 | 2 | 29 | 36 | 65 | |||||||||||||||
Total operating costs | 27 | 2 | 29 | 36 | 65 | |||||||||||||||
Expected return on plan assets | (85 | ) | (7 | ) | (92 | ) | — | (92 | ) | |||||||||||
Interest on pension scheme liabilities | 78 | 7 | 85 | — | 85 | |||||||||||||||
Net finance income | (7 | ) | — | (7 | ) | — | (7 | ) | ||||||||||||
Net income statement charge | 20 | 2 | 22 | 36 | 58 | |||||||||||||||
Actual return on plan assets | 153 | 13 | 166 | — | 166 | |||||||||||||||
F-44
Defined | ||||||||||||||||||||
UK Group | benefit | Sub | Defined | 2005 | ||||||||||||||||
plan | other | Total | contribution | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Current service cost | 25 | 2 | 27 | 35 | 62 | |||||||||||||||
Curtailments | — | (2 | ) | (2 | ) | — | (2 | ) | ||||||||||||
Total operating costs | 25 | — | 25 | 35 | 60 | |||||||||||||||
Expected return on plan assets | (75 | ) | (6 | ) | (81 | ) | — | (81 | ) | |||||||||||
Interest on pension scheme liabilities | 79 | 6 | 85 | — | 85 | |||||||||||||||
Net finance costs | 4 | — | 4 | — | 4 | |||||||||||||||
Net income statement charge | 29 | — | 29 | 35 | 64 | |||||||||||||||
Actual return on plan assets | 214 | 7 | 221 | — | 221 | |||||||||||||||
Defined | ||||||||||||||||||||
UK Group | benefit | Sub | Defined | 2004 | ||||||||||||||||
plan | other | Total | contribution | Total | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
Current service cost | 22 | 2 | 24 | 32 | 56 | |||||||||||||||
Total operating costs | 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 costs | 1 | — | 1 | — | 1 | |||||||||||||||
Net income statement charge | 23 | 2 | 25 | 32 | 57 | |||||||||||||||
Actual return on plan assets | 135 | 9 | 144 | — | 144 | |||||||||||||||
2006 | 2006 | 2006 | 2005 | 2005 | 2005 | |||||||||||||||||||||||||||
UK | Other | Other | UK | Other | Other | |||||||||||||||||||||||||||
Group | funded | unfunded | 2006 | Group | funded | unfunded | 2005 | |||||||||||||||||||||||||
plan | plans | plans | Total | plan | plans | plans | Total | |||||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||||||
Fair value of plan assets | 1,528 | 105 | — | 1,633 | 1,390 | 110 | — | 1,500 | ||||||||||||||||||||||||
Present value of defined benefit obligation | (1,683 | ) | (115 | ) | (12 | ) | (1,810 | ) | (1,661 | ) | (131 | ) | (11 | ) | (1,803 | ) | ||||||||||||||||
Net pension liability | (155 | ) | (10 | ) | (12 | ) | (177 | ) | (271 | ) | (21 | ) | (11 | ) | (303 | ) | ||||||||||||||||
Other post-retirement medical benefit obligation | (48 | ) | (60 | ) | ||||||||||||||||||||||||||||
Other pension accruals | (25 | ) | (26 | ) | ||||||||||||||||||||||||||||
Total retirement benefit obligations | (250 | ) | (389 | ) | ||||||||||||||||||||||||||||
F-45
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Amounts recognised for defined benefit plans | 102 | 21 | (60 | ) | ||||||||
Amounts recognised for post-retirement medical benefit plans | 5 | 5 | (1 | ) | ||||||||
Total recognised in year | 107 | 26 | (61 | ) | ||||||||
Cumulative amounts recognised | 44 | (63 | ) | (89 | ) | |||||||
2006 | 2006 | 2005 | 2005 | |||||||||||||||||||||
UK | Other | UK | Other | |||||||||||||||||||||
Group | funded | 2006 | Group | funded | 2005 | |||||||||||||||||||
% | plan | plans | Total | plan | plans | Total | ||||||||||||||||||
Equities | 46.6 | 3.9 | 50.5 | 47.4 | 4.3 | 51.7 | ||||||||||||||||||
Bonds | 23.8 | 2.1 | 25.9 | 24.7 | 2.0 | 26.7 | ||||||||||||||||||
Properties | 9.2 | — | 9.2 | 8.9 | — | 8.9 | ||||||||||||||||||
Other | 14.0 | 0.4 | 14.4 | 11.7 | 1.0 | 12.7 |
F-46
2006 UK | 2005 UK | |||||||||||||||||||||||
Group | 2006 | 2006 | Group | 2005 | 2005 | |||||||||||||||||||
plan | Other | Total | plan | Other | Total | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Fair value of plan assets | ||||||||||||||||||||||||
Opening fair value of plan assets | 1,390 | 110 | 1,500 | 1,198 | 82 | 1,280 | ||||||||||||||||||
Exchange differences | — | (12 | ) | (12 | ) | — | 9 | 9 | ||||||||||||||||
Expected return on plan assets | 85 | 7 | 92 | 75 | 6 | 81 | ||||||||||||||||||
Actuarial gains and losses | 68 | 6 | 74 | 139 | 1 | 140 | ||||||||||||||||||
Contributions by employer | 43 | 2 | 45 | 35 | 10 | 45 | ||||||||||||||||||
Contributions by employee | 7 | — | 7 | 6 | — | 6 | ||||||||||||||||||
Benefits paid | (65 | ) | (8 | ) | (73 | ) | (63 | ) | (6 | ) | (69 | ) | ||||||||||||
Acquisition through business combination | — | — | — | — | 8 | 8 | ||||||||||||||||||
Closing fair value of plan assets | 1,528 | 105 | 1,633 | 1,390 | 110 | 1,500 | ||||||||||||||||||
Present value of defined benefit obligation | ||||||||||||||||||||||||
Opening defined benefit obligation | (1,661 | ) | (142 | ) | (1,803 | ) | (1,502 | ) | (113 | ) | (1,615 | ) | ||||||||||||
Exchange differences | — | 15 | 15 | — | (12 | ) | (12 | ) | ||||||||||||||||
Current service cost | (27 | ) | (2 | ) | (29 | ) | (25 | ) | (2 | ) | (27 | ) | ||||||||||||
Curtailment | — | — | — | — | 2 | 2 | ||||||||||||||||||
Interest cost | (78 | ) | (7 | ) | (85 | ) | (79 | ) | (6 | ) | (85 | ) | ||||||||||||
Actuarial gains and losses | 25 | 3 | 28 | (112 | ) | (7 | ) | (119 | ) | |||||||||||||||
Contributions by employee | (7 | ) | — | (7 | ) | (6 | ) | — | (6 | ) | ||||||||||||||
Benefits paid | 65 | 8 | 73 | 63 | 6 | 69 | ||||||||||||||||||
Acquisition through business combination | — | (2 | ) | (2 | ) | — | (10 | ) | (10 | ) | ||||||||||||||
Closing defined benefit obligation | (1,683 | ) | (127 | ) | (1,810 | ) | (1,661 | ) | (142 | ) | (1,803 | ) | ||||||||||||
2006 | 2005 | 2004 | 2003 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Fair value of plan assets | 1,633 | 1,500 | 1,280 | 1,164 | ||||||||||||
Present value of defined benefit obligation | (1,810 | ) | (1,803 | ) | (1,615 | ) | (1,454 | ) | ||||||||
Net pension liability | (177 | ) | (303 | ) | (335 | ) | (290 | ) | ||||||||
Experience adjustments on plan assets | 74 | 140 | 67 | 88 | ||||||||||||
Experience adjustments on plan liabilities | 28 | (119 | ) | (127 | ) | (113 | ) | |||||||||
UK | US | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Male | 21.5 | 21.3 | 17.6 | 17.9 | ||||||||||||
Female | 21.8 | 21.6 | 20.2 | 21.3 |
