(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 |
oUS GAAP | þInternational financial Reporting Standards as Issued by the International Accounting Standards Board | oOther |
Item 17o | Item 18o |
Yeso | Noþ |
2
3
• | references to “sterling”, “pounds”, “pence” or “£” are to the lawful currency of the United Kingdom, | |
• | references to “euro” or “€” are to the euro, the lawful currency of the participating Member States in the Third Stage of the European Economic and Monetary Union of the Treaty Establishing the European Commission, and | |
• | references to “US dollars”, “dollars”, “cents” or “$” are to the lawful currency of the United States. |
• | operations and prospects, | |
• | growth strategy, | |
• | funding needs and financing resources, | |
• | expected financial position, | |
• | market risk, | |
• | currency risk, | |
• | US federal and state spending patterns, | |
4
• | debt levels, and | |
• | general market and economic conditions. |
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 | Year Ended December 31 | |||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2007 | 2006 | 2005 | 2004 | 2003 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||||||||
$ | £ | £ | £ | £ | £ | $ | £ | £ | £ | £ | £ | |||||||||||||||||||||||||||||||||||||
(In millions, except for per share amounts) | (In millions, except for per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
IFRS information: | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Income Statement data | ||||||||||||||||||||||||||||||||||||||||||||||||
Total sales | 8,241 | 4,162 | 3,990 | 3,662 | 3,340 | 3,510 | 7,024 | 4,811 | 4,162 | 3,990 | 3,662 | 3,340 | ||||||||||||||||||||||||||||||||||||
Total operating profit | 1,137 | 574 | 522 | 497 | 359 | 386 | 987 | 676 | 574 | 522 | 497 | 359 | ||||||||||||||||||||||||||||||||||||
Profit after taxation from continuing operations | 667 | 337 | 444 | 319 | 232 | 239 | 603 | 413 | 337 | 444 | 319 | 232 | ||||||||||||||||||||||||||||||||||||
Profit for the financial year | 614 | 310 | 469 | 644 | 284 | 275 | 472 | 323 | 310 | 469 | 644 | 284 | ||||||||||||||||||||||||||||||||||||
Consolidated Earnings data per share | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic earnings per equity share(1) | $ | 0.70 | 35.6p | 55.9p | 78.2p | 32.9p | 31.7p | $ | 0.53 | 36.6p | 35.6p | 55.9p | 78.2p | 32.9p | ||||||||||||||||||||||||||||||||||
Diluted earnings per equity share(2) | $ | 0.70 | 35.6p | 55.8p | 78.1p | 32.9p | 31.7p | $ | 0.53 | 36.6p | 35.6p | 55.8p | 78.1p | 32.9p | ||||||||||||||||||||||||||||||||||
Basic earnings from continuing operations per equity share(1) | $ | 0.77 | 39.0p | 52.7p | 37.5p | 26.4p | 27.2p | $ | 0.70 | 47.9p | 39.0p | 52.7p | 37.5p | 26.4p | ||||||||||||||||||||||||||||||||||
Diluted earnings from continuing operations per equity shares | $ | 0.77 | 39.0p | 52.6p | 37.4p | 26.3p | 27.2p | |||||||||||||||||||||||||||||||||||||||||
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 | $ | 0.63 | 31.6p | 29.3p | 27.0p | 25.4p | 24.2p | $ | 0.49 | 33.8p | 31.6p | 29.3p | 27.0p | 25.4p | ||||||||||||||||||||||||||||||||||
Consolidated Balance Sheet data at period end | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Balance Sheet data at | ||||||||||||||||||||||||||||||||||||||||||||||||
period end | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (non-current assets plus current assets) | 14,438 | 7,292 | 7,213 | 7,600 | 6,578 | 6,736 | 14,448 | 9,896 | 7,292 | 7,213 | 7,600 | 6,578 | ||||||||||||||||||||||||||||||||||||
Net assets | 7,671 | 3,874 | 3,644 | 3,733 | 3,014 | 3,161 | 7,335 | 5,024 | 3,874 | 3,644 | 3,733 | 3,014 | ||||||||||||||||||||||||||||||||||||
Long-term obligations(3) | (3,328 | ) | (1,681 | ) | (1,853 | ) | (2,500 | ) | (2,403 | ) | (1,982 | ) | (4,237 | ) | (2,902 | ) | (1,681 | ) | (1,853 | ) | (2,500 | ) | (2,403 | ) | ||||||||||||||||||||||||
Capital stock | 400 | 202 | 202 | 201 | 201 | 201 | 295 | 202 | 202 | 202 | 201 | 201 | ||||||||||||||||||||||||||||||||||||
Number of equity shares outstanding (millions of ordinary shares) | 808 | 808 | 806 | 804 | 803 | 802 | 809 | 809 | 808 | 806 | 804 | 803 |
6
(1) | Basic earnings per equity share is based on profit for the financial period and the weighted average number of ordinary shares in issue during the period. | |
(2) | 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. | |
(3) | 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. | |
(4) | The results of |
Fiscal year | Interim | Final | Total | Interim | Final | Total | Interim | Final | Total | Interim | Final | Total | ||||||||||||||||||||||||||||||||||||
(Pence per ordinary share) | (Cents per ordinary share) | (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 | 40.6 | * | 63.0 | 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 | 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 | 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 | 9.7 | 15.7 | 25.4 | 17.4 | 26.4 | 43.8 | ||||||||||||||||||||||||||||||||||||
2003 | 9.4 | 14.8 | 24.2 | 15.6 | 25.5 | 41.1 |
* | As the | |
** | 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
7
Month | High | Low | ||||||
March 2008 | $ | 2.03 | $ | 1.98 | ||||
February 2008 | $ | 1.99 | $ | 1.94 | ||||
January 2008 | $ | 1.99 | $ | 1.95 | ||||
December 2007 | $ | 2.07 | $ | 1.98 | ||||
November 2007 | $ | 2.11 | $ | 2.05 | ||||
October 2007 | $ | 2.08 | $ | 2.03 |
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 | Average rate | ||||||
2008 | $ | 1.84 | ||||||
2007 | $ | 2.01 | $ | 2.01 | ||||
2006 | $ | 1.84 | $ | 1.84 | ||||
2005 | $ | 1.81 | $ | 1.81 | ||||
2004 | $ | 1.83 | $ | 1.83 | ||||
2003 | $ | 1.63 |
8
9
8
— | Students seeking cheaper sources of content, e.g. online discounters, file sharing, use of pirated copies, used books or re-imported | |
— | Competition from major publishers and other educational material and service providers, including not for profit organizations, in our US educational textbook and assessment businesses. | |
— | Penguin: authors’ advances in consumer publishing. We compete with other publishing businesses to purchase the rights to author manuscripts. Our competitors may bid to a level at which we could not generate a sufficient return on our investment, and so, typically, we would not purchase these rights. | |
— | FT: we face competitive threats both from large media players and from smaller businesses, online portals and news redistributors operating in the digital arena and providing alternative sources of news and information. | |
— | People: the investments we make in our employees, combined with our employment policies and practices, we believe are critical factors enabling us to recruit and retain the very best people in our business sectors. |
9
10
10
11
11
12
ITEM 4. | INFORMATION ON THE COMPANY |
• | FT Publishing includes the globally focusedFinancial Times newspaper and FT.com |
12
• | Interactive Data provides specialist financial data to financial institutions and retail investors. Pearson owns a 62% interest in Interactive Data, which is publicly listed on the New York Stock Exchange (NYSE:IDC). |
• | Content: We invest steadily in unique | |
• | Technology and services: |
13
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 approximately 60% of our sales in the US, our brands, content and technology | |
• | Efficiency: |
13
14
1415
• | 50% interest in The Economist Group, publisher of one of the world’s leading weekly business and current affairs magazines. | |
• | 50% interest in FTSE International, a joint venture with the London Stock Exchange, which publishes a wide range of global indices, including the FTSE index. |
16
• | 50% interest inBusiness DayandFinancial Mail, publishers of one of South Africa’s leading financial newspapers and magazines. | |
• | 33% interest inVedomosti,a leading Russian business newspaper. |
15
• | 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
16
18
17
Percentage | ||||||
interest/voting | ||||||
Name | Country of incorporation/residence | power | ||||
Pearson Education | ||||||
Pearson Education Inc. | United States (Delaware) | 100 | % | |||
Pearson Education Ltd. | England and Wales | 100 | % | |||
Edexcel Ltd. | England and Wales | 100 | % | |||
NCS Pearson Inc. | United States (Minnesota) | 100 | % | |||
FT Group | ||||||
The Financial Times Limited | England and Wales | 100 | % | |||
Mergermarket Ltd. | England and Wales | 100 | % | |||
Interactive Data Corporation | United States (Delaware) | 62 | % | |||
The Penguin Group | ||||||
Penguin Group (USA) Inc. | United States (Delaware) | 100 | % | |||
The Penguin Publishing Co Ltd. | England and Wales | 100 | % | |||
Dorling Kindersley Holdings Ltd | England and Wales | 100 | % |
19
18
General use of property | Location | Area in square feet | ||||
Warehouse/Office | Kirkwood, New York, USA | 524,000 | ||||
Warehouse/Office | Pittston, Pennsylvania, USA | 406,000 | ||||
Office | Iowa City, Iowa, USA | 310,000 | ||||
Warehouse/Office | Old Tappan, New Jersey, USA | 210,112 | ||||
Warehouse/Office | Cedar Rapids, Iowa, USA | 205,000 | ||||
Office | Southwark, London, UK | 155,000 | ||||
Office | Hadley, Massachusetts, USA | 136,570 | ||||
Printing | Owatonna, Minnesota, USA | 128,000 | ||||
General use of property | Location | Area in square feet | ||||
Warehouse/Office | Lebanon, Indiana, USA | 1,091,435 | ||||
Warehouse/Office | Cranbury, New Jersey, USA | 886,747 | ||||
Warehouse/Office | Indianapolis, Indiana, USA | 737,850 | ||||
Warehouse/Office | San Antonio, Texas, USA | 559,258 | ||||
Warehouse/Office | Newmarket, Ontario, Canada | 518,128 | ||||
Office | Upper Saddle River, New Jersey, USA | 474,801 | ||||
Warehouse/Office | Rugby, UK | 446,077 | ||||
Office | New York City, New York, USA | 430,738 | ||||
Office | London, UK | 282,917 | ||||
Office | Harlow, UK | 231,850 | ||||
Warehouse/Office | Austin, Texas, USA | 226,076 | ||||
Office | Boston, Massachusetts, USA | 225,299 | ||||
Warehouse | Scoresby, Victoria, Australia | |||||
Office | Boston, Massachusetts, USA | 191,360 | * | |||
Office | Glenview, Illinois, USA | 187,500 | ||||
Warehouse/Office | Bedfordshire, UK | 187,248 | ||||
Office | Bloomington, Minnesota, USA | 153,240 | ||||
Office | Parsippany, New Jersey, USA | 143,777 | ||||
Office | ||||||
Chandler, Arizona, USA | 135,460 | |||||
Office | New York City, New York, USA | 116,039 | ||||
Warehouse | San Antonio Zomeyucan, Mexico | 113,638 | ||||
Office | London, UK | 112,000 | ||||
Call Center | Lawrence, | 105,000 |
* | Reduced to 53,248 square feet subsequent to year end |
20
19
21
20
2122
Year Ended December 31 | Year Ended December 31 | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Education: | ||||||||||||||||||||||||
School | 1,537 | 1,455 | 1,295 | |||||||||||||||||||||
Higher Education | 793 | 795 | 779 | |||||||||||||||||||||
North American | 2,002 | 1,667 | 1,679 | |||||||||||||||||||||
International | 866 | 735 | 640 | |||||||||||||||||||||
Professional | 298 | 280 | 238 | 244 | 226 | 211 | ||||||||||||||||||
FT Group: | ||||||||||||||||||||||||
FT Publishing | 344 | 280 | 249 | 390 | 344 | 280 | ||||||||||||||||||
Interactive Data | 344 | 332 | 297 | 406 | 344 | 332 | ||||||||||||||||||
Penguin | 846 | 848 | 804 | 903 | 846 | 848 | ||||||||||||||||||
Total | 4,162 | 3,990 | 3,662 | 4,811 | 4,162 | 3,990 | ||||||||||||||||||
Year Ended December 31 | Year Ended December 31 | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
European countries | 1,102 | 1,003 | 868 | 1,217 | 1,102 | 1,003 | ||||||||||||||||||
North America | 2,591 | 2,585 | 2,388 | 3,028 | 2,591 | 2,585 | ||||||||||||||||||
Asia Pacific | 351 | 295 | 300 | 415 | 351 | 295 | ||||||||||||||||||
Other countries | 118 | 107 | 106 | 151 | 118 | 107 | ||||||||||||||||||
Total | 4,162 | 3,990 | 3,662 | 4,811 | 4,162 | 3,990 | ||||||||||||||||||
23
22
24
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% |
28
29
30
31
32
33
23
Year Ended December 31 | Year Ended December 31 | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
£m | £m | £m | £m | |||||||||||||
�� | ||||||||||||||||
Cost of goods sold | 1,910 | 1,841 | 1,910 | 1,841 | ||||||||||||
Distribution costs | 264 | 288 | 202 | 232 | ||||||||||||
Administration and other expenses | 1,538 | 1,462 | 1,600 | 1,518 | ||||||||||||
Other operating income | (101 | ) | (99 | ) | (101 | ) | (99 | ) | ||||||||
Total | 1,701 | 1,651 | 1,701 | 1,651 | ||||||||||||
34
24
35
25
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2007 | North | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | American | International | FT | Interactive | ||||||||||||||||||||||||||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | Data | Penguin | Total | Education | Education | Professional | Publishing | Data | Penguin | Total | ||||||||||||||||||||||||||||||||||||||||||
Sales | 1,537 | 793 | 298 | 344 | 344 | 846 | 4,162 | 1,667 | 735 | 226 | 344 | 344 | 846 | 4,162 | ||||||||||||||||||||||||||||||||||||||||||
37% | 19% | 7% | 8% | 8% | 21% | 100% | 40% | 18% | 5% | 8% | 8% | 21% | 100% | |||||||||||||||||||||||||||||||||||||||||||
Total operating profit | 175 | 159 | 27 | 50 | 90 | 73 | 574 | 253 | 82 | 26 | 50 | 90 | 73 | 574 | ||||||||||||||||||||||||||||||||||||||||||
30% | 28% | 4% | 9% | 16% | 13% | 100% | 44% | 14% | 4% | 9% | 16% | 13% | 100% | |||||||||||||||||||||||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 28 | 2 | 1 | 6 | 7 | 1 | 45 | 20 | 10 | 1 | 6 | 7 | 1 | 45 | ||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: continuing operations | 203 | 161 | 28 | 56 | 97 | 74 | 619 | 273 | 92 | 27 | 56 | 97 | 74 | 619 | ||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 14 | 1 | — | — | 15 | — | — | 14 | 1 | — | — | 15 | ||||||||||||||||||||||||||||||||||||||||||
Total adjusted operating profit | 203 | 161 | 42 | 57 | 97 | 74 | 634 | 273 | 92 | 41 | 57 | 97 | 74 | 634 | ||||||||||||||||||||||||||||||||||||||||||
32% | 25% | 7% | 9% | 15% | 12% | 100% | 43% | 15% | 6% | 9% | 15% | 12% | 100% |
2636
Year Ended December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2006 | North | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | American | International | FT | Interactive | ||||||||||||||||||||||||||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | Data | Penguin | Total | Education | Education | Professional | Publishing | Data | Penguin | Total | ||||||||||||||||||||||||||||||||||||||||||
Sales | 1,455 | 795 | 280 | 280 | 332 | 848 | 3,990 | 1,679 | 640 | 211 | 280 | 332 | 848 | 3,990 | ||||||||||||||||||||||||||||||||||||||||||
36% | 20% | 7% | 7% | 8% | 22% | 100% | 42% | 16% | 5% | 7% | 8% | 22% | 100% | |||||||||||||||||||||||||||||||||||||||||||
Total operating profit | 167 | 161 | 24 | 30 | 82 | 58 | 522 | 266 | 70 | 16 | 30 | 82 | 58 | 522 | ||||||||||||||||||||||||||||||||||||||||||
32% | 31% | 4% | 6% | 16% | 11% | 100% | 51% | 13% | 3% | 6% | 16% | 11% | 100% | |||||||||||||||||||||||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 17 | — | 1 | 2 | 7 | 8 | 35 | 14 | 3 | 1 | 2 | 7 | 8 | 35 | ||||||||||||||||||||||||||||||||||||||||||
Other net gains and losses including associates | — | — | — | (4 | ) | — | — | (4 | ) | — | — | — | (4) | — | — | (4) | ||||||||||||||||||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | (1 | ) | — | — | (1 | ) | — | — | — | (1) | — | — | (1) | ||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: continuing operations | 184 | 161 | 25 | 27 | 89 | 66 | 552 | 280 | 73 | 17 | 27 | 89 | 66 | 552 | ||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 35 | 5 | — | — | 40 | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: discontinued Operations | — | — | 35 | 5 | — | — | 40 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total adjusted operating profit | 184 | 161 | 60 | 32 | 89 | 66 | 592 | 280 | 73 | 52 | 32 | 89 | 66 | 592 | ||||||||||||||||||||||||||||||||||||||||||
31% | 27% | 10% | 6% | 15% | 11% | 100% | 47% | 12% | 9% | 6% | 15% | 11% | 100% |
27
37
38
28
39
29
32
30
33
Year Ended December 31 | Year Ended December 31 | |||||||||||||||
2006 | 2005 | 2007 | 2006 | |||||||||||||
£m | £m | £m | £m | |||||||||||||
Cost of goods sold | 1,841 | 1,713 | 1,910 | 1,841 | ||||||||||||
Distribution costs | 288 | 281 | 202 | 232 | ||||||||||||
Administration and other expenses | 1,462 | 1,309 | 1,600 | 1,518 | ||||||||||||