UK | US | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Male | 23.3 | 23.1 | 17.6 | 17.9 | ||||||||||||
Female | 23.8 | 23.6 | 20.2 | 21.3 |
F-51
2008 | ||||||||||||||||||||||||
Defined | ||||||||||||||||||||||||
UK Group | benefit | Defined | ||||||||||||||||||||||
plan | other | Sub-total | contribution | PRMB | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Current service cost | 33 | 3 | 36 | 41 | 1 | 78 | ||||||||||||||||||
Past service cost | — | 1 | 1 | — | 5 | 6 | ||||||||||||||||||
Total operating expense | 33 | 4 | 37 | 41 | 6 | 84 | ||||||||||||||||||
Expected return on plan assets | (104 | ) | (7 | ) | (111 | ) | — | — | (111 | ) | ||||||||||||||
Interest on plan liabilities | 93 | 7 | 100 | — | 3 | 103 | ||||||||||||||||||
Net finance (income)/expense | (11 | ) | — | (11 | ) | — | 3 | (8 | ) | |||||||||||||||
Net income statement charge | 22 | 4 | 26 | 41 | 9 | 76 | ||||||||||||||||||
Actual (loss)/return on plan assets | (130 | ) | (27 | ) | (157 | ) | — | — | (157 | ) | ||||||||||||||
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 (loss)/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 | 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 (loss)/return on plan assets | 153 | 13 | 166 | — | — | 166 | ||||||||||||||||||
F-52
2008 | 2007 | |||||||||||||||||||||||||||||||
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 | 1,478 | 100 | — | 1,578 | 1,744 | 109 | — | 1,853 | ||||||||||||||||||||||||
Present value of defined benefit obligation | (1,429 | ) | (149 | ) | (16 | ) | (1,594 | ) | (1,682 | ) | (117 | ) | (12 | ) | (1,811 | ) | ||||||||||||||||
Net pension (liability)/asset | 49 | (49 | ) | (16 | ) | (16 | ) | 62 | (8 | ) | (12 | ) | 42 | |||||||||||||||||||
Other post-retirement medical benefit obligation | (68 | ) | (47 | ) | ||||||||||||||||||||||||||||
Other pension accruals | (34 | ) | (28 | ) | ||||||||||||||||||||||||||||
Net retirement benefit obligations | (118 | ) | (33 | ) | ||||||||||||||||||||||||||||
Analysed as: | ||||||||||||||||||||||||||||||||
Retirement benefit assets | 49 | 62 | ||||||||||||||||||||||||||||||
Retirement benefit obligations | (167 | ) | (95 | ) | ||||||||||||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Amounts recognised for defined benefit plans | (74 | ) | 79 | 102 | ||||||||
Amounts recognised for post-retirement medical benefit plans | 3 | 1 | 5 | |||||||||
Total recognised in year | (71 | ) | 80 | 107 | ||||||||
Cumulative amounts recognised | 53 | 124 | 44 | |||||||||
2008 | 2007 | |||||||||||||||||||||||
Other | Other | |||||||||||||||||||||||
UK Group | funded | UK Group | funded | |||||||||||||||||||||
plan | plans | Total | plan | plans | Total | |||||||||||||||||||
% | ||||||||||||||||||||||||
Equities | 28.0 | 3.1 | 31.1 | 34.3 | 3.4 | 37.7 | ||||||||||||||||||
Bonds | 40.8 | 2.2 | 43.0 | 34.9 | 2.0 | 36.9 | ||||||||||||||||||
Properties | 7.4 | 0.1 | 7.5 | 7.7 | — | 7.7 | ||||||||||||||||||
Other | 17.5 | 0.9 | 18.4 | 17.2 | 0.5 | 17.7 |
F-53
2008 | 2007 | |||||||||||||||||||||||
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 | 1,744 | 109 | 1,853 | 1,528 | 105 | 1,633 | ||||||||||||||||||
Exchange differences | — | 23 | 23 | — | 1 | 1 | ||||||||||||||||||
Expected return on plan assets | 104 | 7 | 111 | 96 | 7 | 103 | ||||||||||||||||||
Actuarial gains and (losses) | (234 | ) | (34 | ) | (268 | ) | 32 | (3 | ) | 29 | ||||||||||||||
Contributions by employer | 54 | 3 | 57 | 152 | 5 | 157 | ||||||||||||||||||
Contributions by employee | 9 | — | 9 | 8 | — | 8 | ||||||||||||||||||
Benefits paid | (72 | ) | (8 | ) | (80 | ) | (72 | ) | (6 | ) | (78 | ) | ||||||||||||
Other movements | (127 | ) | — | (127 | ) | — | — | — | ||||||||||||||||
Closing fair value of plan assets | 1,478 | 100 | 1,578 | 1,744 | 109 | 1,853 | ||||||||||||||||||
Present value of defined benefit obligation | ||||||||||||||||||||||||
Opening defined benefit obligation | (1,682 | ) | (129 | ) | (1,811 | ) | (1,683 | ) | (127 | ) | (1,810 | ) | ||||||||||||
Exchange differences | — | (38 | ) | (38 | ) | — | 1 | 1 | ||||||||||||||||
Current service cost | (33 | ) | (3 | ) | (36 | ) | (29 | ) | (2 | ) | (31 | ) | ||||||||||||
Past service cost | — | (1 | ) | (1 | ) | — | — | — | ||||||||||||||||
Interest cost | (93 | ) | (7 | ) | (100 | ) | (84 | ) | (7 | ) | (91 | ) | ||||||||||||
Actuarial gains and (losses) | 189 | 5 | 194 | 50 | — | 50 | ||||||||||||||||||
Contributions by employee | (9 | ) | — | (9 | ) | (8 | ) | — | (8 | ) | ||||||||||||||
Benefits paid | 72 | 8 | 80 | 72 | 6 | 78 | ||||||||||||||||||
Other movements | 127 | — | 127 | — | — | — | ||||||||||||||||||
Closing defined benefit obligation | (1,429 | ) | (165 | ) | (1,594 | ) | (1,682 | ) | (129 | ) | (1,811 | ) | ||||||||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Opening defined benefit obligation | (47 | ) | (48 | ) | ||||
Exchange differences | (19 | ) | — | |||||
Current service cost | (1 | ) | (1 | ) | ||||
Past service cost | (5 | ) | — | |||||
Interest cost | (3 | ) | (2 | ) | ||||
Actuarial gains and (losses) | 3 | 1 | ||||||
Benefits paid | 4 | 3 | ||||||
Closing defined benefit obligation | (68 | ) | (47 | ) | ||||
F-54
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Fair value of plan assets | 1,578 | 1,853 | 1,633 | 1,500 | 1,280 | |||||||||||||||
Present value of defined benefit obligation | (1,594 | ) | (1,811 | ) | (1,810 | ) | (1,803 | ) | (1,615 | ) | ||||||||||
Net pension asset/(liability) | (16 | ) | 42 | (177 | ) | (303 | ) | (335 | ) | |||||||||||
Experience adjustments on plan assets | (268 | ) | 29 | 74 | 140 | 67 | ||||||||||||||
Experience adjustments on plan liabilities | 194 | 50 | 28 | (119 | ) | (127 | ) |
F-47
2006 | 2006 | |||||||
1% increase | 1% decrease | |||||||
(All figures in £ millions) | ||||||||
Effect on: | ||||||||
(Decrease)/increase in defined benefit obligation | (242 | ) | 297 |
2008 | ||||||||
1% increase | 1% decrease | |||||||
All figures in £ millions | ||||||||
Effect on: | ||||||||
(Decrease)/increase in defined benefit obligation — UK Group plan | (180.1 | ) | 209.6 | |||||
(Decrease)/increase of aggregate of service cost and interest cost — UK Group plan | (2.2 | ) | 1.1 | |||||
(Decrease)/increase in defined benefit obligation — US plan | (12.2 | ) | 14.5 |
% | 2006 | 2005 | 2004 | |||||||||
Inflation | 3.00 | 3.00 | 3.00 | |||||||||
Initial rate of increase in healthcare rates | 10.00 | 10.00 | 12.00 | |||||||||
Ultimate rate of increase in healthcare rates | 5.00 | 5.00 | 5.00 | |||||||||
Rate used to discount scheme liabilities | 5.85 | 5.60 | 5.60 |
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Current service cost | 1 | 1 | 1 | |||||||||
Past service cost | (2 | ) | — | — | ||||||||
Total operating (income)/costs | (1 | ) | 1 | 1 | ||||||||
Interest cost | 3 | 3 | 4 | |||||||||
Net income statement charge | 2 | 4 | 5 | |||||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Opening defined benefit obligation | (60 | ) | (58 | ) | ||||
Exchange differences | 8 | (7 | ) | |||||
Reclassifications | (3 | ) | — | |||||
Current service cost | (1 | ) | (1 | ) | ||||
Past service cost | 2 | — | ||||||
Interest cost | (3 | ) | (3 | ) | ||||
Benefits paid | 4 | 4 | ||||||
Actuarial gains and losses | 5 | 5 | ||||||
Closing defined benefit obligation | (48 | ) | (60 | ) | ||||
F-48
2006 | 2006 | 2005 | 2005 | 2004 | 2004 | |||||||||||||||||||
1% increase | 1% decrease | 1% increase | 1% decrease | 1% increase | 1% decrease | |||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||
Effect on: | ||||||||||||||||||||||||
Increase/(decrease) of aggregate of service cost and interest cost | 0.1 | (0.1 | ) | 0.2 | (0.2 | ) | 0.2 | (0.2 | ) | |||||||||||||||
(Decrease)/increase in defined benefit obligation | (4.7 | ) | 5.1 | (4.7 | ) | 4.1 | (4.1 | ) | 3.7 |
2008 | ||||||||
1% increase | 1% decrease | |||||||
All figures in £ millions | ||||||||
Effect on: | ||||||||
Increase/(decrease) in post-retirement medical benefit obligation | 3.3 | (2.9 | ) | |||||
Increase/(decrease) of aggregate of service cost and interest cost | 0.2 | (0.1 | ) |
F-55
26. | Share-based payments |
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Pearson plans | 18 | 13 | 15 | |||||||||
IDC plans | 7 | 10 | 10 | |||||||||
Total share-based payment costs | 25 | 23 | 25 | |||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Pearson plans | 25 | 23 | 18 | |||||||||
Interactive Data plans | 8 | 7 | 7 | |||||||||
Total share-based payment costs | 33 | 30 | 25 | |||||||||
F-56
F-49
2006 | 2006 | 2005 | 2005 | |||||||||||||
Number of | Weighted | Number of | Weighted | |||||||||||||
share | average | share | average | |||||||||||||
options | exercise | options | exercise | |||||||||||||
000s | price £ | 000s | price £ | |||||||||||||
Outstanding at beginning of year | 21,677 | 13.15 | 26,179 | 13.62 | ||||||||||||
Granted during the year | 837 | 6.30 | 606 | 4.92 | ||||||||||||
Exercised during the year | (1,396 | ) | 5.36 | (324 | ) | 6.01 | ||||||||||
Forfeited during the year | (1,828 | ) | 15.39 | (4,352 | ) | 15.75 | ||||||||||
Expired during the year | (429 | ) | 6.72 | (432 | ) | 9.17 | ||||||||||
Outstanding at end of year | 18,861 | 13.36 | 21,677 | 13.15 | ||||||||||||
Options exercisable at end of year | 15,595 | 14.14 | 17,420 | 13.90 | ||||||||||||
2008 | 2007 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
share | exercise | share | exercise | |||||||||||||
options | price | options | price | |||||||||||||
000s | £ | 000s | £ | |||||||||||||
Outstanding at beginning of year | 16,781 | 13.15 | 18,861 | 13.36 | ||||||||||||
Granted during the year | 1,437 | 5.35 | 773 | 6.90 | ||||||||||||
Exercised during the year | (683 | ) | 4.85 | (1,326 | ) | 5.80 | ||||||||||
Forfeited during the year | (3,082 | ) | 11.56 | (1,434 | ) | 19.63 | ||||||||||
Expired during the year | (74 | ) | 6.06 | (93 | ) | 7.68 | ||||||||||
Outstanding at end of year | 14,379 | 13.14 | 16,781 | 13.15 | ||||||||||||
Options exercisable at end of year | 11,527 | 14.97 | 13,999 | 14.63 | ||||||||||||
2006 | 2006 | 2005 | 2005 | |||||||||||||
Number of | Weighted | Number of | Weighted | |||||||||||||
share | average | share | average | |||||||||||||
Range of exercise prices | options | contractual | options | contractual | ||||||||||||
£ | 000s | life years | 000s | life years | ||||||||||||
0 — 5 | 1,649 | 1.94 | 2,773 | 2.32 | ||||||||||||
5 — 10 | 5,254 | 3.85 | 5,555 | 4.57 | ||||||||||||
10 — 15 | 7,638 | 3.63 | 8,237 | 4.64 | ||||||||||||
15 — 20 | 1,050 | 2.88 | 1,168 | 3.81 | ||||||||||||
20 — 25 | 424 | 3.19 | 930 | 3.80 | ||||||||||||
>25 | 2,846 | 3.22 | 3,014 | 4.22 | ||||||||||||
18,861 | 3.42 | 21,677 | 4.19 | |||||||||||||
2008 | 2007 | |||||||||||||||
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 | 453 | 1.23 | 930 | 1.56 | ||||||||||||
5 — 10 | 5,113 | 2.84 | 4,909 | 3.22 | ||||||||||||
10 — 15 | 5,481 | 1.97 | 7,257 | 2.62 | ||||||||||||
15 — 20 | 908 | 0.84 | 980 | 1.85 | ||||||||||||
20 — 25 | 350 | 1.19 | 400 | 2.19 | ||||||||||||
>25 | 2,074 | 1.19 | 2,305 | 2.19 | ||||||||||||
14,379 | 2.05 | 16,781 | 2.62 | |||||||||||||
F-57
F-50
2006 | 2005 | |||||||
Weighted | Weighted | |||||||
average | average | |||||||
Fair value | £1.92 | £2.41 | ||||||
Weighted average share price | £7.66 | £6.54 | ||||||
Weighted average exercise price | £6.30 | £5.08 | ||||||
Expected volatility | 23.12 | % | 35.47 | % | ||||
Expected life | 4.0 years | 4.1 years | ||||||
Risk free rate | 4.42 | % | 4.48 | % | ||||
Expected dividend yield | 3.52 | % | 3.93 | % | ||||
Forfeiture rate | 5.0 | % | 6.3 | % | ||||
2008 | 2007 | |||||||
Weighted | Weighted | |||||||
average | average | |||||||
Fair value | £1.67 | £2.53 | ||||||
Weighted average share price | £6.96 | £8.91 | ||||||
Weighted average exercise price | £5.35 | £6.90 | ||||||
Expected volatility | 21.41 | % | 19.72 | % | ||||
Expected life | 4.1 years | 4.0 years | ||||||
Risk free rate | 4.28 | % | 5.34 | % | ||||
Expected dividend yield | 4.54 | % | 3.29 | % | ||||
Forfeiture rate | 3.6 | % | 3.5 | % |
2006 | 2006 | 2005 | ||||||||||||||
Number | Weighted | 2005 | Weighted | |||||||||||||
of shares | average | Number | average | |||||||||||||
000s | fair value | of shares | fair value | |||||||||||||
£ | 000s | £ | ||||||||||||||
Annual Bonus Share Matching Plan | 90 | 6.27 | 71 | 5.57 | ||||||||||||
Long-Term Incentive Plan | 3,585 | 6.96 | 3,987 | 5.05 |
2008 | 2007 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
shares | fair value | shares | fair value | |||||||||||||