Other operating income | (99) | (84) | (101 | ) | (99 | ) | ||||||||||
Total | 1,651 | 1,506 | 1,701 | 1,651 | ||||||||||||
31
34
32
35
33
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2006 | North | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | American | International | FT | Interactive | ||||||||||||||||||||||||||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | Data | Penguin | Total | Education | Education | Professional | Publishing | Data | Penguin | Total | ||||||||||||||||||||||||||||||||||||||||||
Sales | 1,455 | 795 | 280 | 280 | 332 | 848 | 3,990 | 1,667 | 735 | 226 | 344 | 344 | 846 | 4,162 | ||||||||||||||||||||||||||||||||||||||||||
36% | 20% | 7% | 7% | 8% | 22% | 100% | 40% | 18% | 5% | 8% | 8% | 21% | 100% | |||||||||||||||||||||||||||||||||||||||||||
Total operating profit | 167 | 161 | 24 | 30 | 82 | 58 | 522 | 253 | 82 | 26 | 50 | 90 | 73 | 574 | ||||||||||||||||||||||||||||||||||||||||||
32% | 31% | 4% | 6% | 16% | 11% | 100% | 44% | 14% | 4% | 9% | 16% | 13% | 100% | |||||||||||||||||||||||||||||||||||||||||||
Add back: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization and adjustment of acquired intangibles | 17 | — | 1 | 2 | 7 | 8 | 35 | 20 | 10 | 1 | 6 | 7 | 1 | 45 | ||||||||||||||||||||||||||||||||||||||||||
Other net gains and losses including associates | — | — | — | (4) | — | — | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | (1) | — | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: continuing operations | 184 | 161 | 25 | 27 | 89 | 66 | 552 | 273 | 92 | 27 | 56 | 97 | 74 | 619 | ||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 35 | 5 | — | — | 40 | — | — | 14 | 1 | — | — | 15 | ||||||||||||||||||||||||||||||||||||||||||
Total adjusted operating profit | 184 | 161 | 60 | 32 | 89 | 66 | 592 | 273 | 92 | 41 | 57 | 97 | 74 | 634 | ||||||||||||||||||||||||||||||||||||||||||
31% | 27% | 10% | 6% | 15% | 11% | 100% | 43% | 15% | 6% | 9% | 15% | 12% | 100% |
Year Ended December 31, 2005 | ||||||||||||||||||||||||||||
Higher | FT | Interactive | ||||||||||||||||||||||||||
£m | School | Education | Professional | Publishing | Data | Penguin | Total | |||||||||||||||||||||
Sales | 1,295 | 779 | 238 | 249 | 297 | 804 | 3,662 | |||||||||||||||||||||
36% | 21% | 6% | 7% | 8% | 22% | 100% | ||||||||||||||||||||||
Total operating profit | 142 | 156 | 10 | 54 | 75 | 60 | 497 | |||||||||||||||||||||
29% | 31% | 2% | 11% | 15% | 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 | 10 | 17 | 80 | 60 | 470 | |||||||||||||||||||||
Adjusted operating profit: discontinued operations | — | — | 35 | 1 | — | — | 36 | |||||||||||||||||||||
Total adjusted operating profit | 147 | 156 | 45 | 18 | 80 | 60 | 506 | |||||||||||||||||||||
29% | 31% | 9% | 3% | 16% | 12% | 100% |
3436
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
35
38
39
36
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
35
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
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
38
39
40
37
41
38
At December 31, 2007 | At December 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Less than | One to | Two to | After five | Less than | One to | Two to | After five | |||||||||||||||||||||||||||||||||
Total | one year | two years | five years | years | Total | one year | two years | five years | years | |||||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |||||||||||||||||||||||||||||||
Gross borrowings: | ||||||||||||||||||||||||||||||||||||||||
Bank loans, overdrafts and commercial paper | 444 | 444 | — | — | — | 228 | — | — | 228 | — | ||||||||||||||||||||||||||||||
Variable rate loan notes | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Bonds | 1,150 | 105 | 176 | 264 | 605 | 2,128 | 244 | — | 626 | 1,258 | ||||||||||||||||||||||||||||||
Lease obligations | 1,353 | 123 | 116 | 280 | 834 | |||||||||||||||||||||||||||||||||||
Finance lease obligations | 7 | 4 | 2 | 1 | — | |||||||||||||||||||||||||||||||||||
Operating lease obligations | 1,612 | 149 | 138 | 355 | 970 | |||||||||||||||||||||||||||||||||||
Total | 2,947 | 672 | 292 | 544 | 1,439 | 3,975 | 397 | 140 | 1,210 | 2,228 | ||||||||||||||||||||||||||||||
42
39
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 | |||||
Will Ethridge | 57 | Chief Executive, Pearson Education North America | ||||
Rona Fairhead | Chairman and Chief Executive, The FT Group | |||||
Robin Freestone | Chief Financial Officer | |||||
Susan Fuhrman | 64 | Non-executive Director | ||||
Ken Hydon | Non-executive Director | |||||
John Makinson | Chairman and Chief Executive, Penguin Group | |||||
CK Prahalad | 67 | Non-executive Director |
43
40
44
41
4245
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
43
47
44
48
45
49
46
50
Fees payable from | ||||
July 1, 2007 (£) | ||||
Non-executive director fee | 60,000 | |||
Chairmanship of audit committee | 20,000 | |||
Chairmanship of personnel committee | 15,000 | |||
Membership of audit committee | 10,000 | |||
Membership of personnel committee | 5,000 | |||
Senior independent director | 15,000 |
47
Salaries/ | Annual | Salaries/ | Annual | |||||||||||||||||||||||||||||||||||||
Fees | incentive | Allowances(1) | Benefits(2) | Total(3) | Fees(1) | Incentive(2) | Allowances(3) | Benefits(4) | Total(5) | |||||||||||||||||||||||||||||||
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |||||||||||||||||||||||||||||||
Chairman | ||||||||||||||||||||||||||||||||||||||||
Non-executive Chairman | ||||||||||||||||||||||||||||||||||||||||
Glen Moreno | 450 | — | — | — | 450 | 450 | — | — | — | 450 | ||||||||||||||||||||||||||||||
Executive directors | ||||||||||||||||||||||||||||||||||||||||
Marjorie Scardino | 900 | 1,341 | 52 | 39 | 2,332 | 950 | 1,017 | 55 | 35 | 2,057 | ||||||||||||||||||||||||||||||
David Bell | 442 | 650 | — | 19 | 1,111 | 469 | 493 | — | 21 | 983 | ||||||||||||||||||||||||||||||
Will Ethridge (appointed 1 May 2008) | 361 | 810 | — | — | 1,171 | |||||||||||||||||||||||||||||||||||
Rona Fairhead | 487 | 693 | — | 27 | 1,207 | 506 | 494 | — | 36 | 1,036 | ||||||||||||||||||||||||||||||
Robin Freestone | 405 | 597 | — | 15 | 1,017 | 450 | 491 | — | 16 | 957 | ||||||||||||||||||||||||||||||
John Makinson | 507 | 743 | 169 | 29 | 1,448 | 525 | 500 | 183 | 32 | 1,240 | ||||||||||||||||||||||||||||||
Senior management as a group | 3,191 | 4,024 | 221 | 129 | 7,565 | 3,711 | 3,805 | 238 | 140 | 7,894 | ||||||||||||||||||||||||||||||
(1) | There will be no increase in base salary for the executive directors for 2009. | |
(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 | |
(4) | Benefits include company car, car allowance and UK health care premiums. US health and welfare benefits for Marjorie Scardino and Will Ethridge are self-insured and the company cost, after employee contributions, is |
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. |
(5) | 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 | |||||||||
4852
Number of | Exercise | Earliest | ||||||||||||||||||
Director | Options | (1) | Price | Exercise Date | Expiry Date | |||||||||||||||
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 | |||||||||||||||||||
Notes: |
(1) | Shares under option are designated as:aexecutive;bworldwide save for shares;cpremium priced; anddlong-term incentive; and*where options are exercisable. |
49
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
Ordinary | Restricted | Ordinary | Restricted | |||||||||||||
As at March 31, 2008 | shares(1) | shares(2) | ||||||||||||||
As at March 31, 2009 | shares(1) | shares(2) | ||||||||||||||
Glen Moreno | 180,000 | — | 210,000 | — | ||||||||||||
Marjorie Scardino | 400,886 | 1,825,384 | 632,755 | 1,957,861 | ||||||||||||
David Arculus | 10,545 | — | 11,740 | — | ||||||||||||
David Bell | 172,896 | 631,408 | 250,348 | 593,970 | ||||||||||||
Terry Burns | 8,792 | — | 10,290 | — | ||||||||||||
Patrick Cescau | 3,079 | — | 4,144 | — | ||||||||||||
Will Ethridge | 128,758 | 490,192 | ||||||||||||||
Rona Fairhead | 123,460 | 742,896 | 209,259 | 699,460 | ||||||||||||
Robin Freestone | 7,930 | 278,143 | 44,379 | 400,216 | ||||||||||||
Susan Fuhrman | 5,726 | — | 7,365 | — | ||||||||||||
Ken Hydon | 7,494 | — | 8,559 | — | ||||||||||||
John Makinson | 306,592 | 696,012 | 397,733 | 668,469 | ||||||||||||
Rana Talwar (resigned April 27, 2007) | 18,683 | — | ||||||||||||||
CK Prahalad | 969 | — |
(1) | Amounts include shares acquired by individuals under the annual bonus share matching plan and amounts purchased in the market by individuals. |
50
(2) | Restricted shares comprise awards made under the annual bonus share matching and long-term incentive plans. The number of shares shown represents the maximum number of shares which may vest, subject to the performance conditions being fulfilled. |
Percentage | ||||||
interest/voting | ||||||
Name | Country of incorporation/residence | power | ||||
Pearson Education | ||||||
Pearson Education Inc. | United States (Delaware) | 100 | % | |||
Pearson Education Ltd. | England and Wales | 100 | % | |||
Edexcel Ltd. | England and Wales | 100 | % | |||
NCS Pearson Inc. | United States (Minnesota) | 100 | % | |||
FT Group | ||||||
The Financial Times Limited | England and Wales | 100 | % | |||
Mergermarket Ltd. | England and Wales | 100 | % | |||
Interactive Data Corporation | United States (Delaware) | 62 | % | |||
The Penguin Group | ||||||
Penguin Group (USA) Inc. | United States (Delaware) | 100 | % | |||
The Penguin Publishing Co Ltd. | England and Wales | 100 | % | |||
Dorling Kindersley Holdings Ltd | England and Wales | 100 | % |
5119
General use of property | Location | Area in square feet | ||||
Warehouse/Office | Kirkwood, New York, USA | 524,000 | ||||
Warehouse/Office | Pittston, Pennsylvania, USA | 406,000 | ||||
Office | Iowa City, Iowa, USA | 310,000 | ||||
Warehouse/Office | Old Tappan, New Jersey, USA | 210,112 | ||||
Warehouse/Office | Cedar Rapids, Iowa, USA | 205,000 | ||||
Office | Southwark, London, UK | 155,000 | ||||
Office | Hadley, Massachusetts, USA | 136,570 | ||||
Printing | Owatonna, Minnesota, USA | 128,000 |
General use of property | Location | Area in square feet | ||||
Warehouse/Office | Lebanon, Indiana, USA | 1,091,435 | ||||
Warehouse/Office | Cranbury, New Jersey, USA | 886,747 | ||||
Warehouse/Office | Indianapolis, Indiana, USA | 737,850 | ||||
Warehouse/Office | San Antonio, Texas, USA | 559,258 | ||||
Warehouse/Office | Newmarket, Ontario, Canada | 518,128 | ||||
Office | Upper Saddle River, New Jersey, USA | 474,801 | ||||
Warehouse/Office | Rugby, UK | 446,077 | ||||
Office | New York City, New York, USA | 430,738 | ||||
Office | London, UK | 282,917 | ||||
Office | Harlow, UK | 231,850 | ||||
Warehouse/Office | Austin, Texas, USA | 226,076 | ||||
Office | Boston, Massachusetts, USA | 225,299 | ||||
Warehouse | Scoresby, Victoria, Australia | 197,255 | ||||
Office | Boston, Massachusetts, USA | 191,360 | * | |||
Office | Glenview, Illinois, USA | 187,500 | ||||
Warehouse/Office | Bedfordshire, UK | 187,248 | ||||
Office | Bloomington, Minnesota, USA | 153,240 | ||||
Office | Parsippany, New Jersey, USA | 143,777 | ||||
Office | Chandler, Arizona, USA | 135,460 | ||||
Office | New York City, New York, USA | 116,039 | ||||
Warehouse | San Antonio Zomeyucan, Mexico | 113,638 | ||||
Office | London, UK | 112,000 | ||||
Warehouse | Cape Town, South Africa | 111,259 | ||||
Call Center | Lawrence, Kansas, USA | 105,000 |
20
21
Average number employed | 2007 | 2006 | 2005 | |||||||||
School | 12,906 | 11,064 | 10,133 | |||||||||
Higher Education | 5,098 | 4,368 | 4,196 | |||||||||
Professional | 3,458 | 3,204 | 3,259 | |||||||||
Penguin | 4,163 | 3,943 | 4,051 | |||||||||
FT Publishing | 2,083 | 1,766 | 1,434 | |||||||||
Interactive Data | 2,300 | 2,200 | 1,956 | |||||||||
Other | 1,614 | 1,669 | 1,573 | |||||||||
Continuing operations | 31,622 | 28,214 | 26,602 | |||||||||
Discontinued operations | 1,070 | 6,127 | 5,601 | |||||||||
Total | 32,692 | 34,341 | 32,203 | |||||||||
5222
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 | ||||||||||||
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 | |||||||||
23
24
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% |
28
29
30
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
35
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
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
38
39
40
41
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 | |||||||||||||||
42
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name | Age | Position | ||||
Glen Moreno | 65 | Chairman | ||||
Marjorie Scardino | 62 | Chief Executive | ||||
David Arculus | 62 | Non-executive Director | ||||
David Bell | 62 | Director for People | ||||
Terry Burns | 65 | Non-executive Director | ||||
Patrick Cescau | 60 | Non-executive Director | ||||
Will Ethridge | 57 | Chief Executive, Pearson Education North America | ||||
Rona Fairhead | 47 | Chairman and Chief Executive, The FT Group | ||||
Robin Freestone | 50 | Chief Financial Officer | ||||
Susan Fuhrman | 64 | Non-executive Director | ||||
Ken Hydon | 64 | Non-executive Director | ||||
John Makinson | 54 | Chairman and Chief Executive, Penguin Group | ||||
CK Prahalad | 67 | Non-executive Director |
43
44
45
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
47
48
49
50
Fees payable from | ||||
July 1, 2007 (£) | ||||
Non-executive director fee | 60,000 | |||
Chairmanship of audit committee | 20,000 | |||
Chairmanship of personnel committee | 15,000 | |||
Membership of audit committee | 10,000 | |||
Membership of personnel committee | 5,000 | |||
Senior independent director | 15,000 |
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) | There will be no increase in base salary for the executive directors for 2009. |
(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 £43,560 in respect of housing costs and a US payroll supplement of £11,804. John Makinson is entitled to a location and market premium in relation to the management of the business of the Penguin Group in the US and received £182,824 for 2008. |
(4) | Benefits include company car, car allowance and UK health care premiums. US health and welfare benefits for Marjorie Scardino and Will Ethridge are self-insured and the company cost, after employee contributions, is |
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. |
(5) | 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 | 1,757 | b | 534.8p | 08/01/11 | 02/01/12 | |||||
Total | 1,757 | |||||||||
John Makinson | 4,178 | b | 424.8p | 08/01/10 | 02/01/11 | |||||
21,477 | c* | 1372.4p | 06/08/02 | 06/08/09 | ||||||
21,477 | c* | 1647.5p | 06/08/02 | 06/08/09 | ||||||
19,785 | d* | 1421.0p | 05/09/02 | 05/09/11 | ||||||
19,785 | d* | 1421.0p | 05/09/03 | 05/09/11 | ||||||
19,785 | d* | 1421.0p | 05/09/04 | 05/09/11 | ||||||
19,785 | d* | 1421.0p | 05/09/05 | 05/09/11 | ||||||
Total | 126,272 | |||||||||
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
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 and long-term incentive plans. The number of shares shown represents the maximum number of shares which may vest, subject to the performance conditions being fulfilled. |
Percentage | ||||||
interest/voting | ||||||
Name | Country of incorporation/residence | power | ||||
Pearson Education | ||||||
Pearson Education Inc. | United States (Delaware) | 100 | % | |||
Pearson Education Ltd. | England and Wales | 100 | % | |||
Edexcel Ltd. | England and Wales | 100 | % | |||
NCS Pearson Inc. | United States (Minnesota) | 100 | % | |||
FT Group | ||||||
The Financial Times Limited | England and Wales | 100 | % | |||
Mergermarket Ltd. | England and Wales | 100 | % | |||
Interactive Data Corporation | United States (Delaware) | 62 | % | |||
The Penguin Group | ||||||
Penguin Group (USA) Inc. | United States (Delaware) | 100 | % | |||
The Penguin Publishing Co Ltd. | England and Wales | 100 | % | |||
Dorling Kindersley Holdings Ltd | England and Wales | 100 | % |
19
General use of property | Location | Area in square feet | ||||
Warehouse/Office | Kirkwood, New York, USA | 524,000 | ||||
Warehouse/Office | Pittston, Pennsylvania, USA | 406,000 | ||||
Office | Iowa City, Iowa, USA | 310,000 | ||||
Warehouse/Office | Old Tappan, New Jersey, USA | 210,112 | ||||
Warehouse/Office | Cedar Rapids, Iowa, USA | 205,000 | ||||
Office | Southwark, London, UK | 155,000 | ||||
Office | Hadley, Massachusetts, USA | 136,570 | ||||