000s | £ | 000s | £ | |||||||||||||
Annual Bonus Share Matching Plan | 253 | 6.73 | 143 | 7.67 | ||||||||||||
Long-Term Incentive Plan | 4,152 | 5.78 | 3,377 | 7.12 |
F-58
F-51
2006 | 2005 | |||||||||||||||||||||||
2006 | Weighted | 2006 | 2005 | Weighted | 2005 | |||||||||||||||||||
Number | average | Weighted | Number | average | Weighted | |||||||||||||||||||
of share | exercise | average | of share | exercise | average | |||||||||||||||||||
options | price | exercise | options | price | exercise | |||||||||||||||||||
000s | $ | price £ | 000s | $ | price £ | |||||||||||||||||||
Outstanding at beginning of year | 10,068 | 15.16 | 8.37 | 9,832 | 13.46 | 7.36 | ||||||||||||||||||
Granted during the year | 1,835 | 20.58 | 10.52 | 1,940 | 21.38 | 11.80 | ||||||||||||||||||
Exercised during the year | (1,252 | ) | 12.88 | 6.58 | (1,412 | ) | 11.57 | 6.39 | ||||||||||||||||
Forfeited during the year | (139 | ) | 19.02 | 9.72 | (292 | ) | 16.86 | 9.31 | ||||||||||||||||
Expired during the year | (6 | ) | 11.46 | 5.86 | — | — | — | |||||||||||||||||
Outstanding at end of year | 10,506 | 16.33 | 8.34 | 10,068 | 15.16 | 8.37 | ||||||||||||||||||
Options exercisable at end of year | 6,547 | 14.11 | 7.21 | 6,052 | 12.58 | 6.94 | ||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
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 | 9,827 | 18.21 | 9.15 | 10,506 | 16.33 | 8.34 | ||||||||||||||||||
Granted during the year | 1,449 | 24.95 | 17.35 | 1,560 | 27.17 | 13.65 | ||||||||||||||||||
Exercised during the year | (895 | ) | 15.37 | 10.69 | (1,935 | ) | 14.88 | 7.48 | ||||||||||||||||
Forfeited during the year | (99 | ) | 22.05 | 15.34 | (293 | ) | 20.38 | 10.24 | ||||||||||||||||
Expired during the year | (18 | ) | 12.17 | 8.46 | (11 | ) | 18.12 | 9.10 | ||||||||||||||||
Outstanding at end of year | 10,264 | 19.38 | 13.48 | 9,827 | 18.21 | 9.15 | ||||||||||||||||||
Options exercisable at end of year | 6,865 | 16.89 | 11.75 | 6,199 | 15.27 | 7.67 | ||||||||||||||||||
2006 | 2006 | 2005 | 2005 | |||||||||||||
Number | Weighted | Number | Weighted | |||||||||||||
of share | average | of share | average | |||||||||||||
Range of exercise prices | options | contractual | options | contractual | ||||||||||||
$ | 000s | life years | 000s | life years | ||||||||||||
0 — 4.4 | 30 | 3.1 | 33 | 4.2 | ||||||||||||
4.4 — 7.5 | 157 | 2.3 | 206 | 3.6 | ||||||||||||
7.5 — 12 | 2,164 | 4.4 | 2,685 | 5.3 | ||||||||||||
12 — 20 | 4,640 | 6.4 | 5,243 | 7.4 | ||||||||||||
>20 | 3,515 | 9.0 | 1,901 | 9.5 | ||||||||||||
10,506 | 6.8 | 10,068 | 5.4 | |||||||||||||
2008 | 2007 | |||||||||||||||
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 | — | — | — | — | ||||||||||||
4.4 — 7.5 | 47 | 1.3 | 72 | 2.1 | ||||||||||||
7.5 — 12 | 1,502 | 2.4 | 1,745 | 3.4 | ||||||||||||
12 — 20 | 2,987 | 4.6 | 3,464 | 5.6 | ||||||||||||
> 20 | 5,728 | 8.0 | 4,546 | 8.5 | ||||||||||||
10,264 | 6.2 | 9,827 | 6.6 | |||||||||||||
F-59
Long-Term Incentive Plan | Employee Stock Purchase Plan | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||
average | average | average | average | |||||||||||||
Fair value | $ 5.58 | $ 6.60 | $ 6.59 | $ 4.76 | ||||||||||||
Weighted average share price | $24.95 | $27.17 | $22.95 | $17.77 | ||||||||||||
Weighted average exercise price | $24.95 | $27.17 | $22.95 | $17.77 | ||||||||||||
Expected volatility | 24.20 | % | 23.40 | % | 33.70 | % | 20.50 | % | ||||||||
Expected life | 5.7 years | 5.0 years | 0.5 years | 0.5 years | ||||||||||||
Risk free rate | 1.5% to 3.5% | 4.2% to 4.9% | 2.0% to 2.4% | 4.3% to 5.1% | ||||||||||||
Expected dividend yield | 2.2 | % | 1.9 | % | 2.1 | % | 2.0 | % | ||||||||
Forfeiture rate | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
2006 | ||||||||||||||||||||||||
2006 | Weighted | 2006 | 2005 | 2005 | ||||||||||||||||||||
Number | average | Weighted | 2005 | Weighted | Weighted | |||||||||||||||||||
of shares | fair value | average | Number | average | average | |||||||||||||||||||
000s | $ | fair value | of shares | fair value | fair value | |||||||||||||||||||
£ | 000s | $ | £ | |||||||||||||||||||||
2000 Long-Term Incentive Plan | 196 | 20.82 | 10.64 | 148 | 20.57 | 11.35 | ||||||||||||||||||
2001 Employee Stock Purchase Plan | 206 | 3.98 | 2.03 | 178 | 3.68 | 2.03 |
2008 | 2007 | |||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
Number of | average | average | Number of | average | average | |||||||||||||||||||
shares | fair value | fair value | shares | fair value | fair value | |||||||||||||||||||
000s | $ | £ | 000s | $ | £ | |||||||||||||||||||
2000 Long-Term Incentive Plan | 194 | 25.43 | 17.69 | 185 | 27.07 | 13.60 |
F-52
Long-Term Incentive Plan | Employee Stock Purchase Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||
average | average | average | average | |||||||||||||
Fair value | $ 6.57 | $ 5.56 | $ 3.98 | $ 3.68 | ||||||||||||
Weighted average share price | $20.58 | $21.38 | $15.58 | $15.46 | ||||||||||||
Weighted average exercise price | $20.58 | $21.38 | $15.58 | $15.46 | ||||||||||||
Expected volatility | 25.90 | % | 24.50 | % | 18.32 | % | 20.00 | % | ||||||||
Expected life | 4.7 years | 4.0 years | 0.5 years | 0.5 years | ||||||||||||
Risk free rate | 4.56% to 5.11 | % | 3.86 | % | 3.66% to 5.22 | % | 2.33 | % | ||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Forfeiture rate | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Share capital and share premium |
Number | Ordinary | Share | ||||||||||
of shares | shares | premium | ||||||||||
000s | £m | £m | ||||||||||
At 1 January 2005 | 803,250 | 201 | 2,473 | |||||||||
Issue of ordinary shares — share option schemes | 770 | — | 4 | |||||||||
At 31 December 2005 | 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 | |||||||||
Number | Ordinary | Share | ||||||||||
of shares | shares | premium | ||||||||||
000s | £m | £m | ||||||||||
At 1 January 2007 | 806,109 | 202 | 2,487 | |||||||||
Issue of ordinary shares — share option schemes | 1,919 | — | 12 | |||||||||
At 31 December 2007 | 808,028 | 202 | 2,499 | |||||||||
Issue of ordinary shares — share option schemes | 1,248 | — | 6 | |||||||||
At 31 December 2008 | 809,276 | 202 | 2,505 | |||||||||
F-60
Treasury shares |
Pearson plc | IDC | Total | ||||||||||||||||||
Number | Number | |||||||||||||||||||
of shares | of shares | |||||||||||||||||||
000s | £m | 000s | £m | £m | ||||||||||||||||
At 1 January 2005 | 4,623 | 105 | 3,145 | 27 | 132 | |||||||||||||||
Purchase of treasury shares | 626 | 5 | 1,407 | 16 | 21 | |||||||||||||||
At 31 December 2005 | 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 | |||||||||||||||
Pearson plc | Interactive Data | Total | ||||||||||||||||||
Number | Number | |||||||||||||||||||
of shares | of shares | |||||||||||||||||||
000s | £m | 000s | £m | £m | ||||||||||||||||
At 1 January 2007 | 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 | |||||||||||||||
Purchase of treasury shares | 2,028 | 12 | 1,976 | 35 | 47 | |||||||||||||||
Release of treasury shares | (3,341 | ) | (41 | ) | — | — | (41 | ) | ||||||||||||
At 31 December 2008 | 10,448 | 112 | 9,205 | 110 | 222 | |||||||||||||||
F-53
F-61
Other reserves and retained earnings |
Total | ||||||||||||||||||||
Translation | Fair value | other | Retained | |||||||||||||||||
Notes | reserve | reserve | reserves | earnings | ||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||
At 1 January 2005 | (491 | ) | — | (491 | ) | 749 | ||||||||||||||
Net exchange differences on translation of foreign operations | 327 | — | 327 | — | ||||||||||||||||
Cumulative translation adjustment disposed | (14 | ) | — | (14 | ) | — | ||||||||||||||
Profit for the year attributable to equity holders of the Company | — | — | — | 624 | ||||||||||||||||
Dividends paid to equity holders of the Company | 10 | — | — | — | (205 | ) | ||||||||||||||
Equity settled transactions | 24 | — | — | — | 23 | |||||||||||||||
Actuarial gains on post-retirement plans | 24 | — | — | — | 26 | |||||||||||||||
Taxation on items charged to equity | 8 | — | — | — | 12 | |||||||||||||||
Transition adjustment on adoption of IAS 39 | 3 | — | 3 | (15 | ) | |||||||||||||||
At 31 December 2005 | (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 | 24 | — | — | — | 25 | |||||||||||||||
Actuarial gains on post-retirement plans | 24 | — | — | — | 107 | |||||||||||||||
Treasury shares released under employee share plans | 26 | — | — | — | (16 | ) | ||||||||||||||
Taxation on items charged to equity | 8 | — | — | — | 12 | |||||||||||||||
At 31 December 2006 | (592 | ) | — | (592 | ) | 1,568 | ||||||||||||||
Total | ||||||||||||||||||||
Translation | Fair value | other | Retained | |||||||||||||||||
Notes | reserve | reserve | reserves | earnings | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
At 1 January 2007 | (592 | ) | — | (592 | ) | 1,568 | ||||||||||||||
Net exchange differences on translation of foreign operations | 25 | — | 25 | — | ||||||||||||||||
Cumulative translation adjustment disposed — subsidiaries | 32 | 53 | — | 53 | — | |||||||||||||||
Profit for the year attributable to equity holders of the company | — | — | — | 284 | ||||||||||||||||
Dividends paid to equity holders of the company | 9 | — | — | — | (238 | ) | ||||||||||||||
Equity settled transactions | 26 | — | — | — | 30 | |||||||||||||||
Actuarial gains on retirement benefit obligations — Group | 25 | — | — | — | 80 | |||||||||||||||
Treasury shares released under employee share plans | 28 | — | — | — | (29 | ) | ||||||||||||||
Taxation on items charged to equity | 7 | — | — | — | 29 | |||||||||||||||
At 31 December 2007 | (514 | ) | — | (514 | ) | 1,724 | ||||||||||||||
Net exchange differences on translation of foreign operations | 1,050 | — | 1,050 | — | ||||||||||||||||
Cumulative translation adjustment disposed — subsidiaries | 32 | 49 | — | 49 | — | |||||||||||||||
Cumulative translation adjustment disposed — joint venture | 1 | — | 1 | — | ||||||||||||||||
Profit for the year attributable to equity holders of the company | — | — | — | 292 | ||||||||||||||||
Dividends paid to equity holders of the company | 9 | — | — | — | (257 | ) | ||||||||||||||
Equity settled transactions | 26 | — | — | — | 33 | |||||||||||||||
Actuarial losses on retirement benefit obligations — Group | 25 | — | — | — | (71 | ) | ||||||||||||||
Actuarial losses on retirement benefit obligations — associate | — | — | — | (3 | ) | |||||||||||||||
Treasury shares released under employee share plans | 28 | — | — | — | (41 | ) | ||||||||||||||
Taxation on items charged to equity | 7 | — | — | — | 2 | |||||||||||||||
At 31 December 2008 | 586 | — | 586 | 1,679 | ||||||||||||||||
Business combinations |
F-62
F-54
2006 | 2005 | |||||||||||||||||||||||||||
Mergermarket | Mergermarket | Other | Total | Total | ||||||||||||||||||||||||
Carrying | Fair value | Mergermarket | Fair | Fair | Fair | |||||||||||||||||||||||
Notes | amount | adjs | Fair value | value | value | value | ||||||||||||||||||||||
(All figures in £ millions) | ||||||||||||||||||||||||||||
Property, plant and equipment | 11 | 1 | — | 1 | 12 | 13 | 7 | |||||||||||||||||||||
Intangible assets | 12 | — | 34 | 34 | 122 | 156 | 89 | |||||||||||||||||||||
Intangible assets — Pre-publication | 17 | — | — | — | 4 | 4 | 15 | |||||||||||||||||||||
Inventories | — | — | — | 14 | 14 | 10 | ||||||||||||||||||||||
Trade and other receivables | 11 | — | 11 | 13 | 24 | 32 | ||||||||||||||||||||||
Cash and cash equivalents | 14 | — | 14 | 14 | 28 | 3 | ||||||||||||||||||||||
Trade and other liabilities | (21 | ) | — | (21 | ) | (31 | ) | (52 | ) | (42 | ) | |||||||||||||||||
Financial liabilities — Borrowings | — | — | — | (3 | ) | (3 | ) | — | ||||||||||||||||||||
Deferred income tax liabilities | 14 | — | (10 | ) | (10 | ) | (16 | ) | (26 | ) | (21 | ) | ||||||||||||||||
Retirement benefit obligations | 24 | — | — | — | (2 | ) | (2 | ) | (2 | ) | ||||||||||||||||||
Provisions for other liabilities and charges | 22 | — | — | — | (3 | ) | (3 | ) | (1 | ) | ||||||||||||||||||
Equity minority interest | — | — | — | (9 | ) | (9 | ) | 8 | ||||||||||||||||||||
Net assets acquired at fair value | 5 | 24 | 29 | 115 | 144 | 98 | ||||||||||||||||||||||
Goodwill | 97 | 149 | 246 | 155 | ||||||||||||||||||||||||
Total | 126 | 264 | 390 | 253 | ||||||||||||||||||||||||
Satisfied by: | ||||||||||||||||||||||||||||
Cash | (109 | ) | (273 | ) | (382 | ) | (249 | ) | ||||||||||||||||||||
Deferred consideration | (17 | ) | — | (17 | ) | (5 | ) | |||||||||||||||||||||