Printing | Owatonna, Minnesota, USA | 128,000 |
General use of property | Location | Area in square feet | ||||
Warehouse/Office | Lebanon, Indiana, USA | 1,091,435 | ||||
Warehouse/Office | Cranbury, New Jersey, USA | 886,747 | ||||
Warehouse/Office | Indianapolis, Indiana, USA | 737,850 | ||||
Warehouse/Office | San Antonio, Texas, USA | 559,258 | ||||
Warehouse/Office | Newmarket, Ontario, Canada | 518,128 | ||||
Office | Upper Saddle River, New Jersey, USA | 474,801 | ||||
Warehouse/Office | Rugby, UK | 446,077 | ||||
Office | New York City, New York, USA | 430,738 | ||||
Office | London, UK | 282,917 | ||||
Office | Harlow, UK | 231,850 | ||||
Warehouse/Office | Austin, Texas, USA | 226,076 | ||||
Office | Boston, Massachusetts, USA | 225,299 | ||||
Warehouse | Scoresby, Victoria, Australia | 197,255 | ||||
Office | Boston, Massachusetts, USA | 191,360 | * | |||
Office | Glenview, Illinois, USA | 187,500 | ||||
Warehouse/Office | Bedfordshire, UK | 187,248 | ||||
Office | Bloomington, Minnesota, USA | 153,240 | ||||
Office | Parsippany, New Jersey, USA | 143,777 | ||||
Office | Chandler, Arizona, USA | 135,460 | ||||
Office | New York City, New York, USA | 116,039 | ||||
Warehouse | San Antonio Zomeyucan, Mexico | 113,638 | ||||
Office | London, UK | 112,000 | ||||
Warehouse | Cape Town, South Africa | 111,259 | ||||
Call Center | Lawrence, Kansas, USA | 105,000 |
* | Reduced to 53,248 square feet subsequent to year end |
20
21
22
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 | ||||||||||||
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 | |||||||||
23
24
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% |
28
29
30
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
35
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
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
38
39
40
41
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 | |||||||||||||||
42
ITEM |
Name | Age | Position | ||||
Glen Moreno | 65 | Chairman | ||||
Marjorie Scardino | 62 | Chief Executive | ||||
David Arculus | 62 | Non-executive Director | ||||
David Bell | 62 | Director for People | ||||
Terry Burns | 65 | Non-executive Director | ||||
Patrick Cescau | 60 | Non-executive Director | ||||
Will Ethridge | 57 | Chief Executive, Pearson Education North America | ||||
Rona Fairhead | 47 | Chairman and Chief Executive, The FT Group | ||||
Robin Freestone | 50 | Chief Financial Officer | ||||
Susan Fuhrman | 64 | Non-executive Director | ||||
Ken Hydon | 64 | Non-executive Director | ||||
John Makinson | 54 | Chairman and Chief Executive, Penguin Group | ||||
CK Prahalad | 67 | Non-executive Director |
43
44
45
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
47
48
49
50
Fees payable from | ||||
July 1, 2007 (£) | ||||
Non-executive director fee | 60,000 | |||
Chairmanship of audit committee | 20,000 | |||
Chairmanship of personnel committee | 15,000 | |||
Membership of audit committee | 10,000 | |||
Membership of personnel committee | 5,000 | |||
Senior independent director | 15,000 |
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) | There will be no increase in base salary for the executive directors for 2009. |
(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 £43,560 in respect of housing costs and a US payroll supplement of £11,804. John Makinson is entitled to a location and market premium in relation to the management of the business of the Penguin Group in the US and received £182,824 for 2008. |
(4) | Benefits include company car, car allowance and UK health care premiums. US health and welfare benefits for Marjorie Scardino and Will Ethridge are self-insured and the company cost, after employee contributions, is |
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. |
(5) | 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 | 1,757 | b | 534.8p | 08/01/11 | 02/01/12 | |||||
Total | 1,757 | |||||||||
John Makinson | 4,178 | b | 424.8p | 08/01/10 | 02/01/11 | |||||
21,477 | c* | 1372.4p | 06/08/02 | 06/08/09 | ||||||
21,477 | c* | 1647.5p | 06/08/02 | 06/08/09 | ||||||
19,785 | d* | 1421.0p | 05/09/02 | 05/09/11 | ||||||
19,785 | d* | 1421.0p | 05/09/03 | 05/09/11 | ||||||
19,785 | d* | 1421.0p | 05/09/04 | 05/09/11 | ||||||
19,785 | d* | 1421.0p | 05/09/05 | 05/09/11 | ||||||
Total | 126,272 | |||||||||
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
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 and long-term incentive plans. The number of shares shown represents the maximum number of shares which may vest, subject to the performance conditions being fulfilled. |
54
• | 33,680 in fiscal 2008, | |
• | 32,692 in fiscal 2007, and | |
• | 34,341 in fiscal 2006. |
55
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 | |||||||||
• | 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. |
53
Ordinary shares | Average daily | Ordinary shares | Average daily | |||||||||||||||||||||
Reference period | High | Low | trading volume | High | Low | trading volume | ||||||||||||||||||
(In pence) | (Ordinary shares) | (In pence) | ||||||||||||||||||||||
(Ordinary shares) | ||||||||||||||||||||||||
Five most recent fiscal years | ||||||||||||||||||||||||
2008 | 733 | 519 | 4,758,300 | |||||||||||||||||||||
2007 | 915 | 695 | 6,405,600 | 915 | 695 | 6,405,600 | ||||||||||||||||||
2006 | 811 | 671 | 5,004,500 | 811 | 671 | 5,004,500 | ||||||||||||||||||
2005 | 695 | 608 | 5,296,700 | 695 | 608 | 5,296,700 | ||||||||||||||||||
2004 | 682 | 579 | 6,219,200 | 682 | 579 | 6,219,200 | ||||||||||||||||||
2003 | 680 | 430 | 6,631,800 | |||||||||||||||||||||
Most recent quarter and two most recent fiscal years | ||||||||||||||||||||||||
2008 First quarter | 733 | 682 | 5,083,300 | |||||||||||||||||||||
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 | 798 | 695 | 5,156,300 | ||||||||||||||||||
Third quarter | 843 | 729 | 6,481,400 | 843 | 729 | 6,481,400 | ||||||||||||||||||
Second quarter | 915 | 825 | 7,390,600 | 915 | 825 | 7,390,600 | ||||||||||||||||||
First quarter | 872 | 762 | 6,632,100 | 872 | 762 | 6,632,100 | ||||||||||||||||||
2006 Fourth quarter | 796 | 742 | 3,979,500 | |||||||||||||||||||||
Third quarter | 767 | 689 | 3,900,700 | |||||||||||||||||||||
Second quarter | 798 | 688 | 5,728,800 | |||||||||||||||||||||
First quarter | 812 | 671 | 6,395,400 | |||||||||||||||||||||
Most recent six months | ||||||||||||||||||||||||
March 2008 | 700 | 648 | 5,124,400 | |||||||||||||||||||||
February 2008 | 696 | 636 | 3,831,400 | |||||||||||||||||||||
January 2008 | 733 | 621 | 6,110,700 | |||||||||||||||||||||
December 2007 | 755 | 695 | 3,917,200 | |||||||||||||||||||||
November 2007 | 792 | 712 | 3,714,700 | |||||||||||||||||||||
October 2007 | 798 | 742 | 7,540,100 | |||||||||||||||||||||
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 |
ITEM 10. ADDITIONAL INFORMATION |
54
57
(a) | 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. |
55
• | approving dividends; |
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 of one-third of the members of the board of directors at every annual general meeting, the appointment or election of directors in the place of those retiring by rotation or otherwise; | |
• | appointment or reappointment of, and determination of the remuneration of, the auditors; and | |
• | the renewal, limitation, extension, variation or grant of any authority of or to the board, pursuant to the Companies Act 1985, to allot securities. |
56
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 2006; or | |
• | cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person and diminish the amount of our share capital by the amount of the shares so cancelled. |
• | the chairman of the meeting; | |
• | at least three shareholders present in person or by proxy and entitled to vote; | |
• | any shareholder or shareholders present in person or by proxy representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; or | |
• | any shareholder or shareholders present in person or by proxy holding shares conferring a right to vote at the meeting being shares on which the aggregate sum paid up is equal to not less than one-tenth of the total sum paid up on all shares conferring that right. |
57
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%, |
5862
• | an individual citizen or resident of the US, or | |
• | a corporation created or organized in or under the laws of the US or any of its political subdivisions, or | |
• | 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. |
5963
6064
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
61
65
6266
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 |
63
ITEM 15. | CONTROLS AND PROCEDURES |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
68
ITEM 16B. | CODE OF ETHICS |
64
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Auditors’ Remuneration | 2007 | 2006 | 2008 | 2007 | ||||||||||||
£m | £m | £m | £m | |||||||||||||
Audit fees | 3 | 5 | 5 | 4 | ||||||||||||
Audit-related fees | 1 | 4 | ||||||||||||||
Tax fees | 2 | 1 | 2 | 2 | ||||||||||||
All other fees | 1 | 1 | 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 | 1,000,000 | £8.19 | N/A | N/A | ||||||||||||
June 1, 2007 - June 30, 2007 | 2,500,000 | £8.39 | N/A | N/A | ||||||||||||
December 1, 2007 - December 31, 2007 | 1,400,000 | £7.31 | N/A | N/A | ||||||||||||
June 1, 2008 - June 30, 2008 | 2,000,000 | £6.14 | N/A | N/A |
ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING AUDITOR |
6569
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. |
6670
Page | ||||
F-2 | ||||
F-1
F-2
F-3F-2
Notes | 2007 | 2006 | 2005 | Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||
Sales | 2 | 4,162 | 3,990 | 3,662 | 2 | 4,811 | 4,162 | 3,990 | ||||||||||||||||||||||||
Cost of goods sold | 4 | (1,910 | ) | (1,841 | ) | (1,713 | ) | 4 | (2,174 | ) | (1,910 | ) | (1,841 | ) | ||||||||||||||||||
Gross profit | 2,252 | 2,149 | 1,949 | 2,637 | 2,252 | 2,149 | ||||||||||||||||||||||||||
Operating expenses | 4 | (1,701 | ) | (1,651 | ) | (1,506 | ) | 4 | (1,986 | ) | (1,701 | ) | (1,651 | ) | ||||||||||||||||||
Other net gains and losses | 5 | — | — | 40 | ||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 13 | 23 | 24 | 14 | 12 | 25 | 23 | 24 | ||||||||||||||||||||||||
Operating profit | 2 | 574 | 522 | 497 | 2 | 676 | 574 | 522 | ||||||||||||||||||||||||
Finance costs | 7 | (150 | ) | (133 | ) | (132 | ) | 6 | (136 | ) | (150 | ) | (133 | ) | ||||||||||||||||||
Finance income | 7 | 44 | 59 | 62 | 6 | 45 | 44 | 59 | ||||||||||||||||||||||||
Profit before tax | 468 | 448 | 427 | 585 | 468 | 448 | ||||||||||||||||||||||||||
Income tax | 8 | (131 | ) | (4 | ) | (108 | ) | 7 | (172 | ) | (131 | ) | (4 | ) | ||||||||||||||||||
Profit for the year from continuing operations | 337 | 444 | 319 | 413 | 337 | 444 | ||||||||||||||||||||||||||
(Loss)/profit for the year from discontinued operations | 3 | (27 | ) | 25 | 325 | |||||||||||||||||||||||||||
(Loss)/gain for the year from discontinued operations | 3 | (90 | ) | (27 | ) | 25 | ||||||||||||||||||||||||||
Profit for the year | 310 | 469 | 644 | 323 | 310 | 469 | ||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||
Equity holders of the Company | 284 | 446 | 624 | |||||||||||||||||||||||||||||
Equity holders of the company | 292 | 284 | 446 | |||||||||||||||||||||||||||||
Minority interest | 26 | 23 | 20 | 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) | ||||||||||||||||||||||||||||||||
Earnings per share for profit from continuing and discontinued operations attributable to the equity holders of the company during the year(expressed in pence per share) | ||||||||||||||||||||||||||||||||
— basic | 9 | 35.6p | 55.9p | 78.2p | 8 | 36.6p | 35.6p | 55.9p | ||||||||||||||||||||||||
— diluted | 9 | 35.6p | 55.8p | 78.1p | 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) | ||||||||||||||||||||||||||||||||
Earnings per share for profit from continuing operations attributable to the equity holders of the company during the year(expressed in pence per share) | ||||||||||||||||||||||||||||||||
— basic | 9 | 39.0p | 52.7p | 37.5p | 8 | 47.9p | 39.0p | 52.7p | ||||||||||||||||||||||||
— diluted | 9 | 39.0p | 52.6p | 37.4p | 8 | 47.9p | 39.0p | 52.6p | ||||||||||||||||||||||||
F-4F-3
Notes | 2007 | 2006 | 2005 | Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
Net exchange differences on translation of foreign operations | 29 | 25 | (417 | ) | 327 | 29 | 1,050 | 25 | (417 | ) | ||||||||||||||||||||||
Actuarial gains on retirement benefit obligations | 25 | 80 | 107 | 26 | ||||||||||||||||||||||||||||
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 | 8 | 29 | 12 | 12 | 7 | 2 | 29 | 12 | ||||||||||||||||||||||||
Net income/(expense) recognised directly in equity | 134 | (298 | ) | 365 | ||||||||||||||||||||||||||||
Net income recognised directly in equity | 978 | 134 | (298 | ) | ||||||||||||||||||||||||||||
Profit for the year | 310 | 469 | 644 | 323 | 310 | 469 | ||||||||||||||||||||||||||
Total recognised income and expense for the year | 444 | 171 | 1,009 | 1,301 | 444 | 171 | ||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||
Equity holders of the Company | 418 | 148 | 989 | |||||||||||||||||||||||||||||
Equity holders of the company | 1,270 | 418 | 148 | |||||||||||||||||||||||||||||
Minority interest | 26 | 23 | 20 | 31 | 26 | 23 | ||||||||||||||||||||||||||
Effect of transition adjustment on adoption of IAS 39 | ||||||||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||
Equity holders of the Company | — | — | (12 | ) |
Notes | 2007 | 2006 | Notes | 2008 | 2007 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Non-current assets | ||||||||||||||||||||||||
Property, plant and equipment | 11 | 355 | 348 | 10 | 423 | 355 | ||||||||||||||||||
Intangible assets | 12 | 3,814 | 3,581 | 11 | 5,353 | 3,814 | ||||||||||||||||||
Investments in joint ventures and associates | 13 | 20 | 20 | 12 | 23 | 20 | ||||||||||||||||||
Deferred income tax assets | 14 | 328 | 417 | 13 | 372 | 328 | ||||||||||||||||||
Financial assets — Derivative financial instruments | 17 | 23 | 36 | 16 | 181 | 23 | ||||||||||||||||||
Retirement benefit assets | 25 | 62 | — | 25 | 49 | 62 | ||||||||||||||||||
Other financial assets | 16 | 52 | 17 | 15 | 63 | 52 | ||||||||||||||||||
Other receivables | 20 | 129 | 124 | 22 | 152 | 129 | ||||||||||||||||||
4,783 | 4,543 | 6,616 | 4,783 | |||||||||||||||||||||
Current assets | ||||||||||||||||||||||||
Intangible assets — Pre-publication | 18 | 450 | 402 | 20 | 695 | 450 | ||||||||||||||||||
Inventories | 19 | 368 | 354 | 21 | 501 | 368 | ||||||||||||||||||
Trade and other receivables | 20 | 946 | 953 | 22 | 1,342 | 946 | ||||||||||||||||||
Financial assets — Derivative financial instruments | 17 | 28 | 50 | 16 | 3 | 28 | ||||||||||||||||||
Financial assets — Marketable securities | 40 | 25 | 14 | 54 | 40 | |||||||||||||||||||
Cash and cash equivalents (excluding overdrafts) | 21 | 560 | 592 | 17 | 685 | 560 | ||||||||||||||||||
2,392 | 2,376 | 3,280 | 2,392 | |||||||||||||||||||||
Non-current assets classified as held for sale | 31 | 117 | 294 | 31 | — | 117 | ||||||||||||||||||
2,509 | 2,670 | 3,280 | 2,509 | |||||||||||||||||||||
Total assets | 7,292 | 7,213 | 9,896 | 7,292 | ||||||||||||||||||||
F-5F-4
Notes | 2007 | 2006 | Notes | 2008 | 2007 | |||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||||||
Financial liabilities — Borrowings | 22 | (1,049 | ) | (1,148 | ) | 18 | (2,019 | ) | (1,049 | ) | ||||||||||||||
Financial liabilities — Derivative financial instruments | 17 | (16 | ) | (19 | ) | 16 | (15 | ) | (16 | ) | ||||||||||||||
Deferred income tax liabilities | 14 | (287 | ) | (245 | ) | 13 | (447 | ) | (287 | ) | ||||||||||||||
Retirement benefit obligations | 25 | (95 | ) | (250 | ) | 25 | (167 | ) | (95 | ) | ||||||||||||||
Provisions for other liabilities and charges | 23 | (44 | ) | (29 | ) | 23 | (33 | ) | (44 | ) | ||||||||||||||
Other liabilities | 24 | (190 | ) | (162 | ) | 24 | (221 | ) | (190 | ) | ||||||||||||||
(1,681 | ) | (1,853 | ) | (2,902 | ) | (1,681 | ) | |||||||||||||||||
Current liabilities | ||||||||||||||||||||||||
Trade and other liabilities | 24 | (1,050 | ) | (998 | ) | 24 | (1,429 | ) | (1,050 | ) | ||||||||||||||
Financial liabilities — Borrowings | 22 | (559 | ) | (595 | ) | 18 | (344 | ) | (559 | ) | ||||||||||||||
Financial liabilities — Derivative financial instruments | 16 | (5 | ) | — | ||||||||||||||||||||