Net prior year adjustments | — | 9 | 9 | 1 | ||||||||||||||||||||||||
Total consideration | (126 | ) | (264 | ) | (390 | ) | (253 | ) | ||||||||||||||||||||
Book value of net assets acquired | 5 | 43 | 48 | 58 | ||||||||||||||||||||||||
Fair value adjustments | 24 | 72 | 96 | 40 | ||||||||||||||||||||||||
Fair value to the Group | 29 | 115 | 144 | 98 | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Harcourt | ||||||||||||||||||||||||
Assessment | Money-Media | Other | Total | Total | ||||||||||||||||||||
Notes | Fair value | Fair value | Fair value | Fair value | Fair value | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Property, plant and equipment | 10 | 6 | — | — | 6 | 11 | ||||||||||||||||||
Intangible assets | 11 | 174 | 10 | 36 | 220 | 197 | ||||||||||||||||||
Intangible assets — Pre-publication | 20 | 27 | — | — | 27 | 18 | ||||||||||||||||||
Inventories | 7 | — | — | 7 | 15 | |||||||||||||||||||
Trade and other receivables | 48 | 2 | 4 | 54 | 28 | |||||||||||||||||||
Cash and cash equivalents | 5 | — | 11 | 16 | — | |||||||||||||||||||
Trade and other liabilities | (40 | ) | (4 | ) | (8 | ) | (52 | ) | (38 | ) | ||||||||||||||
Financial liabilities — Borrowings | — | — | — | — | (1 | ) | ||||||||||||||||||
Current income tax liabilities | — | — | (3 | ) | (3 | ) | 4 | |||||||||||||||||
Net deferred income tax liabilities | 13 | — | — | (4 | ) | (4 | ) | (45 | ) | |||||||||||||||
Provisions for other liabilities and charges | 23 | (19 | ) | — | (7 | ) | (26 | ) | (2 | ) | ||||||||||||||
Minority interest | — | — | (2 | ) | (2 | ) | — | |||||||||||||||||
Assets held for sale | 3 | — | — | 3 | — | |||||||||||||||||||
Net assets acquired at fair value | 211 | 8 | 27 | 246 | 187 | |||||||||||||||||||
Goodwill | 11 | 113 | 25 | 15 | 153 | 304 | ||||||||||||||||||
Total | 324 | 33 | 42 | 399 | 491 | |||||||||||||||||||
Satisfied by: | ||||||||||||||||||||||||
Cash | (321 | ) | (33 | ) | (40 | ) | (394 | ) | (468 | ) | ||||||||||||||
Deferred consideration | — | — | — | — | (12 | ) | ||||||||||||||||||
Net prior year adjustments | (3 | ) | — | (2 | ) | (5 | ) | (11 | ) | |||||||||||||||
Total consideration | (324 | ) | (33 | ) | (42 | ) | (399 | ) | (491 | ) | ||||||||||||||
Carrying value of net assets/(liabilities) acquired | 81 | (2 | ) | (1 | ) | 78 | 41 | |||||||||||||||||
Fair value adjustments | 130 | 10 | 28 | 168 | 146 | |||||||||||||||||||
Fair value | 211 | 8 | 27 | 246 | 187 | |||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Cash — Current year acquisitions | (382 | ) | (249 | ) | (39 | ) | ||||||
Deferred payments for prior year acquisitions and other items | (9 | ) | — | (2 | ) | |||||||
Cash and cash equivalents acquired | 28 | 3 | — | |||||||||
Cash outflow on acquisition | (363 | ) | (246 | ) | (41 | ) | ||||||
F-63
Harcourt Assessment | ||||||||||||
Carrying | Fair | |||||||||||
value | value adjs | Fair value | ||||||||||
All figures in £ millions | ||||||||||||
Property, plant and equipment | 7 | (1 | ) | 6 | ||||||||
Intangible assets | 10 | 164 | 174 | |||||||||
Intangible assets — Pre-publication | 35 | (8 | ) | 27 | ||||||||
Inventories | 8 | (1 | ) | 7 | ||||||||
Trade and other receivables | 50 | (2 | ) | 48 | ||||||||
Cash and cash equivalents | 5 | — | 5 | |||||||||
Trade and other liabilities | (39 | ) | (1 | ) | (40 | ) | ||||||
Provisions for other liabilities and charges | (3 | ) | (16 | ) | (19 | ) | ||||||
Assets held for sale | 8 | (5 | ) | 3 | ||||||||
Net assets acquired at fair value | 81 | 130 | 211 | |||||||||
Goodwill | 113 | |||||||||||
Total | 324 | |||||||||||
Money-Media | ||||||||||||
Carrying | Fair | |||||||||||
value | value adjs | Fair value | ||||||||||
All figures in £ millions | ||||||||||||
Intangible assets | — | 10 | 10 | |||||||||
Trade and other receivables | 2 | — | 2 | |||||||||
Trade and other liabilities | (4 | ) | — | (4 | ) | |||||||
Net assets acquired at fair value | (2 | ) | 10 | 8 | ||||||||
Goodwill | 25 | |||||||||||
Total | 33 | |||||||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Cash — Current year acquisitions | (394 | ) | (468 | ) | (382 | ) | ||||||
Cash — Acquisitions yet to complete | (12 | ) | — | — | ||||||||
Deferred payments for prior year acquisitions and other items | (5 | ) | (4 | ) | (9 | ) | ||||||
Cash and cash equivalents acquired | 16 | — | 28 | |||||||||
Cash outflow on acquisition | (395 | ) | (472 | ) | (363 | ) | ||||||
F-55
F-64
31. | Non-current assets classified as held for sale |
Notes | 2006 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Property, plant and equipment | 11 | 9 | ||||||
Intangible assets — Goodwill | 12 | 221 | ||||||
Intangible assets — Other | 12 | 7 | ||||||
Inventories | 1 | �� | ||||||
Trade and other receivables | 56 | |||||||
Non-current assets classified as held for sale | 294 | |||||||
Other liabilities | (26 | ) | ||||||
Liabilities directly associated with non-current assets classified as held for sale | (26 | ) | ||||||
Net assets classified as held for sale | 268 | |||||||
Notes | 2008 | 2007 | ||||||||||
Property, plant and equipment | 10 | — | 7 | |||||||||
Intangible assets — Goodwill | — | 96 | ||||||||||
Intangible assets — Pre-publication | 20 | — | 2 | |||||||||
Inventories | — | 4 | ||||||||||
Trade and other receivables | — | 8 | ||||||||||
Non-current assets classified as held for sale | — | 117 | ||||||||||
Other liabilities | — | (9 | ) | |||||||||
Liabilities directly associated with non-current assets classified as held for sale | — | (9 | ) | |||||||||
Net assets classified as held for sale | — | 108 | ||||||||||
Disposals |
2006 | 2005 | 2004 | ||||||||||
(All figures in £ millions) | ||||||||||||
Disposal of subsidiaries | ||||||||||||
Property, plant and equipment | — | (48 | ) | — | ||||||||
Investments in associates | — | (3 | ) | — | ||||||||
Deferred income tax assets | — | 8 | — | |||||||||
Other financial assets | — | (2 | ) | — | ||||||||
Inventories | — | (4 | ) | — | ||||||||
Trade and other receivables | — | (59 | ) | (4 | ) | |||||||
Trade and other liabilities | (1 | ) | 71 | 2 | ||||||||
Provisions for other liabilities and charges | — | 3 | — | |||||||||
Cash and cash equivalents | — | (134 | ) | 1 | ||||||||
Equity minority interests | (4 | ) | 54 | (4 | ) | |||||||