Current income tax liabilities | (96 | ) | (74 | ) | (136 | ) | (96 | ) | ||||||||||||||||
Provisions for other liabilities and charges | 23 | (23 | ) | (23 | ) | 23 | (56 | ) | (23 | ) | ||||||||||||||
(1,728 | ) | (1,690 | ) | (1,970 | ) | (1,728 | ) | |||||||||||||||||
Liabilities directly associated with non-current assets classified as held for sale | 31 | (9 | ) | (26 | ) | 31 | — | (9 | ) | |||||||||||||||
Total liabilities | (3,418 | ) | (3,569 | ) | (4,872 | ) | (3,418 | ) | ||||||||||||||||
Net assets | 3,874 | 3,644 | 5,024 | 3,874 | ||||||||||||||||||||
Equity | ||||||||||||||||||||||||
Share capital | 27 | 202 | 202 | 27 | 202 | 202 | ||||||||||||||||||
Share premium | 27 | 2,499 | 2,487 | 27 | 2,505 | 2,499 | ||||||||||||||||||
Treasury shares | 28 | (216 | ) | (189 | ) | 28 | (222 | ) | (216 | ) | ||||||||||||||
Other reserves | 29 | (514 | ) | (592 | ) | 29 | 586 | (514 | ) | |||||||||||||||
Retained earnings | 29 | 1,724 | 1,568 | 29 | 1,679 | 1,724 | ||||||||||||||||||
Total equity attributable to equity holders of the Company | 3,695 | 3,476 | ||||||||||||||||||||||
Total equity attributable to equity holders of the company | 4,750 | 3,695 | ||||||||||||||||||||||
Minority interest | 179 | 168 | 274 | 179 | ||||||||||||||||||||
Total equity | 3,874 | 3,644 | 5,024 | 3,874 | ||||||||||||||||||||
F-6
F-5
Notes | 2007 | 2006 | 2005 | Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||
Net cash generated from operations | 33 | 659 | 621 | 653 | 33 | 894 | 659 | 621 | ||||||||||||||||||||||||
Interest paid | (109 | ) | (106 | ) | (101 | ) | (87 | ) | (109 | ) | (106 | ) | ||||||||||||||||||||
Tax paid | (87 | ) | (59 | ) | (65 | ) | (89 | ) | (87 | ) | (59 | ) | ||||||||||||||||||||
Net cash generated from operating activities | 463 | 456 | 487 | 718 | 463 | 456 | ||||||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
Acquisition of subsidiaries, net of cash acquired | 30 | (472 | ) | (363 | ) | (246 | ) | 30 | (395 | ) | (472 | ) | (363 | ) | ||||||||||||||||||
Acquisition of joint ventures and associates | (4 | ) | (4 | ) | (7 | ) | (5 | ) | (4 | ) | (4 | ) | ||||||||||||||||||||
Purchase of investments | (1 | ) | — | — | ||||||||||||||||||||||||||||
Purchase of property, plant and equipment (PPE) | (86 | ) | (68 | ) | (76 | ) | (75 | ) | (86 | ) | (68 | ) | ||||||||||||||||||||
Proceeds from sale of investments | 5 | — | — | |||||||||||||||||||||||||||||
Proceeds from sale of PPE | 33 | 14 | 8 | 3 | 33 | 2 | 14 | 8 | ||||||||||||||||||||||||
Purchase of intangible assets | (33 | ) | (29 | ) | (24 | ) | (45 | ) | (33 | ) | (29 | ) | ||||||||||||||||||||
Purchase of other financial assets | — | — | (2 | ) | ||||||||||||||||||||||||||||
Disposal of subsidiaries, net of cash disposed | 32 | 469 | 10 | 376 | 32 | 111 | 469 | 10 | ||||||||||||||||||||||||
Disposal of joint ventures and associates | — | — | 54 | |||||||||||||||||||||||||||||
Interest received | 19 | 24 | 29 | 11 | 19 | 24 | ||||||||||||||||||||||||||
Dividends received from joint ventures and associates | 32 | 45 | 14 | 23 | 32 | 45 | ||||||||||||||||||||||||||
Net cash used in investing activities | (61 | ) | (377 | ) | 121 | (369 | ) | (61 | ) | (377 | ) | |||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
Proceeds from issue of ordinary shares | 27 | 12 | 11 | 4 | 27 | 6 | 12 | 11 | ||||||||||||||||||||||||
Purchase of treasury shares | (72 | ) | (36 | ) | (21 | ) | (47 | ) | (72 | ) | (36 | ) | ||||||||||||||||||||
Proceeds from borrowings | 272 | 84 | — | 455 | 272 | 84 | ||||||||||||||||||||||||||
Liquid resources acquired | (15 | ) | (24 | ) | — | — | (15 | ) | (24 | ) | ||||||||||||||||||||||
Repayment of borrowings | (391 | ) | (145 | ) | (79 | ) | (275 | ) | (391 | ) | (145 | ) | ||||||||||||||||||||
Finance lease principal payments | (2 | ) | (3 | ) | (3 | ) | (3 | ) | (2 | ) | (3 | ) | ||||||||||||||||||||
Dividends paid to Company’s shareholders | 10 | (238 | ) | (220 | ) | (205 | ) | |||||||||||||||||||||||||
Dividends paid to minority interests | (10 | ) | (15 | ) | (17 | ) | ||||||||||||||||||||||||||
Dividends paid to company’s shareholders | 9 | (257 | ) | (238 | ) | (220 | ) | |||||||||||||||||||||||||
Dividends paid to minority interest | (28 | ) | (10 | ) | (15 | ) | ||||||||||||||||||||||||||
Net cash used in financing activities | (444 | ) | (348 | ) | (321 | ) | (149 | ) | (444 | ) | (348 | ) | ||||||||||||||||||||
Effects of exchange rate changes on cash and cash equivalents | 3 | (44 | ) | 13 | (103 | ) | 3 | (44 | ) | |||||||||||||||||||||||
Net decrease in cash and cash equivalents | (39 | ) | (313 | ) | 300 | |||||||||||||||||||||||||||
Net increase/(decrease) in cash and cash equivalents | 97 | (39 | ) | (313 | ) | |||||||||||||||||||||||||||
Cash and cash equivalents at beginning of year | 531 | 844 | 544 | 492 | 531 | 844 | ||||||||||||||||||||||||||
Cash and cash equivalents at end of year | 21 | 492 | 531 | 844 | 17 | 589 | 492 | 531 | ||||||||||||||||||||||||
F-7F-6
1. | Accounting policies |
a. | Basis of preparation |
F-7
• | ||
F-8
be shown in a performance statement, the option to present the performance statement as a single statement of comprehensive income and the requirement to include a balance sheet as at the beginning of the earliest comparative period when an entity applies a retrospective change in accounting policy or makes a retrospective restatement. | ||
• | ||
• | Amendments to IAS 39 ‘Financial Instruments: Recognition and Measurement’ (effective for annual reporting periods beginning on or after 1 July 2009). The amendments clarify that inflation may only be hedged where changes in inflation are a specified portion of cash flows of a financial instrument, and also clarify hedging with options. | |
• | ‘Improvements to Financial Reporting Standards 2008’ (mostly effective for annual reporting periods beginning on or after 1 January 2009). This is the first standard published under the IASB’s annual improvements process which is designed to deal with non-urgent minor amendments to standards. Thirty five amendments were issued, 24 resulting in changes in presentation, recognition or measurement, and 11 are expected to have no or minimal effect on accounting. | |
• | IFRIC 16 ‘Hedges of a Net Investment in Foreign Operations’ (effective for annual reporting periods beginning on or after 1 October 2008). IFRIC |
• | Amendments to IAS 23 ‘Borrowing Costs’ (effective for annual reporting periods beginning on or after 1 January 2009). The amendment requires capitalisation of borrowing costs that relate to qualifying assets (ones that take a substantial amount of time to get ready for use or sale, with the exception of assets measured at fair value or inventories manufactured in large quantities or on a repetitive basis). Management assessed the relevance of this amendment with respect to Group operations and concluded that it is not currently applicable to the Group as there are no material qualifying assets. |
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 entity an obligation to another party in respect of a share of net assets only on liquidation, to be classified as equity. Management assessed the relevance of this amendment with respect to the Group and concluded it is not relevant. | |
• | IFRIC 13 ‘Customer Loyalty Programmes’ (effective for annual reporting periods beginning on or after 1 July 2008). IFRIC 13 explains how entities that grant loyalty award credits to customers should account for their obligations to provide free or discounted goods or services to customers who redeem award credits. As | |
• | IFRIC | |
• | IFRIC 17 ‘Distributions of Non-cash Assets to Owners’ (effective for annual reporting periods beginning on or after 1 July 2009). IFRIC 17 provides guidance on the appropriate accounting treatment when an entity distributes assets other than cash as dividends, including recognition upon authorisation and measurement at fair value of assets distributed, with any difference between fair value and carrying value of these assets being recognised in the income statement when an entity settles the dividend payable. This does not apply to distributions of non-cash assets under common control. This interpretation will have no impact on the Group financial statements as the Group does not currently distribute non-cash assets. |
• Intangible assets: | Goodwill | |
• Intangible assets: | Pre-publication assets | |
• Royalty advances | ||
• Taxation | ||
• Employee benefits: | Pension obligations | |
• Revenue recognition |
F-9
F-9
F-10
F-11
F-11
F-12
F-12
F-13
F-14
F-14
F-15
F-15
F-16
F-16
2007 | 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | North | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Publishing | Data | Penguin | Corporate | Group | American | International | FT | Interactive | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | Notes | Education | Education | Professional | Publishing | Data | Penguin | Corporate | Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (external) | 1,537 | 793 | 298 | 344 | 344 | 846 | — | 4,162 | 2,002 | 866 | 244 | 390 | 406 | 903 | — | 4,811 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (inter-segment) | 1 | — | — | — | — | 19 | — | 20 | — | — | 4 | — | — | 22 | — | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 169 | 159 | 26 | 34 | 90 | 73 | — | 551 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 6 | — | 1 | 16 | — | — | — | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit | 303 | 135 | 36 | 74 | 121 | 93 | — | 762 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation of acquired intangibles | (45 | ) | (22 | ) | (1 | ) | (7 | ) | (9 | ) | (2 | ) | — | (86 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | 175 | 159 | 27 | 50 | 90 | 73 | — | 574 | 258 | 113 | 35 | 67 | 112 | 91 | — | 676 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance costs | 7 | (150 | ) | 6 | (136 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance income | 7 | 44 | 6 | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit before tax | 468 | 585 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | 8 | (131 | ) | 7 | (172 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 337 | 413 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | 175 | 159 | 27 | 50 | 90 | 73 | — | 574 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 28 | 2 | 1 | 6 | 7 | 1 | — | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 203 | 161 | 28 | 56 | 97 | 74 | — | 619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment assets | 2,780 | 1,742 | 318 | 397 | 330 | 937 | 651 | 7,155 | 4,952 | 1,358 | 423 | 482 | 524 | 1,211 | 923 | 9,873 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint ventures | 13 | 5 | — | — | 4 | — | 2 | — | 11 | 12 | — | 8 | — | 2 | — | 3 | — | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Associates | 13 | 3 | 1 | — | 5 | — | — | — | 9 | 12 | — | 4 | — | 6 | — | — | — | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets — continuing operations | 2,788 | 1,743 | 318 | 406 | 330 | 939 | 651 | 7,175 | 4,952 | 1,370 | 423 | 490 | 524 | 1,214 | 923 | 9,896 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 117 | — | — | — | — | 117 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 2,788 | 1,743 | 435 | 406 | 330 | 939 | 651 | 7,292 | 4,952 | 1,370 | 423 | 490 | 524 | 1,214 | 923 | 9,896 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | (798 | ) | (266 | ) | (130 | ) | (251 | ) | (129 | ) | (220 | ) | (1,624 | ) | (3,418 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 12 | — | 5 | — | 19 | — | 1 | — | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditure | 11, 12, 18 | 147 | 98 | 20 | 28 | 19 | 44 | — | 356 | 10, 11, 20 | 224 | 82 | 22 | 17 | 25 | 51 | — | 421 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | 11 | 22 | 11 | 9 | 9 | 10 | 7 | — | 68 | 10 | 25 | 12 | 8 | 13 | 13 | 9 | — | 80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation | 12, 18 | 124 | 80 | 11 | 9 | 8 | 30 | — | 262 | 11, 20 | 219 | 69 | 12 | 12 | 12 | 36 | — | 360 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-17
2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2006 | North | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | American | International | FT | Interactive | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Publishing | Data | Penguin | Corporate | Group | Notes | Education | Education | Professional | Publishing | Data | Penguin | Corporate | Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (external) | 1,455 | 795 | 280 | 280 | 332 | 848 | — | 3,990 | 1,667 | 735 | 226 | 344 | 344 | 846 | — | 4,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (inter-segment) | 1 | — | — | — | — | 18 | — | 19 | 1 | — | — | — | — | 19 | — | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 161 | 161 | 23 | 13 | 82 | 58 | — | 498 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 6 | — | 1 | 17 | — | — | — | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit | 273 | 92 | 27 | 56 | 97 | 74 | — | 619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation of acquired intangibles | (20 | ) | (10 | ) | (1 | ) | (6 | ) | (7 | ) | (1 | ) | — | (45 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | 167 | 161 | 24 | 30 | 82 | 58 | — | 522 | 253 | 82 | 26 | 50 | 90 | 73 | — | 574 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance costs | 7 | (133 | ) | 6 | (150 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance income | 7 | 59 | 6 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit before tax | 448 | 468 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | 8 | (4 | ) | 7 | (131 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 444 | 337 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | 167 | 161 | 24 | 30 | 82 | 58 | — | 522 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment to goodwill on recognition of pre-acquisition deferred tax | — | — | — | — | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 17 | — | 1 | 2 | 7 | 1 | — | 28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other net gains and losses of associates | — | — | — | (4 | ) | — | — | — | (4 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | (1 | ) | — | — | — | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 184 | 161 | 25 | 27 | 89 | 66 | — | 552 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment assets | 2,684 | 1,347 | 580 | 317 | 314 | 954 | 703 | 6,899 | 3,536 | 1,013 | 291 | 397 | 330 | 937 | 651 | 7,155 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint ventures | 13 | 5 | — | — | 4 | — | 3 | — | 12 | 12 | — | 5 | — | 4 | — | 2 | — | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Associates | 13 | 4 | — | — | 4 | — | — | — | 8 | 12 | 1 | 3 | — | 5 | — | — | — | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets — continuing operations | 2,693 | 1,347 | 580 | 325 | 314 | 957 | 703 | 6,919 | 3,537 | 1,021 | 291 | 406 | 330 | 939 | 651 | 7,175 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 294 | — | — | — | — | 294 | — | — | 117 | — | — | — | — | 117 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 2,693 | 1,347 | 874 | 325 | 314 | 957 | 703 | 7,213 | 3,537 | 1,021 | 408 | 406 | 330 | 939 | 651 | 7,292 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | (662 | ) | (268 | ) | (177 | ) | (300 | ) | (131 | ) | (269 | ) | (1,762 | ) | (3,569 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 12 | — | 6 | 1 | 16 | — | — | — | 23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditure | 11, 12, 18 | 124 | 88 | 30 | 19 | 20 | 38 | — | 319 | 10, 11, 20 | 136 | 109 | 20 | 28 | 19 | 44 | — | 356 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | 11 | 21 | 8 | 19 | 9 | 13 | 7 | — | 77 | 10 | 26 | 7 | 9 | 9 | 10 | 7 | — | 68 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation | 12, 18 | 117 | 78 | 21 | 4 | 7 | 34 | — | 261 | 11, 20 | 159 | 45 | 11 | 9 | 8 | 30 | — | 262 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-18
2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | North | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Higher | FT | Interactive | American | International | FT | Interactive | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | School | Education | Professional | Publishing | Data | Penguin | Corporate | Group | Notes | Education | Education | Professional | Publishing | Data | Penguin | Corporate | Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (external) | 1,295 | 779 | 238 | 249 | 297 | 804 | — | 3,662 | 1,679 | 640 | 211 | 280 | 332 | 848 | — | 3,990 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (inter-segment) | — | — | — | — | — | 16 | — | 16 | — | — | 1 | — | — | 18 | — | 19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit before joint ventures and associates | 138 | 156 | 9 | 45 | 75 | 60 | — | 483 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | 4 | — | 1 | 9 | — | — | — | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 142 | 156 | 10 | 54 | 75 | 60 | — | 497 | 266 | 70 | 16 | 30 | 82 | 58 | — | 522 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance costs | 7 | (132 | ) | 6 | (133 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance income | 7 | 62 | 6 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit before tax | 427 | 448 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | 8 | (108 | ) | 7 | (4 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the year from continuing operations | 319 | 444 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to adjusted operating profit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating profit | 142 | 156 | 10 | 54 | 75 | 60 | — | 497 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation of acquired intangibles | 5 | — | — | 1 | 5 | — | — | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other net gains and losses | 5 | — | — | — | (40 | ) | — | — | — | (40 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other net finance costs of associates | — | — | — | 2 | — | — | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted operating profit — continuing operations | 147 | 156 | 10 | 17 | 80 | 60 | — | 470 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment assets | 2,347 | 1,648 | 1,179 | 154 | 291 | 960 | 985 | 7,564 | 3,401 | 795 | 415 | 317 | 314 | 954 | 703 | 6,899 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint ventures | 6 | — | — | 4 | — | 2 | — | 12 | — | 5 | — | 4 | — | 3 | — | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Associates | 6 | — | — | 18 | — | — | — | 24 | — | 4 | — | 4 | — | — | — | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets — continuing operations | 3,401 | 804 | 415 | 325 | 314 | 957 | 703 | 6,919 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets — discontinued operations | — | — | 294 | — | — | — | — | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 2,359 | 1,648 | 1,179 | 176 | 291 | 962 | 985 | 7,600 | 3,401 | 804 | 709 | 325 | 314 | 957 | 703 | 7,213 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | (557 | ) | (341 | ) | (263 | ) | (336 | ) | (109 | ) | (280 | ) | (1,981 | ) | (3,867 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other segment items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of results of joint ventures and associates | — | 6 | 1 | 17 | — | — | — | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditure | 114 | 96 | 43 | 14 | 19 | 34 | — | 320 | 141 | 71 | 30 | 19 | 20 | 38 | — | 319 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | 26 | 8 | 17 | 11 | 11 | 7 | — | 80 | 15 | 14 | 19 | 9 | 13 | 7 | — | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortisation | 91 | 78 | 20 | 3 | 5 | 24 | — | 221 | 136 | 59 | 21 | 4 | 7 | 34 | — | 261 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-19
F-19
Sales | Total assets | Capital expenditure | Sales | Non-current assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European countries | 1,102 | 1,003 | 868 | 1,827 | 1,608 | 1,711 | 90 | 70 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||
North America | 2,591 | 2,585 | 2,388 | 4,867 | 4,908 | 5,476 | 248 | 231 | 242 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 351 | 295 | 300 | 365 | 327 | 325 | 14 | 12 | 13 | 415 | 351 | 295 | 179 | 114 | 97 | |||||||||||||||||||||||||||||||||||||||||||||
Other countries | 118 | 107 | 106 | 96 | 56 | 52 | 2 | 2 | 2 | 151 | 118 | 107 | 14 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||||||||
Total | 4,162 | 3,990 | 3,662 | 7,155 | 6,899 | 7,564 | 354 | 315 | 320 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total continuing | 4,811 | 4,162 | 3,990 | 5,951 | 4,318 | 4,073 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European countries | 83 | 103 | 122 | — | 9 | — | 1 | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
North America | 78 | 314 | 329 | 117 | 281 | — | 1 | 2 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
UK | — | 1 | 17 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other European countries | — | 82 | 86 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
USA | 8 | 78 | 314 | — | 117 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Canada | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other countries | 6 | 16 | 10 | — | 4 | — | — | 1 | — | — | 6 | 16 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Total | 167 | �� | 433 | 461 | 117 | 294 | — | 2 | 4 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Joint ventures and associates | — | — | — | 20 | 20 | 36 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total discontinued | 8 | 167 | 433 | — | 117 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 4,329 | 4,423 | 4,123 | 7,292 | 7,213 | 7,600 | 356 | 319 | 320 | 4,819 | 4,329 | 4,423 | 5,951 | 4,435 | 4,367 | |||||||||||||||||||||||||||||||||||||||||||||
3. | Discontinued operations |
F-20
2007 | ||||||||||||||||||||
Government | Data | |||||||||||||||||||
Solutions | Management | Les Echos | Datamark | Total | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Sales | 29 | 56 | 82 | — | 167 | |||||||||||||||
Operating profit | 2 | 12 | 1 | — | 15 | |||||||||||||||
Goodwill impairment | — | (97 | ) | — | — | (97 | ) | |||||||||||||
(Loss)/profit before tax | 2 | (85 | ) | 1 | — | (82 | ) | |||||||||||||
Attributable tax expense | (1 | ) | (4 | ) | — | — | (5 | ) | ||||||||||||
(Loss)/profit after tax | 1 | (89 | ) | 1 | — | (87 | ) | |||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | (19 | ) | — | 165 | — | 146 | ||||||||||||||
Attributable tax (expense)/benefit | (93 | ) | — | — | 7 | (86 | ) | |||||||||||||
(Loss)/profit for the year from discontinued operations | (111 | ) | (89 | ) | 166 | 7 | (27 | ) | ||||||||||||
Operating cash flows | (8 | ) | 11 | 4 | — | 7 | ||||||||||||||
Investing cash flows | — | (1 | ) | 4 | — | 3 | ||||||||||||||
Financing cash flows | (4 | ) | (10 | ) | (7 | ) | — | (21 | ) | |||||||||||
Total cash flows | (12 | ) | — | 1 | — | (11 | ) | |||||||||||||
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 | 2006 | |||||||||||||||||||||||||||||||
Government | Data | Government | Data | |||||||||||||||||||||||||||||
Solutions | Management | Les Echos | Total | Solutions | Management | Les Echos | Total | |||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||
Sales | 286 | 61 | 86 | 433 | 286 | 61 | 86 | 433 | ||||||||||||||||||||||||
Operating profit | 22 | 13 | 5 | 40 | 22 | 13 | 5 | 40 | ||||||||||||||||||||||||
Profit before tax | 22 | 13 | 5 | 40 | 22 | 13 | 5 | 40 | ||||||||||||||||||||||||
Attributable tax expense | (8 | ) | (5 | ) | (2 | ) | (15 | ) | (8 | ) | (5 | ) | (2 | ) | (15 | ) | ||||||||||||||||
Profit after tax | 14 | 8 | 3 | 25 | 14 | 8 | 3 | 25 | ||||||||||||||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | — | — | — | — | ||||||||||||||||||||||||||||
Attributable tax expense | — | — | — | — | ||||||||||||||||||||||||||||
Profit on disposal of discontinued operations before tax | — | — | — | — | ||||||||||||||||||||||||||||
Attributable tax (expense)/benefit | — | — | — | — | ||||||||||||||||||||||||||||
Profit for the year from discontinued operations | 14 | 8 | 3 | 25 | 14 | 8 | 3 | 25 | ||||||||||||||||||||||||
Operating cash flows | 20 | 9 | 4 | 33 | 20 | 9 | 4 | 33 | ||||||||||||||||||||||||
Investing cash flows | (8 | ) | (2 | ) | — | (10 | ) | (8 | ) | (2 | ) | — | (10 | ) | ||||||||||||||||||
Financing cash flows | (1 | ) | (7 | ) | (7 | ) | (15 | ) | (1 | ) | (7 | ) | (7 | ) | (15 | ) | ||||||||||||||||
Total cash flows | 11 | — | (3 | ) | 8 | 11 | — | (3 | ) | 8 | ||||||||||||||||||||||
2005 | ||||||||||||||||||||
Government | Data | |||||||||||||||||||
Solutions | Management | Les Echos | Recoletos | Total | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
Sales | 288 | 63 | 83 | 27 | 461 | |||||||||||||||
Operating profit | 20 | 15 | 4 | (3 | ) | 36 | ||||||||||||||
Profit before tax | 20 | 15 | 4 | (3 | ) | 36 | ||||||||||||||
Attributable tax expense | (8 | ) | (6 | ) | (2 | ) | 1 | (15 | ) | |||||||||||
Profit after tax | 12 | 9 | 2 | (2 | ) | 21 | ||||||||||||||
Profit/(loss) on disposal of discontinued operations before tax | — | — | — | 306 | 306 | |||||||||||||||
Attributable tax expense | — | — | — | (2 | ) | (2 | ) | |||||||||||||
Profit for the year from discontinued operations | 12 | 9 | 2 | 302 | 325 | |||||||||||||||
Operating cash flows | 22 | 9 | 1 | (6 | ) | 26 | ||||||||||||||
Investing cash flows | (13 | ) | (2 | ) | 1 | — | (14 | ) | ||||||||||||
Financing cash flows | (1 | ) | (7 | ) | (21 | ) | — | (29 | ) | |||||||||||
Total cash flows | 8 | — | (19 | ) | (6 | ) | (17 | ) | ||||||||||||
F-22
4. | Operating expenses |
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
By function: | ||||||||||||||||||||||||
Cost of goods sold | 1,910 | 1,841 | 1,713 | 2,174 | 1,910 | 1,841 | ||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Distribution costs | 264 | 288 | 281 | 198 | 202 | 232 | ||||||||||||||||||
Administrative and other expenses | 1,538 | 1,462 | 1,309 | 1,890 | 1,600 | 1,518 | ||||||||||||||||||
Other income | (101 | ) | (99 | ) | (84 | ) | (102 | ) | (101 | ) | (99 | ) | ||||||||||||
Total operating expenses | 1,701 | 1,651 | 1,506 | 1,986 | 1,701 | 1,651 | ||||||||||||||||||
Total | 3,611 | 3,492 | 3,219 | 4,160 | 3,611 | 3,492 | ||||||||||||||||||
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
By nature: | ||||||||||||||||
Utilisation of inventory | 19 | 732 | 702 | 754 | ||||||||||||
Depreciation of property, plant and equipment | 11 | 65 | 68 | 73 | ||||||||||||
Amortisation of intangible assets — Pre-publication | 18 | 192 | 210 | 192 | ||||||||||||
Amortisation of intangible assets — Other | 12 | 70 | 48 | 26 | ||||||||||||
Employee benefit expense | 6 | 1,288 | 1,225 | 1,128 | ||||||||||||
Operating lease rentals | 129 | 122 | 108 | |||||||||||||
Other property costs | 122 | 121 | 84 | |||||||||||||
Royalties expensed | 365 | 360 | 362 | |||||||||||||
Advertising, promotion and marketing | 195 | 190 | 186 | |||||||||||||
Information technology costs | 70 | 71 | 81 | |||||||||||||
Other costs | 484 | 474 | 309 | |||||||||||||
Other income | (101 | ) | (99 | ) | (84 | ) | ||||||||||
Total | 3,611 | 3,492 | 3,219 | |||||||||||||
F-22
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 | |||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Fees payable to the Company’s auditor for the audit of parent company and consolidated accounts | 1 | 1 | 1 | |||||||||||||||||||||
The audit of the Company’s subsidiaries pursuant to legislation | 2 | 4 | 3 | |||||||||||||||||||||
Other services pursuant to legislation | 1 | 4 | — | |||||||||||||||||||||
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 | 1 | 1 | 2 | 2 | 1 | ||||||||||||||||||
Other services | 1 | 1 | 2 | 1 | 1 | 1 | ||||||||||||||||||
Total | 7 | 11 | 7 | 8 | 7 | 11 | ||||||||||||||||||
F-23
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act | 4 | 9 | 4 | 5 | 4 | 9 | ||||||||||||||||||
Non-audit fees | 3 | 2 | 3 | 3 | 3 | 2 | ||||||||||||||||||
Total audit fees | 7 | 11 | 7 | |||||||||||||||||||||
Total | 8 | 7 | 11 | |||||||||||||||||||||
F-23
5. |
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Profit on sale of interest in MarketWatch | — | — | 40 | |||||||||
Employee information |
Notes | 2007 | 2006 | 2005 | Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||
Employee benefit expense | ||||||||||||||||||||||||||||||||
Wages and salaries (including termination benefits and restructuring costs) | 1,087 | 1,035 | 954 | 1,317 | 1,087 | 1,035 | ||||||||||||||||||||||||||
Social security costs | 100 | 101 | 91 | 119 | 100 | 101 | ||||||||||||||||||||||||||
Share-based payment costs | 26 | 30 | 25 | 23 | 26 | 33 | 30 | 25 | ||||||||||||||||||||||||
Pension costs — defined contribution plans | 25 | 39 | 36 | 34 | 25 | 41 | 39 | 36 | ||||||||||||||||||||||||
Pension costs — defined benefit plans | 25 | 31 | 29 | 25 | 25 | 37 | 31 | 29 | ||||||||||||||||||||||||
Other post-retirement benefits | 25 | 1 | (1 | ) | 1 | 25 | 6 | 1 | (1 | ) | ||||||||||||||||||||||
1,288 | 1,225 | 1,128 | 1,553 | 1,288 | 1,225 | |||||||||||||||||||||||||||
F-24
2008 | 2007 | 2006 | ||||||||||||||||||||||
2007 | 2006 | 2005 | Average number employed | |||||||||||||||||||||
Average number employed | ||||||||||||||||||||||||
Employee numbers | ||||||||||||||||||||||||
School | 12,906 | 11,064 | 10,133 | |||||||||||||||||||||
Higher Education | 5,098 | 4,368 | 4,196 | |||||||||||||||||||||
North American Education | 15,412 | 14,327 | 12,710 | |||||||||||||||||||||
International Education | 5,718 | 5,291 | 4,472 | |||||||||||||||||||||
Professional | 3,458 | 3,204 | 3,259 | 2,641 | 2,540 | 2,223 | ||||||||||||||||||
Penguin | 4,163 | 3,943 | 4,051 | |||||||||||||||||||||
FT Publishing | 2,083 | 1,766 | 1,434 | 2,379 | 2,083 | 1,766 | ||||||||||||||||||
Interactive Data | 2,300 | 2,200 | 1,956 | 2,413 | 2,300 | 2,200 | ||||||||||||||||||
Penguin | 4,112 | 4,163 | 3,943 | |||||||||||||||||||||
Other | 1,614 | 1,669 | 1,573 | 909 | 918 | 900 | ||||||||||||||||||
Continuing operations | 31,622 | 28,214 | 26,602 | 33,584 | 31,622 | 28,214 | ||||||||||||||||||
Discontinued operations | 1,070 | 6,127 | 5,601 | 96 | 1,070 | 6,127 | ||||||||||||||||||
32,692 | 34,341 | 32,203 | 33,680 | 32,692 | 34,341 | |||||||||||||||||||
F-24
Net finance costs |
Notes | 2007 | 2006 | 2005 | Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||
Interest payable | (114 | ) | (117 | ) | (98 | ) | (106 | ) | (114 | ) | (117 | ) | ||||||||||||||||||||
Net foreign exchange losses | (25 | ) | (2 | ) | (9 | ) | (11 | ) | (25 | ) | (2 | ) | ||||||||||||||||||||
Finance cost in respect of employee benefits | 25 | — | — | (7 | ) | |||||||||||||||||||||||||||
Other losses on financial instruments in a hedging relationship: | ||||||||||||||||||||||||||||||||
— fair value hedges | (1 | ) | — | (1 | ) | (7 | ) | (1 | ) | — | ||||||||||||||||||||||
— net investment hedges | (1 | ) | (2 | ) | — | — | (1 | ) | (2 | ) | ||||||||||||||||||||||
Other losses on financial instruments not in a hedging relationship: | ||||||||||||||||||||||||||||||||
— derivatives | (9 | ) | (12 | ) | (17 | ) | (12 | ) | (9 | ) | (12 | ) | ||||||||||||||||||||
Finance costs | (150 | ) | (133 | ) | (132 | ) | (136 | ) | (150 | ) | (133 | ) | ||||||||||||||||||||
Interest receivable | 19 | 23 | 21 | 17 | 19 | 23 | ||||||||||||||||||||||||||
Finance income in respect of employee benefits | 25 | 10 | 4 | — | 25 | 8 | 10 | 4 | ||||||||||||||||||||||||
Net foreign exchange gains | 8 | 21 | 21 | — | 8 | 21 | ||||||||||||||||||||||||||
Other gains on financial instruments in a hedging relationship: | ||||||||||||||||||||||||||||||||
— fair value hedges | — | — | 1 | 2 | — | — | ||||||||||||||||||||||||||
— net investment hedges | — | — | 3 | 1 | — | — | ||||||||||||||||||||||||||
Other gains on financial instruments not in a hedging relationship: | ||||||||||||||||||||||||||||||||
— amortisation of transitional adjustment on bonds | 1 | 8 | 7 | 1 | 1 | 8 | ||||||||||||||||||||||||||
— derivatives | 6 | 3 | 9 | 16 | 6 | 3 | ||||||||||||||||||||||||||
Finance income | 44 | 59 | 62 | 45 | 44 | 59 | ||||||||||||||||||||||||||
Net finance costs | (106 | ) | (74 | ) | (70 | ) | (91 | ) | (106 | ) | (74 | ) | ||||||||||||||||||||
Analysed as: | ||||||||||||||||||||||||||||||||
Net interest payable | (95 | ) | (94 | ) | (77 | ) | ||||||||||||||||||||||||||
Finance income/(costs) in respect of employee benefits | 25 | 10 | 4 | (7 | ) | |||||||||||||||||||||||||||
Net finance costs reflected in adjusted earnings | (85 | ) | (90 | ) | (84 | ) | ||||||||||||||||||||||||||
Other net finance (costs)/income | (21 | ) | 16 | 14 | ||||||||||||||||||||||||||||
Total net finance costs | (106 | ) | (74 | ) | (70 | ) | ||||||||||||||||||||||||||