Attributable goodwill | (5 | ) | (104 | ) | (4 | ) | ||||||
Currency translation adjustment | — | 14 | ||||||||||
Net assets disposed of | (10 | ) | (204 | ) | (9 | ) | ||||||
Proceeds received | 10 | 513 | 8 | |||||||||
Costs | — | (3 | ) | (2 | ) | |||||||
Profit on sale | — | 306 | (3 | ) | ||||||||
2008 | 2007 | 2006 | ||||||||||||||||||
Data | ||||||||||||||||||||
Management | Other | Total | Total | Total | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Disposal of subsidiaries | ||||||||||||||||||||
Property, plant and equipment | (7 | ) | — | (7 | ) | (16 | ) | — | ||||||||||||
Intangible assets | (1 | ) | — | (1 | ) | (6 | ) | — | ||||||||||||
Intangible assets — Pre-publication | (2 | ) | — | (2 | ) | — | — | |||||||||||||
Inventories | (4 | ) | (3 | ) | (7 | ) | (1 | ) | — | |||||||||||
Trade and other receivables | (8 | ) | — | (8 | ) | (95 | ) | — | ||||||||||||
Cash and cash equivalents | — | — | — | (14 | ) | — | ||||||||||||||
Net deferred income tax liabilities | — | — | — | 2 | — | |||||||||||||||
Trade and other liabilities | 9 | — | 9 | 73 | (1 | ) | ||||||||||||||
Retirement benefit obligations | — | — | — | 3 | — | |||||||||||||||
Provisions for other liabilities and charges | — | — | — | 1 | — | |||||||||||||||
Minority interest | — | (5 | ) | (5 | ) | (8 | ) | (4 | ) | |||||||||||
Attributable goodwill | (98 | ) | (8 | ) | (106 | ) | (250 | ) | (5 | ) | ||||||||||
Cumulative translation adjustment | (49 | ) | — | (49 | ) | (53 | ) | — | ||||||||||||
Net assets disposed | (160 | ) | (16 | ) | (176 | ) | (364 | ) | (10 | ) | ||||||||||
Cash received | 111 | 15 | 126 | 495 | 10 | |||||||||||||||
Deferred receipts | — | 2 | 2 | — | — | |||||||||||||||
Other proceeds received | — | — | — | 35 | — | |||||||||||||||
Costs | (4 | ) | (1 | ) | (5 | ) | (20 | ) | — | |||||||||||
(Loss)/profit on sale | (53 | ) | — | (53 | ) | 146 | — | |||||||||||||
F-65
F-56
2006 | 2005 | 2004 | ||||||||||
Cash flow from disposals | ||||||||||||
Cash — Current year disposals | 10 | 513 | 8 | |||||||||
Costs paid | — | (3 | ) | (2 | ) | |||||||
Cash and cash equivalents/net debt disposed of | — | (134 | ) | 1 | ||||||||
Net cash inflow | 10 | 376 | 7 | |||||||||
2008 | 2007 | 2006 | ||||||||||
Cash flow from disposals | ||||||||||||
Cash — Current year disposals | 126 | 495 | 10 | |||||||||
Costs paid | (15 | ) | (12 | ) | — | |||||||
Cash and cash equivalents disposed | — | (14 | ) | — | ||||||||
Net cash inflow | 111 | 469 | 10 | |||||||||
33. | Cash generated from operations |
Notes | 2008 | 2007 | 2006 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Net profit | 323 | 310 | 469 | |||||||||||||
Adjustments for: | ||||||||||||||||
Income tax | 209 | 222 | 19 | |||||||||||||
Depreciation | 10 | 80 | 68 | 77 | ||||||||||||
Amortisation of purchased intangible assets | 11 | 86 | 45 | 28 | ||||||||||||
Adjustment on recognition of pre-acquisition deferred tax | — | — | 7 | |||||||||||||
Amortisation of other intangible assets | 11 | 30 | 25 | 23 | ||||||||||||
Loss on sale of property, plant and equipment | 1 | 1 | 2 | |||||||||||||
Net finance costs | 6 | 91 | 106 | 74 | ||||||||||||
Share of results of joint ventures and associates | 12 | (25 | ) | (23 | ) | (24 | ) | |||||||||
Loss/(profit) on sale of discontinued operations | 3 | 53 | (146 | ) | — | |||||||||||
Goodwill impairment of discontinued operation | 3 | — | 97 | — | ||||||||||||
Net foreign exchange adjustment from transactions | 105 | 11 | (37 | ) | ||||||||||||
Share-based payment costs | 26 | 33 | 30 | 25 | ||||||||||||
Pre-publication | (58 | ) | (38 | ) | (3 | ) | ||||||||||
Inventories | (12 | ) | (1 | ) | (16 | ) | ||||||||||
Trade and other receivables | (81 | ) | (5 | ) | (60 | ) | ||||||||||
Trade and other liabilities | 82 | 80 | 54 | |||||||||||||
Retirement benefit obligations | (14 | ) | (126 | ) | (17 | ) | ||||||||||
Provisions for other liabilities and charges | (9 | ) | 3 | — | ||||||||||||
Net cash generated from operations | 894 | 659 | 621 | |||||||||||||
Notes | 2006 | 2005 | 2004 | |||||||||||||
(All figures in £ millions) | ||||||||||||||||
Net profit | 469 | 644 | 284 | |||||||||||||
Adjustments for: | ||||||||||||||||
Tax | 19 | 125 | 70 | |||||||||||||
Depreciation | 11 | 77 | 80 | 84 | ||||||||||||
Amortisation of purchased intangible assets | 12 | 28 | 11 | 5 | ||||||||||||
Adjustment on recognition of pre-acquisition deferred tax | 12 | 7 | — | — | ||||||||||||
Amortisation of other intangible assets | 12 | 23 | 18 | 20 | ||||||||||||
Investment in pre-publication assets | 17 | (213 | ) | (222 | ) | (181 | ) | |||||||||
Amortisation of pre-publication assets | 17 | 210 | 192 | 168 | ||||||||||||
Loss on sale of property, plant and equipment | 2 | — | 4 | |||||||||||||
Profit on sale of investments | — | — | (16 | ) | ||||||||||||
Net finance costs | 74 | 70 | 76 | |||||||||||||
Share of results of joint ventures and associates | 13 | (24 | ) | (14 | ) | (10 | ) | |||||||||
(Profit)/loss on sale of subsidiaries and associates | — | (346 | ) | 3 | ||||||||||||
Net foreign exchange(losses)/gains from transactions | (37 | ) | 39 | (15 | ) | |||||||||||
Share-based payment costs | 24 | 25 | 23 | 25 | ||||||||||||
Inventories | (16 | ) | (17 | ) | (12 | ) | ||||||||||
Trade and other receivables | (60 | ) | (4 | ) | (18 | ) | ||||||||||
Trade and other liabilities | 54 | 71 | 61 | |||||||||||||
Provisions | (17 | ) | (17 | ) | (24 | ) | ||||||||||
Cash generated from operations | 621 | 653 | 524 | |||||||||||||
F-66
F-57
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Net book amount | 10 | 3 | ||||||
Loss on sale of property, plant and equipment | (2 | ) | — | |||||
Proceeds from sale of property, plant and equipment | 8 | 3 | ||||||
2008 | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
Net book amount | 3 | 15 | 10 | |||||||||
Loss on sale of property, plant and equipment | (1 | ) | (1 | ) | (2 | ) | ||||||
Proceeds from sale of property, plant and equipment | 2 | 14 | 8 | |||||||||
34. | Contingencies |
35. | Commitments |
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Property, plant and equipment | — | 1 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Property, plant and equipment | — | 3 | ||||||
2006 | 2005 | |||||||
(All figures in | ||||||||