F-25
Income tax |
Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||||||
Notes | 2007 | 2006 | 2005 | All figures in £ millions | ||||||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||
Current tax | ||||||||||||||||||||||||||||||||
Charge in respect of current year | (71 | ) | (81 | ) | (60 | ) | (89 | ) | (71 | ) | (81 | ) | ||||||||||||||||||||
Recognition of previously unrecognised trading losses | — | 23 | — | — | — | 23 | ||||||||||||||||||||||||||
Other adjustments in respect of prior years | 27 | 35 | (1 | ) | 10 | 27 | 35 | |||||||||||||||||||||||||
Total current tax charge | (44 | ) | (23 | ) | (61 | ) | (79 | ) | (44 | ) | (23 | ) | ||||||||||||||||||||
Deferred tax | ||||||||||||||||||||||||||||||||
In respect of timing differences | (96 | ) | (73 | ) | (66 | ) | (97 | ) | (96 | ) | (73 | ) | ||||||||||||||||||||
Recognition of previously unrecognised capital losses | — | 76 | — | — | — | 76 | ||||||||||||||||||||||||||
Recognition of previously unrecognised trading losses | — | 37 | — | — | — | 37 | ||||||||||||||||||||||||||
Other adjustments in respect of prior years | 9 | (21 | ) | 19 | 4 | 9 | (21 | ) | ||||||||||||||||||||||||
Total deferred tax (charge)/benefit | 14 | (87 | ) | 19 | (47 | ) | ||||||||||||||||||||||||||
Total deferred tax charge | 13 | (93 | ) | (87 | ) | 19 | ||||||||||||||||||||||||||
Total tax charge | (131 | ) | (4 | ) | (108 | ) | (172 | ) | (131 | ) | (4 | ) | ||||||||||||||||||||
F-25
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Profit before tax | 468 | 448 | 427 | 585 | 468 | 448 | ||||||||||||||||||
Tax calculated at UK rate | (141 | ) | (135 | ) | (128 | ) | ||||||||||||||||||
Tax calculated at UK rate (2008: 28.5%, 2007: 30%) | (167 | ) | (141 | ) | (135 | ) | ||||||||||||||||||
Effect of overseas tax rates | (25 | ) | (17 | ) | (18 | ) | (29 | ) | (25 | ) | (17 | ) | ||||||||||||
Joint venture and associate income reported net of tax | 7 | 7 | 5 | 7 | 7 | 7 | ||||||||||||||||||
Income not subject to tax | 3 | 5 | 16 | |||||||||||||||||||||
Expenses not deductible for tax purposes | (12 | ) | (18 | ) | (9 | ) | ||||||||||||||||||
Net expense not deductible for tax purposes | (1 | ) | (9 | ) | (13 | ) | ||||||||||||||||||
Utilisation of previously unrecognised tax losses | 3 | 7 | 11 | 4 | 3 | 7 | ||||||||||||||||||
Recognition of previously unrecognised tax losses | — | 136 | — | — | — | 136 | ||||||||||||||||||
Unutilised tax losses | (2 | ) | (3 | ) | (3 | ) | — | (2 | ) | (3 | ) | |||||||||||||
Prior year adjustments | 36 | 14 | 18 | 14 | 36 | 14 | ||||||||||||||||||
Total tax charge | (131 | ) | (4 | ) | (108 | ) | (172 | ) | (131 | ) | (4 | ) | ||||||||||||
UK | (42 | ) | (15 | ) | (26 | ) | (53 | ) | (42 | ) | (15 | ) | ||||||||||||
Overseas | (89 | ) | 11 | (82 | ) | (119 | ) | (89 | ) | 11 | ||||||||||||||
Total tax charge | (131 | ) | (4 | ) | (108 | ) | (172 | ) | (131 | ) | (4 | ) | ||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Share-based payments | 7 | 2 | 3 | (7 | ) | 7 | 2 | |||||||||||||||||
Pension contributions and actuarial gains and losses | 28 | 9 | — | 10 | 28 | 9 | ||||||||||||||||||
Net investment hedges and other foreign exchange gains and losses | (6 | ) | 1 | 9 | (1 | ) | (6 | ) | 1 | |||||||||||||||
�� | ||||||||||||||||||||||||
29 | 12 | 12 | 2 | 29 | 12 | |||||||||||||||||||
F-26
Earnings per share |
F-26
Notes | 2007 | 2006 | 2005 | |||||||||||||
All figures in £ millions | ||||||||||||||||
Profit for the year from continuing operations | 337 | 444 | 319 | |||||||||||||
Minority interest | (26 | ) | (23 | ) | (20 | ) | ||||||||||
Earnings from continuing operations | 311 | 421 | 299 | |||||||||||||
(Loss)/profit for the year from discontinued operations | 3 | (27 | ) | 25 | 325 | |||||||||||
Earnings | 284 | 446 | 624 | |||||||||||||
Weighted average number of shares (millions) | 796.8 | 798.4 | 797.9 | |||||||||||||
Effect of dilutive share options (millions) | 1.3 | 1.5 | 1.1 | |||||||||||||
Weighted average number of shares (millions) for diluted earnings | 798.1 | 799.9 | 799.0 | |||||||||||||
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 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||
Basic | 35.6p | 55.9p | 78.2p | 36.6p | 35.6p | 55.9p | ||||||||||||||||||||||||||
Diluted | 35.6p | 55.8p | 78.1p | 36.6p | 35.6p | 55.8p | ||||||||||||||||||||||||||
Earnings per share from continuing operations | ||||||||||||||||||||||||||||||||
Earnings per share from continuing operations | ||||||||||||||||||||||||||||||||
Basic | 39.0p | 52.7p | 37.5p | 47.9p | 39.0p | 52.7p | ||||||||||||||||||||||||||
Diluted | 39.0p | 52.6p | 37.4p | 47.9p | 39.0p | 52.6p | ||||||||||||||||||||||||||
Earnings per share from discontinued operations | ||||||||||||||||||||||||||||||||
Earnings per share from discontinued operations | ||||||||||||||||||||||||||||||||
Basic | (3.4p | ) | 3.2p | 40.7p | (11.3p | ) | (3.4p | ) | 3.2p | |||||||||||||||||||||||
Dividends |
2007 | 2006 | 2005 | ||||||||||
All figures in £ millions | ||||||||||||
Final paid in respect of prior year 18.8p (2006: 17p; 2005: 15.7p) | 150 | 136 | 125 | |||||||||
Interim paid in respect of current year 11.1p (2006: 10.5p; 2005: 10p) | 88 | 84 | 80 | |||||||||
238 | 220 | 205 | ||||||||||
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 | Assets in | |||||||||||||||||||||||||||||||
Land and | Plant and | course of | Land and | Plant and | course of | |||||||||||||||||||||||||||
buildings | equipment | construction | Total | buildings | equipment | construction | Total | |||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||||||
At 1 January 2006 | 328 | 683 | 7 | 1,018 | ||||||||||||||||||||||||||||
Exchange differences | (20 | ) | (54 | ) | — | (74 | ) | |||||||||||||||||||||||||
Transfers | — | (11 | ) | (1 | ) | (12 | ) | |||||||||||||||||||||||||
Additions | 12 | 52 | 13 | 77 | ||||||||||||||||||||||||||||
Disposals | (9 | ) | (32 | ) | — | (41 | ) | |||||||||||||||||||||||||
Acquisition through business combination | 9 | 12 | — | 21 | ||||||||||||||||||||||||||||
Reclassifications | — | 8 | (8 | ) | — | |||||||||||||||||||||||||||
Transfer to non-current assets held for sale | (7 | ) | (27 | ) | — | (34 | ) | |||||||||||||||||||||||||
At 31 December 2006 | 313 | 631 | 11 | 955 | ||||||||||||||||||||||||||||
At 1 January 2007 | 313 | 631 | 11 | 955 | ||||||||||||||||||||||||||||
Exchange differences | (2 | ) | — | — | (2 | ) | (2 | ) | — | — | (2 | ) | ||||||||||||||||||||
Additions | 20 | 62 | 11 | 93 | 20 | 62 | 11 | 93 | ||||||||||||||||||||||||
Disposals | (24 | ) | (65 | ) | — | (89 | ) | (24 | ) | (65 | ) | — | (89 | ) | ||||||||||||||||||
Acquisition through business combination | — | 27 | — | 27 | — | 27 | — | 27 | ||||||||||||||||||||||||
Disposal through business disposal | (1 | ) | (25 | ) | — | (26 | ) | (1 | ) | (25 | ) | — | (26 | ) | ||||||||||||||||||
Reclassifications | — | 6 | (6 | ) | — | — | 6 | (6 | ) | — | ||||||||||||||||||||||
Transfer to non-current assets held for sale | (8 | ) | (14 | ) | — | (22 | ) | (8 | ) | (14 | ) | — | (22 | ) | ||||||||||||||||||
At 31 December 2007 | 298 | 622 | 16 | 936 | 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
Assets in | ||||||||||||||||
Land and | Plant and | course of | ||||||||||||||
buildings | equipment | construction | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2006 | (130 | ) | (504 | ) | — | (634 | ) | |||||||||
Exchange differences | 10 | 41 | — | 51 | ||||||||||||
Transfers | — | 5 | — | 5 | ||||||||||||
Charge for the year | (17 | ) | (60 | ) | — | (77 | ) | |||||||||
Disposals | 4 | 27 | — | 31 | ||||||||||||
Acquisition through business combination | — | (8 | ) | — | (8 | ) | ||||||||||
Transfer to non-current assets held for sale | 5 | 20 | — | 25 | ||||||||||||
At 31 December 2006 | (128 | ) | (479 | ) | — | (607 | ) | |||||||||
Exchange differences | — | 1 | — | 1 | ||||||||||||
Charge for the year | (14 | ) | (54 | ) | — | (68 | ) | |||||||||
Disposals | 11 | 63 | — | 74 | ||||||||||||
Acquisition through business combination | — | (16 | ) | — | (16 | ) | ||||||||||
Disposal through business disposal | — | 20 | — | 20 | ||||||||||||
Transfer to non-current assets held for sale | 5 | 10 | — | 15 | ||||||||||||
At 31 December 2007 | (126 | ) | (455 | ) | — | (581 | ) | |||||||||
Carrying amounts | ||||||||||||||||
At 1 January 2006 | 198 | 179 | 7 | 384 | ||||||||||||
At 31 December 2006 | 185 | 152 | 11 | 348 | ||||||||||||
At 31 December 2007 | 172 | 167 | 16 | 355 | ||||||||||||
F-29
Intangible assets |
Acquired | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired | Other | Total | customer | Acquired | Acquired | Other | ||||||||||||||||||||||||||||||||||||||||||||||
publishing | intangibles | intangibles | lists & | trademarks | publishing | intangibles | ||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | Goodwill | Software | relationships | & brands | rights | acquired | Total | ||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||
At 1 January 2006 | 3,654 | 197 | 68 | 83 | 151 | 4,002 | ||||||||||||||||||||||||||||||||||||||||||||||
At 1 January 2007 | 3,271 | 201 | 113 | 26 | 96 | 53 | 3,760 | |||||||||||||||||||||||||||||||||||||||||||||
Exchange differences | (396 | ) | (17 | ) | (8 | ) | (8 | ) | (16 | ) | (429 | ) | (4 | ) | (2 | ) | — | 1 | 3 | — | (2 | ) | ||||||||||||||||||||||||||||||
Transfers | — | 6 | — | — | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Additions | — | 29 | — | — | — | 29 | ||||||||||||||||||||||||||||||||||||||||||||||
Disposals | (5 | ) | (2 | ) | — | — | — | (7 | ) | |||||||||||||||||||||||||||||||||||||||||||
Acquisition through business combination | 246 | 4 | 36 | 117 | 153 | 403 | ||||||||||||||||||||||||||||||||||||||||||||||
Adjustment on recognition of pre-acquisition deferred tax | (7 | ) | — | — | — | — | (7 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Transfer to non-current assets held for sale | (221 | ) | (16 | ) | — | — | — | (237 | ) | |||||||||||||||||||||||||||||||||||||||||||
At 31 December 2006 | 3,271 | 201 | 96 | 192 | 288 | 3,760 | ||||||||||||||||||||||||||||||||||||||||||||||
Exchange differences | (4 | ) | (2 | ) | 3 | 1 | 4 | (2 | ) | |||||||||||||||||||||||||||||||||||||||||||
Additions | — | 33 | — | — | — | 33 | ||||||||||||||||||||||||||||||||||||||||||||||
Additions — internal development | — | 20 | — | — | — | — | 20 | |||||||||||||||||||||||||||||||||||||||||||||
Additions — purchased | — | 13 | — | — | — | — | 13 | |||||||||||||||||||||||||||||||||||||||||||||
Disposals | (34 | ) | (19 | ) | (3 | ) | — | (3 | ) | (56 | ) | (34 | ) | (19 | ) | (2 | ) | — | (3 | ) | 2 | (56 | ) | |||||||||||||||||||||||||||||
Acquisition through business combination | 304 | 4 | 40 | 155 | 195 | 503 | 304 | 4 | 76 | 35 | 40 | 44 | 503 | |||||||||||||||||||||||||||||||||||||||
Transfer to non-current assets held for sale | (194 | ) | — | — | — | — | (194 | ) | (194 | ) | — | — | — | — | — | (194 | ) | |||||||||||||||||||||||||||||||||||
At 31 December 2007 | 3,343 | 217 | 136 | 348 | 484 | 4,044 | 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-30F-29
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 | |||||||||||||||||||||
Acquired | Other | Total | ||||||||||||||||||||||
publishing | intangibles | intangibles | ||||||||||||||||||||||
Goodwill | Software | rights | acquired | acquired | Total | |||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||
Amortisation | ||||||||||||||||||||||||
At 1 January 2006 | — | (129 | ) | (5 | ) | (14 | ) | (19 | ) | (148 | ) | |||||||||||||
Exchange differences | — | 13 | 1 | 2 | 3 | 16 | ||||||||||||||||||
Transfers | — | (5 | ) | — | — | — | (5 | ) | ||||||||||||||||
Charge for the year | — | (23 | ) | (11 | ) | (17 | ) | (28 | ) | (51 | ) | |||||||||||||
Disposals | — | 1 | — | — | — | 1 | ||||||||||||||||||
Acquisition through business combination | — | (1 | ) | — | — | — | (1 | ) | ||||||||||||||||
Transfer to non-current assets held for sale | — | 9 | — | — | — | 9 | ||||||||||||||||||
At 31 December 2006 | — | (135 | ) | (15 | ) | (29 | ) | (44 | ) | (179 | ) | |||||||||||||
Exchange differences | — | 1 | — | 1 | 1 | 2 | ||||||||||||||||||
Charge for the year | — | (25 | ) | (17 | ) | (28 | ) | (45 | ) | (70 | ) | |||||||||||||
Disposals | — | 19 | — | — | — | 19 | ||||||||||||||||||
Acquisition through business combination | — | (2 | ) | — | — | — | (2 | ) | ||||||||||||||||
Transfer to non-current assets held for sale | — | — | — | — | — | — | ||||||||||||||||||
At 31 December 2007 | — | (142 | ) | (32 | ) | (56 | ) | (88 | ) | (230 | ) | |||||||||||||
Carrying amounts | ||||||||||||||||||||||||
At 1 January 2006 | 3,654 | 68 | 63 | 69 | 132 | 3,854 | ||||||||||||||||||
At 31 December 2006 | 3,271 | 66 | 81 | 163 | 244 | 3,581 | ||||||||||||||||||
At 31 December 2007 | 3,343 | 75 | 104 | 292 | 396 | 3,814 | ||||||||||||||||||
F-30
F-31
Notes | 2007 | 2006 | Notes | 2008 | 2007 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Higher Education | 1,031 | 780 | ||||||||||||||||||||||
School Curriculum (2006: School Book) | 867 | 683 | ||||||||||||||||||||||
School Assessment and Information (2006: School Assessment and Testing) | 540 | 342 | ||||||||||||||||||||||
School Technology | — | 356 | ||||||||||||||||||||||
Other Assessment and Testing | 247 | 490 | ||||||||||||||||||||||
Technology and Business Publishing (2006: Other Book) | 55 | 56 | ||||||||||||||||||||||
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 | 2,740 | 2,707 | 3,821 | 2,740 | ||||||||||||||||||||
Financial Times | 46 | 12 | ||||||||||||||||||||||
Mergermarket | 130 | 126 | ||||||||||||||||||||||
Interactive Data | 208 | 147 | ||||||||||||||||||||||
FT Group total | 384 | 285 | ||||||||||||||||||||||
Penguin US | 155 | 156 | 216 | 155 | ||||||||||||||||||||
Penguin UK | 111 | 114 | 95 | 111 | ||||||||||||||||||||
Pearson Australia | 52 | 44 | 54 | 52 | ||||||||||||||||||||
Penguin total | 318 | 314 | 365 | 318 | ||||||||||||||||||||
Financial Times | 12 | 4 | ||||||||||||||||||||||
Mergermarket | 126 | 97 | ||||||||||||||||||||||
Interactive Data | 147 | 149 | ||||||||||||||||||||||
FT Group total | 285 | 250 | ||||||||||||||||||||||
Total goodwill — continuing operations | 3,343 | 3,271 | 4,570 | 3,343 | ||||||||||||||||||||
Goodwill held for sale | 30 | 96 | 221 | 31 | — | 96 | ||||||||||||||||||
Total goodwill | 3,439 | 3,492 | 4,570 | 3,439 | ||||||||||||||||||||
F-31
F-32
Investments in joint ventures and associates |
2007 | 2006 | |||||||||||||||
All figures in | 2008 | 2007 | ||||||||||||||
£ millions | All figures in £ millions | |||||||||||||||
At beginning of year | 12 | 12 | 11 | 12 | ||||||||||||
Exchange differences | — | (3 | ) | (4 | ) | — | ||||||||||
Share of profit after tax | 4 | 3 | 6 | 4 | ||||||||||||
Dividends | (8 | ) | (4 | ) | (5 | ) | (8 | ) | ||||||||
Additions and further investment | 3 | 4 | 5 | 3 | ||||||||||||
At end of year | 11 | 12 | 13 | 11 | ||||||||||||
F-32
2007 | 2006 | |||||||||||||||
All figures in | 2008 | 2007 | ||||||||||||||
£ millions | All figures in £ millions | |||||||||||||||
Assets | ||||||||||||||||
Non-current assets | 3 | 3 | 6 | 3 | ||||||||||||
Current assets | 23 | 24 | 21 | 23 | ||||||||||||
Liabilities | ||||||||||||||||
Current liabilities | (15 | ) | (15 | ) | (14 | ) | (15 | ) | ||||||||
Net assets | 11 | 12 | 13 | 11 | ||||||||||||
Income | 61 | 52 | 36 | 61 | ||||||||||||
Expenses | (57 | ) | (49 | ) | (30 | ) | (57 | ) | ||||||||
Profit after income tax | 4 | 3 | 6 | 4 | ||||||||||||
F-33
2007 | 2006 | |||||||||||||||
All figures in | 2008 | 2007 | ||||||||||||||
£ millions | All figures in £ millions | |||||||||||||||
At beginning of year | 8 | 24 | 9 | 8 | ||||||||||||
Exchange differences | (1 | ) | (1 | ) | (5 | ) | (1 | ) | ||||||||
Share of profit after tax | 19 | 21 | 19 | 19 | ||||||||||||
Dividends | (24 | ) | (41 | ) | (16 | ) | (24 | ) | ||||||||
Additions | 1 | — | — | 1 | ||||||||||||
Distribution from associate in excess of carrying value | 6 | 5 | 6 | 6 | ||||||||||||
Actuarial losses on retirement benefit obligations | (3 | ) | — | |||||||||||||
At end of year | 9 | 8 | 10 | 9 | ||||||||||||
% | % | |||||||||||||||||||||||||||||||||||||||||||||||
2007 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||||||||||||||||||||||||||
2008 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 63 | (63 | ) | 131 | 15 | England | 50 | 86 | (86 | ) | 149 | 16 | ||||||||||||||||||||||||||||||||||
Other | 30 | (21 | ) | 56 | 4 | 35 | (25 | ) | 42 | 3 | ||||||||||||||||||||||||||||||||||||||
Total | 93 | (84 | ) | 187 | 19 | 121 | (111 | ) | 191 | 19 | ||||||||||||||||||||||||||||||||||||||
% | % | |||||||||||||||||||||||||||||||||||||||||||||||
2006 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||||||||||||||||||||||||||
2007 | Country of incorporation | Interest held | Assets | Liabilities | Revenues | Profit | ||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
The Economist Newspaper Ltd | England | 50 | 64 | (64 | ) | 122 | 18 | England | 50 | 63 | (63 | ) | 131 | 15 | ||||||||||||||||||||||||||||||||||
Other | 28 | (20 | ) | 48 | 3 | 30 | (21 | ) | 56 | 4 | ||||||||||||||||||||||||||||||||||||||
Total | 92 | (84 | ) | 170 | 21 | 93 | (84 | ) | 187 | 19 | ||||||||||||||||||||||||||||||||||||||
F-33
Deferred income tax |
2007 | 2006 | |||||||||||||||
All figures in | 2008 | 2007 | ||||||||||||||
£ millions | All figures in £ millions | |||||||||||||||
Deferred income tax assets | ||||||||||||||||
Deferred income tax assets to be recovered after more than 12 months | 262 | 288 | 341 | 262 | ||||||||||||
Deferred income tax assets to be recovered within 12 months | 66 | 129 | 31 | 66 | ||||||||||||
328 | 417 | 372 | 328 | |||||||||||||
Deferred income tax liabilities | ||||||||||||||||
Deferred income tax liabilities to be settled after more than 12 months | (287 | ) | (245 | ) | (447 | ) | (287 | ) | ||||||||
Deferred income tax liabilities to be settled within 12 months | — | — | — | — | ||||||||||||
(287 | ) | (245 | ) | (447 | ) | (287 | ) | |||||||||
Net deferred income tax | 41 | 172 | (75 | ) | 41 | |||||||||||
F-34
Notes | 2007 | 2006 | ||||||||||||||||||||||
All figures in | Notes | 2008 | 2007 | |||||||||||||||||||||
£ millions | All figures in £ millions | |||||||||||||||||||||||
At beginning of year | 172 | 181 | 41 | 172 | ||||||||||||||||||||
Exchange differences | (4 | ) | (16 | ) | (12 | ) | (4 | ) | ||||||||||||||||
Income statement (charge)/benefit | 8 | (87 | ) | 19 | ||||||||||||||||||||
Income statement charge | 7 | (93 | ) | (87 | ) | |||||||||||||||||||
Acquisition through business combination | 30 | (45 | ) | (26 | ) | 30 | (4 | ) | (45 | ) | ||||||||||||||
Disposal through business disposal | 32 | 2 | — | 32 | — | 2 | ||||||||||||||||||
Tax benefit to equity | 3 | 14 | ||||||||||||||||||||||
Tax (charge)/benefit to equity | (7 | ) | 3 | |||||||||||||||||||||
At end of year | 41 | 172 | (75 | ) | 41 | |||||||||||||||||||
F-34
Capital | Trading | Goodwill and | Returns | Capital | Trading | Goodwill and | Returns | |||||||||||||||||||||||||||||||||||||||||
losses | losses | intangibles | provisions | Other | Total | losses | losses | intangibles | provisions | Other | Total | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Deferred income tax asset | ||||||||||||||||||||||||||||||||||||||||||||||||
At 1 January 2006 | — | 134 | 35 | 83 | 133 | 385 | ||||||||||||||||||||||||||||||||||||||||||
Exchange differences | — | (17 | ) | (4 | ) | (10 | ) | (11 | ) | (42 | ) | |||||||||||||||||||||||||||||||||||||
Income statement benefit/(charge) | 76 | 12 | (6 | ) | (7 | ) | (12 | ) | 63 | |||||||||||||||||||||||||||||||||||||||
Tax benefit to equity | — | — | — | — | 11 | 11 | ||||||||||||||||||||||||||||||||||||||||||
At 31 December 2006 | 76 | 129 | 25 | 66 | 121 | 417 | ||||||||||||||||||||||||||||||||||||||||||
Deferred income tax assets | ||||||||||||||||||||||||||||||||||||||||||||||||
At 1 January 2007 | 76 | 129 | 25 | 66 | 121 | 417 | ||||||||||||||||||||||||||||||||||||||||||
Exchange differences | — | (5 | ) | — | (1 | ) | (2 | ) | (8 | ) | — | (5 | ) | — | (1 | ) | (2 | ) | (8 | ) | ||||||||||||||||||||||||||||
Acquisition through business combination | — | 10 | — | — | 1 | 11 | — | 10 | — | — | 1 | 11 | ||||||||||||||||||||||||||||||||||||
Income statement (charge)/benefit | (76 | ) | (47 | ) | (5 | ) | 14 | 19 | (95 | ) | (76 | ) | (47 | ) | (5 | ) | 14 | 19 | (95 | ) | ||||||||||||||||||||||||||||
Tax benefit to equity | — | — | — | — | 3 | 3 | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||||||||||||||
At 31 December 2007 | — | 87 | 20 | 79 | 142 | 328 | — | 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 | ||||||||||||||||||||||||||||||||||||||||||
F-35
Goodwill and | Goodwill and | |||||||||||||||||||||||
intangibles | Other | Total | intangibles | Other | Total | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Deferred income tax liabilities | ||||||||||||||||||||||||
At 1 January 2006 | (117 | ) | (87 | ) | (204 | ) | ||||||||||||||||||
Exchange differences | 15 | 11 | 26 | |||||||||||||||||||||
Acquisition through business combination | (20 | ) | (6 | ) | (26 | ) | ||||||||||||||||||
Income statement charge | (27 | ) | (17 | ) | (44 | ) | ||||||||||||||||||
Tax benefit to equity | — | 3 | 3 | |||||||||||||||||||||
At 31 December 2006 | (149 | ) | (96 | ) | (245 | ) | ||||||||||||||||||
At 1 January 2007 | (149 | ) | (96 | ) | (245 | ) | ||||||||||||||||||
Exchange differences | 3 | 1 | 4 | 3 | 1 | 4 | ||||||||||||||||||
Acquisition through business combination | (56 | ) | — | (56 | ) | (56 | ) | — | (56 | ) | ||||||||||||||
Disposal through business disposal | — | 2 | 2 | — | 2 | 2 | ||||||||||||||||||
Income statement (charge)/benefit | (12 | ) | 20 | 8 | (12 | ) | 20 | 8 | ||||||||||||||||
Tax benefit to equity | — | — | — | — | — | — | ||||||||||||||||||
At 31 December 2007 | (214 | ) | (73 | ) | (287 | ) | (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
14. | 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 |
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 | ||||||
16. | Derivative financial instruments |
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
17. | Cash and cash equivalents (excluding overdrafts) |
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Cash at bank and in hand | 528 | 439 | ||||||
Short-term bank deposits | 157 | 121 | ||||||
685 | 560 | |||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Cash and cash equivalents | 685 | 560 | ||||||
Bank overdrafts | (96 | ) | (68 | ) | ||||
589 | 492 | |||||||
F-39
18. | Financial |
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 | ||||||
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
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 | |||||||||||||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
US dollar | 2,081 | 1,251 | ||||||
Sterling | 277 | 357 | ||||||
Euro | 5 | — | ||||||
2,363 | 1,608 | |||||||
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
18. | 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-36
2007 | ||||||||||||
Net carrying | ||||||||||||
amount | +1% change | −1% change | ||||||||||
£ millions | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 10 | (24 | ) | 26 | ||||||||
Interest rate derivatives — not in hedge relationship | (1 | ) | 1 | (1 | ) | |||||||
Cross currency rate derivatives — in a net investment hedge relationship | 17 | — | — | |||||||||
Cross currency rate derivatives — not in hedge relationship | 9 | — | — | |||||||||
Total | 35 | (23 | ) | 25 | ||||||||
2006 | ||||||||||||
Net carrying | ||||||||||||
amount | +1% change | −1% change | ||||||||||
£ millions | ||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 3 | (28 | ) | 31 | ||||||||
Interest rate derivatives — not in hedge relationship | 7 | 1 | (1 | ) | ||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 40 | — | — | |||||||||
Cross currency rate derivatives — not in hedge relationship | 17 | (1 | ) | 1 | ||||||||
Total | 67 | (28 | ) | 31 | ||||||||
F-37
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 | ) | ||||
2007 | 2006 | |||||||
£ millions | ||||||||
Fixed rate | 567 | 514 | ||||||
Floating rate | 406 | 545 | ||||||
Total | 973 | 1,059 | ||||||
2007 | 2006 | |||||||
£ millions | ||||||||
Bank debt | 458 | 177 | ||||||
Bonds | 1,150 | 1,566 | ||||||
Total | 1,608 | 1,743 | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Fixed rate | 781 | 567 | ||||||
Floating rate | 679 | 406 | ||||||
Total | 1,460 | 973 | ||||||
2007 | ||||||||||||||||||||||||
Currency | 2006 | |||||||||||||||||||||||
As reported | derivatives | Combined | Combined | 2008 | 2007 | |||||||||||||||||||
£ millions | All figures in £ millions | |||||||||||||||||||||||
US dollar | 1,251 | 150 | 1,401 | 1,253 | 2,081 | 1,401 | ||||||||||||||||||
Sterling | 357 | (150 | ) | 207 | 206 | 277 | 207 | |||||||||||||||||
Euro | — | — | — | 284 | 5 | — | ||||||||||||||||||
Total | 1,608 | — | 1,608 | 1,743 | 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-38F-44
2007 | ||||||||||||||||||||
Impact of 1% | Impact of 1% | Impact of 10% | Impact of 10% | |||||||||||||||||
Carrying | increase in | decrease in | strengthening in | weakening in | ||||||||||||||||
value | interest rates | interest rates | sterling | sterling | ||||||||||||||||
All amounts in £ millions | ||||||||||||||||||||
Investments in unlisted securities | 52 | — | — | (4 | ) | 5 | ||||||||||||||
Cash and cash equivalents | 560 | — | — | (36 | ) | 44 | ||||||||||||||
Marketable securities | 40 | — | — | (3 | ) | 4 | ||||||||||||||
Derivative financial instruments | 35 | (23 | ) | 25 | 11 | (13 | ) | |||||||||||||
Bonds | (1,150 | ) | 24 | (26 | ) | 71 | (87 | ) | ||||||||||||
Other borrowings | (458 | ) | — | — | 42 | (51 | ) | |||||||||||||
Other net financial assets | 408 | — | — | (29 | ) | 35 | ||||||||||||||
Total financial instruments | (513 | ) | 1 | (1 | ) | 52 | (63 | ) | ||||||||||||
F-39
2006 | ||||||||||||||||||||
Impact of 1% | Impact of 1% | Impact of 10% | Impact of 10% | |||||||||||||||||
Carrying | increase in | decrease in | strengthening in | weakening in | ||||||||||||||||
value | interest rates | interest rates | sterling | sterling | ||||||||||||||||
All amounts in £ millions | ||||||||||||||||||||
Investments in unlisted securities | 17 | — | — | (1 | ) | 1 | ||||||||||||||
Cash and cash equivalents | 592 | — | — | (38 | ) | 46 | ||||||||||||||
Marketable securities | 25 | — | — | (2 | ) | 2 | ||||||||||||||
Derivative financial instruments | 67 | (28 | ) | 31 | 8 | (10 | ) | |||||||||||||
Bonds | (1,566 | ) | 28 | (31 | ) | 108 | (132 | ) | ||||||||||||
Other borrowings | (177 | ) | — | — | 16 | (19 | ) | |||||||||||||
Other net financial assets | 425 | — | — | (31 | ) | 38 | ||||||||||||||
Total financial instruments | (617 | ) | — | — | 60 | (74 | ) | |||||||||||||
F-40
2007 | ||||||||||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||||||||
Derivatives | Derivatives | Amortised cost | Total | Total | ||||||||||||||||||||||||||||
Available | deemed held | in hedging | Loans and | Other | carrying | market | ||||||||||||||||||||||||||
Notes | for sale | for trading | relationships | receivables | liabilities | value | value | |||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||
Investments in unlisted securities | 16 | 52 | — | — | — | — | 52 | 52 | ||||||||||||||||||||||||
Marketable securities | 40 | — | — | — | — | 40 | 40 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | 16 | 35 | — | — | 51 | 51 | ||||||||||||||||||||||||
Trade receivables | 20 | — | — | — | 750 | — | 750 | 750 | ||||||||||||||||||||||||
Cash and cash equivalents | 21 | — | — | — | 560 | — | 560 | 560 | ||||||||||||||||||||||||
Total financial assets | 92 | 16 | 35 | 1,310 | — | 1,453 | 1,453 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | (8 | ) | (8 | ) | — | — | (16 | ) | (16 | ) | ||||||||||||||||||||
Trade payables | 24 | — | — | — | — | (342 | ) | (342 | ) | (342 | ) | |||||||||||||||||||||
Bank loans and overdrafts | 22 | — | — | — | — | (444 | ) | (444 | ) | (444 | ) | |||||||||||||||||||||
Borrowings due within one year | 22 | — | — | — | — | (115 | ) | (115 | ) | (112 | ) | |||||||||||||||||||||
Borrowings due after more than one year | 22 | — | — | — | — | (1,049 | ) | (1,049 | ) | (1,046 | ) | |||||||||||||||||||||
Total financial liabilities | — | (8 | ) | (8 | ) | — | (1,950 | ) | (1,966 | ) | (1,960 | ) | ||||||||||||||||||||
F-41
2006 | ||||||||||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||||||||
Derivatives | Derivatives | Amortised cost | Total | Total | ||||||||||||||||||||||||||||
Available | deemed held | in hedging | Loans and | Other | carrying | market | ||||||||||||||||||||||||||
Notes | for sale | for trading | relationships | receivables | liabilities | value | value | |||||||||||||||||||||||||
All figures in £ millions | ||||||||||||||||||||||||||||||||
Investments in unlisted securities | 16 | 17 | — | — | — | — | 17 | 17 | ||||||||||||||||||||||||
Marketable securities | 25 | — | — | — | — | 25 | 25 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | 25 | 61 | — | — | 86 | 86 | ||||||||||||||||||||||||
Trade receivables | 20 | — | — | — | 768 | — | 768 | 768 | ||||||||||||||||||||||||
Cash and cash equivalents | 21 | — | — | — | 592 | — | 592 | 592 | ||||||||||||||||||||||||
Total financial assets | 42 | 25 | 61 | 1,360 | — | 1,488 | 1,488 | |||||||||||||||||||||||||
Derivative financial instruments | 17 | — | (2 | ) | (17 | ) | — | — | (19 | ) | (19 | ) | ||||||||||||||||||||
Trade payables | 24 | — | — | — | — | (343 | ) | (343 | ) | (343 | ) | |||||||||||||||||||||
Bank loans and overdrafts | 22 | — | — | — | — | (173 | ) | (173 | ) | (173 | ) | |||||||||||||||||||||
Borrowings due within one year | 22 | — | — | — | — | (422 | ) | (422 | ) | (400 | ) | |||||||||||||||||||||
Borrowings due after more than one year | 22 | — | — | — | — | (1,148 | ) | (1,148 | ) | (1,157 | ) | |||||||||||||||||||||
Total financial liabilities | — | (2 | ) | (17 | ) | — | (2,086 | ) | (2,105 | ) | (2,092 | ) | ||||||||||||||||||||
F-42
2007 | ||||||||||||||||
USD | GBP | EUR | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Not later than one year | 153 | (30 | ) | — | 123 | |||||||||||
Later than one year and not later than five years | 966 | 70 | — | 1,036 | ||||||||||||
Later than five years | 420 | 285 | — | 705 | ||||||||||||
Total | 1,539 | 325 | — | 1,864 | ||||||||||||
Analysed as: | ||||||||||||||||
Revolving credit facilities and commercial paper | 429 | — | — | 429 | ||||||||||||
Bonds | 1,017 | 483 | — | 1,500 | ||||||||||||
Rate derivatives — inflows | (268 | ) | (160 | ) | — | (428 | ) | |||||||||
Rate derivatives — outflows | 361 | 2 | — | 363 | ||||||||||||
Total | 1,539 | 325 | — | 1,864 | ||||||||||||
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 | ||||||||||||
2006 | 2007 | |||||||||||||||||||||||||||||||
USD | GBP | EUR | Total | USD | GBP | EUR | Total | |||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||
Not later than one year | 166 | 18 | 265 | 449 | 153 | (30 | ) | — | 123 | |||||||||||||||||||||||
Later than one year and not later than five years | 758 | 60 | — | 818 | 966 | 70 | — | 1,036 | ||||||||||||||||||||||||
Later than five years | 478 | 242 | — | 720 | 420 | 285 | — | 705 | ||||||||||||||||||||||||
Total | 1,402 | 320 | 265 | 1,987 | 1,539 | 325 | — | 1,864 | ||||||||||||||||||||||||
Analysed as: | ||||||||||||||||||||||||||||||||
Revolving credit facilities and commercial paper | 99 | — | — | 99 | 429 | — | — | 429 | ||||||||||||||||||||||||
Bonds | 1,045 | 511 | 423 | 1,979 | 1,017 | 483 | — | 1,500 | ||||||||||||||||||||||||
Rate derivatives — inflows | (318 | ) | (329 | ) | (192 | ) | (839 | ) | (268 | ) | (160 | ) | — | (428 | ) | |||||||||||||||||
Rate derivatives — outflows | 576 | 138 | 34 | 748 | 361 | 2 | — | 363 | ||||||||||||||||||||||||
Total | 1,402 | 320 | 265 | 1,987 | 1,539 | 325 | — | 1,864 | ||||||||||||||||||||||||
Financial counterparty risk management |
Notes | 2007 | 2006 | ||||||||||
All figures in £ millions | ||||||||||||
At beginning of year | 17 | 18 | ||||||||||
Exchange differences | — | (1 | ) | |||||||||
Equity interest received on sale of Government Solutions | 32 | 35 | — | |||||||||
At end of year | 52 | 17 | ||||||||||
F-43F-45
2007 | 2006 | |||||||||||||||||||||||
Gross notional | Gross notional | |||||||||||||||||||||||
amounts | Assets | Liabilities | amounts | Assets | Liabilities | |||||||||||||||||||
Interest rate derivatives — in a fair value hedge relationship | 522 | 18 | (8 | ) | 953 | 20 | (17 | ) | ||||||||||||||||
Interest rate derivatives — not in a hedge relationship | 796 | 7 | (8 | ) | 1,026 | 9 | (2 | ) | ||||||||||||||||