£ millions) | ||||||||
Not later than one year | 123 | 132 | ||||||
Later than one year and not later than two years | 113 | 117 | ||||||
Later than two years and not later than three years | 103 | 108 | ||||||
Later than three years and not later than four years | 90 | 97 | ||||||
Later than four years and not later than five years | 83 | 81 | ||||||
Later than five years | 857 | 915 | ||||||
1,369 | 1,450 | |||||||
F-58
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Not later than one year | 149 | 123 | ||||||
Later than one year and not later than two years | 138 | 116 | ||||||
Later than two years and not later than three years | 129 | 102 | ||||||
Later than three years and not later than four years | 118 | 93 | ||||||
Later than four years and not later than five years | 108 | 85 | ||||||
Later than five years | 970 | 834 | ||||||
1,612 | 1,353 | |||||||
36. | Related party transactions |
F-67
F-59
Year ended December 31 | |||||||||||||||||
Note | 2006 | 2005 | 2004 | ||||||||||||||
£m | £m | £m | |||||||||||||||
Profit for the financial year under IFRS | 446 | 624 | 262 | ||||||||||||||
US GAAP adjustments: | |||||||||||||||||
Intangible amortization | (i) | (50 | ) | (60 | ) | (74 | ) | ||||||||||
Discontinued operations | (iii) | (71 | ) | — | (2 | ) | |||||||||||
Leases | (v) | (5 | ) | — | 3 | ||||||||||||
Disposal adjustments | (iv) | — | (119 | ) | — | ||||||||||||
Pensions and other post-retirement benefits | (vi) | (19 | ) | (26 | ) | (23 | ) | ||||||||||
Share-based payments | (vii) | — | (4 | ) | (13 | ) | |||||||||||
Derivative financial instruments | (viii) | (11 | ) | (12 | ) | (23 | ) | ||||||||||
Acquisition adjustments | (xii) | (3 | ) | 1 | — | ||||||||||||
Partnerships and associates | (x) | (1 | ) | (2 | ) | — | |||||||||||
Minority interests | (xi) | 1 | 2 | — | |||||||||||||
Other | (2 | ) | (9 | ) | (1 | ) | |||||||||||
Taxation effect of US GAAP adjustments | (xiv) | 56 | 16 | 53 | |||||||||||||
Total US GAAP adjustments | (105 | ) | (213 | ) | (80 | ) | |||||||||||
Net income under US GAAP | 341 | 411 | 182 | ||||||||||||||
Profit from continuing operations (less (benefit from)/charge for applicable taxes 2006: £(45)m, 2005: £100m, 2004: £2m) | 398 | 164 | 153 | ||||||||||||||
(Loss)/profit from discontinued operations (less charge for applicable taxes 2006: £8m; 2005: £8m, 2004: £15m) | (57 | ) | 8 | 29 | |||||||||||||
Profit on disposal of discontinued operations (less charge for applicable taxes 2006: £nil; 2005: £1m, 2004: £nil) | — | 239 | — | ||||||||||||||
Net income under US GAAP | 341 | 411 | 182 | ||||||||||||||
F-60
Year ended December 31 | ||||||||||||||||
Note | 2006 | 2005 | 2004 | |||||||||||||
Presentation of earnings per equity share under US GAAP | (xiii) | |||||||||||||||
Earnings/(loss) per equity share | (p | ) | (p | ) | (p | ) | ||||||||||
Basic: | ||||||||||||||||
Continuing operations | 49.9 | 20.5 | 19.2 | |||||||||||||
Discontinued operations | (7.2 | ) | 31.0 | 3.6 | ||||||||||||
Total | 42.7 | 51.5 | 22.8 | |||||||||||||
Diluted: | ||||||||||||||||
Continuing operations | 49.8 | 20.5 | 19.2 | |||||||||||||
Discontinued operations | (7.2 | ) | 30.9 | 3.6 | ||||||||||||
Total | 42.6 | 51.4 | 22.8 | |||||||||||||
Average shares outstanding (millions) | 798.4 | 797.9 | 795.6 | |||||||||||||
Dilutive effect of stock options (millions) | 1.5 | 1.1 | 1.1 | |||||||||||||
Average number of shares outstanding assuming dilution (millions) | 799.9 | 799.0 | 796.7 | |||||||||||||
Year ended | |||||||||||||
December 31 | |||||||||||||
Note | 2006 | 2005 | |||||||||||
£m | £m | ||||||||||||
Shareholders’ funds under IFRS | 3,476 | 3,564 | |||||||||||
US GAAP adjustments: | |||||||||||||
Goodwill | (i) | 76 | 81 | ||||||||||
Intangibles | (i),(ii) | 158 | 231 | ||||||||||
Discontinued operations | (iii) | (64 | ) | 7 | |||||||||
Leases | (v) | (5 | ) | — | |||||||||
Pensions and other post-retirement benefits | (vi) | — | 61 | ||||||||||
Derivative financial instruments | (viii) | 5 | 15 | ||||||||||
Share-based payments | (vii) | (3 | ) | — | |||||||||
Acquisition adjustments | (xii) | 24 | 26 | ||||||||||
Partnerships and associates | (x) | 9 | 15 | ||||||||||
Minority interests | (xi) | (26 | ) | (30 | ) | ||||||||
Other | (8 | ) | (6 | ) | |||||||||
Taxation effect of US GAAP adjustments | (xiv) | (61 | ) | (126 | ) | ||||||||
Total US GAAP adjustments | 105 | 274 | |||||||||||
Shareholders’ funds under US GAAP | 3,581 | 3,838 | |||||||||||
F-61
F-62
Goodwill | Intangible assets | |||||||
£m | £m | |||||||
Year ended December 31, 2004 | 129 | 267 | ||||||
Foreign exchange differences | (9 | ) | 28 | |||||
Amortization | — | (60 | ) | |||||
Net movement in deferred consideration | (39 | ) | — | |||||
Acquisitions | — | (4 | ) | |||||
Year ended December 31, 2005 | 81 | 231 | ||||||
Foreign exchange differences | 1 | (25 | ) | |||||
Amortization | — | (50 | ) | |||||
Net movement in deferred consideration | (4 | ) | — | |||||
Acquisitions | (2 | ) | 2 | |||||
Year ended December 31, 2006 | 76 | 158 | ||||||
F-63
2006 | 2005 | 2004 | ||||||||||
£m | £m | £m | ||||||||||
Total (loss)/profit before tax in respect of discontinued operations | (49 | ) | 17 | 49 | ||||||||
Assets in respect of discontinued operations | 240 | 388 | 729 | |||||||||
Liabilities in respect of discontinued operations | (27 | ) | (51 | ) | (183 | ) |
2006 | 2005 | 2004 | ||||||||||
£m | £m | £m | ||||||||||
Difference in carrying value on disposal | — | (86 | ) | — | ||||||||
Cumulative translation adjustment | — | (33 | ) | — | ||||||||
Total US GAAP differences in respect of disposals | — | (119 | ) | — | ||||||||
F-64
F-65
F-66
F-67
Income | Equity | Income | Equity | Income | ||||||||||||||||
2006 | 2006 | 2005 | 2005 | 2004 | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Tax effect of GAAP adjustments on: | ||||||||||||||||||||
Goodwill and intangible amortization | 20 | (94 | ) | 18 | (121 | ) | 17 | |||||||||||||
Derivative financial instruments | 3 | (1 | ) | 3 | (5 | ) | 38 | |||||||||||||
Options, pensions, disposals and other adjustments | 33 | 34 | (6 | ) | — | (2 | ) | |||||||||||||
Total taxation effect of US GAAP adjustments | 56 | (61 | ) | 15 | (126 | ) | 53 | |||||||||||||
F-68
F-69
F-68
F-70