Cross currency rate derivatives — in a net investment hedge relationship | 100 | 17 | — | 230 | 40 | — | ||||||||||||||||||
Cross currency rate derivatives — not in a hedge relationship | 50 | 9 | — | 180 | 17 | — | ||||||||||||||||||
Total | 1,468 | 51 | (16 | ) | 2,389 | 86 | (19 | ) | ||||||||||||||||
Analysed as expiring: | ||||||||||||||||||||||||
In less than one year | 320 | 28 | — | 976 | 50 | — | ||||||||||||||||||
Later than one year and not later than five years | 796 | 13 | (8 | ) | 1,005 | 26 | (4 | ) | ||||||||||||||||
Later than five years | 352 | 10 | (8 | ) | 408 | 10 | (15 | ) | ||||||||||||||||
Total | 1,468 | 51 | (16 | ) | 2,389 | 86 | (19 | ) | ||||||||||||||||
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
F-44
Intangible assets — Pre-publication |
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Cost | ||||||||||||||||
At beginning of year | 1,152 | 1,357 | 1,264 | 1,152 | ||||||||||||
Exchange differences | (7 | ) | (148 | ) | 494 | (7 | ) | |||||||||
Transfers | — | 6 | ||||||||||||||
Additions | 230 | 213 | 297 | 230 | ||||||||||||
Disposals | (125 | ) | (280 | ) | (345 | ) | (125 | ) | ||||||||
Acquisition through business combination | 19 | 4 | 78 | 19 | ||||||||||||
Transfer from software | 12 | — | ||||||||||||||
Transfer to non-current assets held for sale | (5 | ) | — | — | (5 | ) | ||||||||||
At end of year | 1,264 | 1,152 | 1,800 | 1,264 | ||||||||||||
Amortisation | ||||||||||||||||
At beginning of year | (750 | ) | (931 | ) | (814 | ) | (750 | ) | ||||||||
Exchange differences | 1 | 111 | (337 | ) | 1 | |||||||||||
Charge for the year | (192 | ) | (210 | ) | (244 | ) | (192 | ) | ||||||||
Disposals | 125 | 280 | 345 | 125 | ||||||||||||
Acquisition through business combination | (1 | ) | — | (51 | ) | (1 | ) | |||||||||
Transfer from software | (4 | ) | — | |||||||||||||
Transfer to non-current assets held for sale | 3 | — | — | 3 | ||||||||||||
At end of year | (814 | ) | (750 | ) | (1,105 | ) | (814 | ) | ||||||||
Carrying amounts | ||||||||||||||||
At end of year | 450 | 402 | 695 | 450 | ||||||||||||
F-47
Inventories |
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Raw materials | 24 | 26 | 31 | 24 | ||||||||||||
Work in progress | 30 | 28 | 29 | 30 | ||||||||||||
Finished goods | 314 | 300 | 441 | 314 | ||||||||||||
368 | 354 | 501 | 368 | |||||||||||||
F-45
Trade and other receivables |
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Current | ||||||||||||||||
Trade receivables | 750 | 768 | 1,030 | 750 | ||||||||||||
Royalty advances | 84 | 91 | 111 | 84 | ||||||||||||
Prepayments and accrued income | 48 | 34 | 62 | 48 | ||||||||||||
Other receivables | 59 | 58 | 135 | 59 | ||||||||||||
Receivables from related parties | 5 | 2 | 4 | 5 | ||||||||||||
946 | 953 | 1,342 | 946 | |||||||||||||
Non-current | ||||||||||||||||
Royalty advances | 68 | 80 | 102 | 68 | ||||||||||||
Prepayments and accrued income | 4 | 4 | 3 | 4 | ||||||||||||
Other receivables | 57 | 40 | 47 | 57 | ||||||||||||
129 | 124 | 152 | 129 | |||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
At beginning of year | (46 | ) | (45 | ) | (52 | ) | (46 | ) | ||||||||
Exchange differences | (1 | ) | 3 | (18 | ) | (1 | ) | |||||||||
Income statement movements | (19 | ) | (23 | ) | (27 | ) | (19 | ) | ||||||||
Utilised | 15 | 21 | 27 | 15 | ||||||||||||
Acquisition through business combination | (3 | ) | (2 | ) | (2 | ) | (3 | ) | ||||||||
Disposal through business disposal | 2 | — | — | 2 | ||||||||||||
At end of year | (52 | ) | (46 | ) | (72 | ) | (52 | ) | ||||||||
F-46F-48
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Within due date | 811 | 810 | 1,110 | 819 | ||||||||||||
Up to three months past due date | 161 | 177 | 248 | 171 | ||||||||||||
Three to six months past due date | 43 | 62 | 60 | 51 | ||||||||||||
Six to nine months past due date | 7 | 6 | 21 | 12 | ||||||||||||
Nine to 12 months past due date | 13 | 8 | 15 | 19 | ||||||||||||
More that 12 months past due date | 4 | 1 | ||||||||||||||
More than 12 months past due date | 20 | 19 | ||||||||||||||
Total trade receivables | 1,039 | 1,064 | 1,474 | 1,091 | ||||||||||||
Less: provision for bad and doubtful debts | (72 | ) | (52 | ) | ||||||||||||
Less: provision for sales returns | (281 | ) | (243 | ) | (372 | ) | (281 | ) | ||||||||
Transfer to non-current assets held for sale | (8 | ) | (53 | ) | — | (8 | ) | |||||||||
Net trade receivables | 750 | 768 | 1,030 | 750 | ||||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Cash at bank and in hand | 439 | 421 | ||||||
Short-term bank deposits | 121 | 171 | ||||||
560 | 592 | |||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Cash and cash equivalents | 560 | 592 | ||||||
Bank overdrafts | (68 | ) | (61 | ) | ||||
492 | 531 | |||||||
F-47
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Non-current | ||||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | — | 105 | ||||||
4.7% US Dollar Bonds 2009 (nominal amount $350m) | 176 | 178 | ||||||
7% Global Dollar Bonds 2011 (nominal amount $500m) | 264 | 266 | ||||||
7% Sterling Bonds 2014 (nominal amount £250m) | 251 | 251 | ||||||
5.7% US Dollar Bonds 2014 (nominal amount $400m) | 211 | 206 | ||||||
4.625% US Dollar notes 2018 (nominal amount $300m) | 143 | 139 | ||||||
Finance lease liabilities | 4 | 3 | ||||||
1,049 | 1,148 | |||||||
Current | ||||||||
Due within one year or on demand: | ||||||||
Bank loans and overdrafts | 444 | 173 | ||||||
6.125% Euro Bonds 2007 (nominal amount €591m) | — | 421 | ||||||
10.5% Sterling Bonds 2008 (nominal amount £100m) | 105 | — | ||||||
Loan notes | 8 | — | ||||||
Finance lease liabilities | 2 | 1 | ||||||
559 | 595 | |||||||
Total borrowings | 1,608 | 1,743 | ||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Between one and two years | 178 | 107 | ||||||
Between two and five years | 266 | 445 | ||||||
Over five years | 605 | 596 | ||||||
1,049 | 1,148 | |||||||
Less than | One to | More than | ||||||||||||||
one year | five years | five years | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
Carrying value of borrowings | 559 | 444 | 605 | 1,608 | ||||||||||||
Effect of rate derivatives | 359 | (7 | ) | (352 | ) | — | ||||||||||
918 | 437 | 253 | 1,608 | |||||||||||||
F-48
Carrying | Carrying | |||||||||||||||||||
Effective | amount | Market value | amount | Market value | ||||||||||||||||
interest rate | 2007 | 2007 | 2006 | 2006 | ||||||||||||||||
All figures in £ millions | ||||||||||||||||||||
10.5% Sterling Bonds 2008 | 10.53 | % | — | — | 105 | 106 | ||||||||||||||
4.7% US Dollar Bonds 2009 | 4.86 | % | 176 | 176 | 178 | 176 | ||||||||||||||
7% Global Dollar Bonds 2011 | 7.16 | % | 264 | 267 | 266 | 269 | ||||||||||||||
7% Sterling Bonds 2014 | 7.20 | % | 251 | 261 | 251 | 265 | ||||||||||||||
5.7% US Dollar Bonds 2014 | 5.88 | % | 211 | 203 | 206 | 203 | ||||||||||||||
4.625% US Dollar notes 2018 | 4.69 | % | 143 | 135 | 139 | 135 | ||||||||||||||
Finance lease liabilities | n/a | 4 | 4 | 3 | 3 | |||||||||||||||
1,049 | 1,046 | 1,148 | 1,157 | |||||||||||||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
US dollar | 1,251 | 966 | ||||||
Sterling | 357 | 356 | ||||||
Euro | — | 421 | ||||||
1,608 | 1,743 | |||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Floating rate | ||||||||
— expiring within one year | — | — | ||||||
— expiring beyond one year | 1,007 | 894 | ||||||
1,007 | 894 | |||||||
F-49
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Finance lease liabilities — minimum lease payments | ||||||||
Not later than one year | 2 | 1 | ||||||
Later than one year and not later than two years | 2 | 3 | ||||||
Later than two years and not later than three years | 1 | — | ||||||
Later than three years and not later than four years | 1 | — | ||||||
Later than four years and not later than five years | — | — | ||||||
Later than five years | — | — | ||||||
Future finance charges on finance leases | — | — | ||||||
Present value of finance lease liabilities | 6 | 4 | ||||||
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Not later than one year | 2 | 1 | ||||||
Later than one year and not later than five years | 4 | 3 | ||||||
Later than five years | — | — | ||||||
6 | 4 | |||||||
23. | Provisions for other liabilities and charges |
Deferred | ||||||||||||||||
consideration | Leases | Other | Total | |||||||||||||
All figures in £ millions | ||||||||||||||||
At 1 January 2007 | 25 | 12 | 15 | 52 | ||||||||||||
Exchange differences | (1 | ) | — | (1 | ) | (2 | ) | |||||||||
Charged to consolidated income statement | ||||||||||||||||
— Additional provisions: interest | 2 | — | — | 2 | ||||||||||||
— Additional provisions: prior year adjustments | 3 | — | — | 3 | ||||||||||||
— Additional provisions: other | — | — | 12 | 12 | ||||||||||||
— Unused amounts reversed | — | (1 | ) | (1 | ) | (2 | ) | |||||||||
Acquisition through business combination | 12 | — | 2 | 14 | ||||||||||||
Disposal through business disposal | — | — | (1 | ) | (1 | ) | ||||||||||
Utilised | (4 | ) | (2 | ) | (5 | ) | (11 | ) | ||||||||
At 31 December 2007 | 37 | 9 | 21 | 67 | ||||||||||||
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 | ||||||||||||
F-50
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Analysis of provisions | ||||||||||||||||
Non-current | 44 | 29 | 33 | 44 | ||||||||||||
Current | 23 | 23 | 56 | 23 | ||||||||||||
67 | 52 | 89 | 67 | |||||||||||||
F-49
24. | Trade and other liabilities |
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Trade payables | 342 | 343 | 450 | 342 | ||||||||||||
Social security and other taxes | 23 | 18 | 35 | 23 | ||||||||||||
Accruals | 402 | 345 | 501 | 402 | ||||||||||||
Deferred income | 290 | 276 | 444 | 290 | ||||||||||||
Dividends payable to minority | 12 | — | ||||||||||||||
Interest payable | 10 | — | ||||||||||||||
Dividends payable to minority interest | 5 | 12 | ||||||||||||||
Other liabilities | 171 | 178 | 205 | 171 | ||||||||||||
1,240 | 1,160 | 1,650 | 1,240 | |||||||||||||
Less: non-current portion | ||||||||||||||||
Accruals | 30 | 24 | 42 | 30 | ||||||||||||
Deferred income | 58 | 47 | 87 | 58 | ||||||||||||
Interest payable | 1 | — | ||||||||||||||
Other liabilities | 102 | 91 | 91 | 102 | ||||||||||||
190 | 162 | 221 | 190 | |||||||||||||
Current portion | 1,050 | 998 | 1,429 | 1,050 | ||||||||||||
• | multi-year obligations to deliver workbooks to adoption customers in school businesses; | |
• | advance payments in | |
• | subscription income in school, newspaper and market pricing businesses; | |
• | advertising income relating to future publishing days in newspaper businesses; and | |
• | obligations to deliver digital content in future periods. |
F-51
25. | Retirement benefit and other post-retirement obligations |
F-50
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
UK Group | Other | UK Group | Other | UK Group | Other | UK Group | Other | UK Group | Other | UK Group | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inflation | 3.30 | 2.93 | 3.00 | 3.00 | 2.91 | 3.00 | 2.80 | 2.95 | 3.00 | 2.80 | 2.80 | 2.80 | 3.30 | 2.93 | 3.00 | 3.00 | 2.91 | 3.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rate used to discount plan liabilities | 5.80 | 6.01 | 6.05 | 5.20 | 5.70 | 5.85 | 4.85 | 5.54 | 5.60 | 6.40 | 6.25 | 6.25 | 5.80 | 6.01 | 6.05 | 5.20 | 5.70 | 5.85 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected return on assets | 6.50 | 7.27 | — | 6.40 | 7.18 | — | 6.40 | 7.31 | — | 6.33 | 7.60 | — | 6.50 | 7.27 | — | 6.40 | 7.18 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected rate of increase in salaries | 5.00 | 4.36 | — | 4.70 | 4.37 | — | 4.50 | 4.43 | — | 4.30 | 4.50 | — | 5.00 | 4.36 | — | 4.70 | 4.37 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected rate of increase for pensions in payment and deferred pensions | 2.50 to 4.30 | — | — | 2.10 to 4.60 | — | — | 2.50 to 4.00 | — | — | 2.30 to 4.20 | — | — | 2.50 to 4.30 | — | — | 2.10 to 4.60 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Initial rate of increase in healthcare rate | — | — | 9.50 | — | — | 10.00 | — | — | 10.00 | — | — | 9.00 | — | — | 9.50 | — | — | 10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ultimate rate of increase in healthcare rate | — | — | 5.00 | — | — | 5.00 | — | — | 5.00 | — | — | 5.00 | — | — | 5.00 | — | — | 5.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-52
UK | US | UK | US | |||||||||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||||||||
Male | 21.3 | 20.9 | 17.9 | 17.9 | 21.5 | 21.3 | 17.6 | 17.9 | ||||||||||||||||||||||||
Female | 21.6 | 21.3 | 21.3 | 21.3 | 21.8 | 21.6 | 20.2 | 21.3 |
UK | US | UK | US | |||||||||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||||||||
Male | 23.1 | 22.2 | 17.9 | 17.9 | 23.3 | 23.1 | 17.6 | 17.9 | ||||||||||||||||||||||||
Female | 23.6 | 22.5 | 21.3 | 21.3 | 23.8 | 23.6 | 20.2 | 21.3 |
F-51
2007 | 2008 | |||||||||||||||||||||||||||||||||||||||||||||||
Defined | Defined | |||||||||||||||||||||||||||||||||||||||||||||||
UK Group | benefit | Defined | UK Group | benefit | Defined | |||||||||||||||||||||||||||||||||||||||||||
plan | other | Sub total | contribution | PRMB | Total | plan | other | Sub-total | contribution | PRMB | Total | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Current service cost | 29 | 2 | 31 | 39 | 1 | 71 | 33 | 3 | 36 | 41 | 1 | 78 | ||||||||||||||||||||||||||||||||||||
Past service cost | — | 1 | 1 | — | 5 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Total operating expense | 29 | 2 | 31 | 39 | 1 | 71 | 33 | 4 | 37 | 41 | 6 | 84 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (96 | ) | (7 | ) | (103 | ) | — | — | (103 | ) | (104 | ) | (7 | ) | (111 | ) | — | — | (111 | ) | ||||||||||||||||||||||||||||
Interest on plan liabilities | 84 | 7 | 91 | — | 2 | 93 | 93 | 7 | 100 | — | 3 | 103 | ||||||||||||||||||||||||||||||||||||
Net finance (income)/expense | (12 | ) | — | (12 | ) | — | 2 | (10 | ) | (11 | ) | — | (11 | ) | — | 3 | (8 | ) | ||||||||||||||||||||||||||||||
Net income statement charge | 17 | 2 | 19 | 39 | 3 | 61 | 22 | 4 | 26 | 41 | 9 | 76 | ||||||||||||||||||||||||||||||||||||
Actual return on plan assets | 128 | 4 | 132 | — | — | 132 | ||||||||||||||||||||||||||||||||||||||||||
Actual (loss)/return on plan assets | (130 | ) | (27 | ) | (157 | ) | — | — | (157 | ) | ||||||||||||||||||||||||||||||||||||||
2006 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||
Defined | Defined | |||||||||||||||||||||||||||||||||||||||||||||||
UK Group | benefit | Defined | UK Group | benefit | Defined | |||||||||||||||||||||||||||||||||||||||||||
plan | other | Sub total | contribution | PRMB | Total | plan | other | Sub-total | contribution | PRMB | Total | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Current service cost | 27 | 2 | 29 | 36 | 1 | 66 | 29 | 2 | 31 | 39 | 1 | 71 | ||||||||||||||||||||||||||||||||||||
Past service cost | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||||||||
Total operating expense/(income) | 27 | 2 | 29 | 36 | (1 | ) | 64 | |||||||||||||||||||||||||||||||||||||||||
Total operating expense | 29 | 2 | 31 | 39 | 1 | 71 | ||||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (85 | ) | (7 | ) | (92 | ) | — | — | (92 | ) | (96 | ) | (7 | ) | (103 | ) | — | — | (103 | ) | ||||||||||||||||||||||||||||
Interest on plan liabilities | 78 | 7 | 85 | — | 3 | 88 | 84 | 7 | 91 | — | 2 | 93 | ||||||||||||||||||||||||||||||||||||
Net finance (income)/expense | (7 | ) | — | (7 | ) | — | 3 | (4 | ) | (12 | ) | — | (12 | ) | — | 2 | (10 | ) | ||||||||||||||||||||||||||||||
Net income statement charge | 20 | 2 | 22 | 36 | 2 | 60 | 17 | 2 | 19 | 39 | 3 | 61 | ||||||||||||||||||||||||||||||||||||
Actual return on plan assets | 153 | 13 | 166 | — | — | 166 | ||||||||||||||||||||||||||||||||||||||||||
Actual (loss)/return on plan assets | 128 | 4 | 132 | — | — | 132 | ||||||||||||||||||||||||||||||||||||||||||
F-53
2005 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||||
Defined | Defined | |||||||||||||||||||||||||||||||||||||||||||||||
UK Group | benefit | Defined | UK Group | benefit | Defined | |||||||||||||||||||||||||||||||||||||||||||
plan | other | Sub total | contribution | PRMB | Total | plan | other | Sub-total | contribution | PRMB | Total | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Current service cost | 25 | 2 | 27 | 34 | 1 | 62 | 27 | 2 | 29 | 36 | 1 | 66 | ||||||||||||||||||||||||||||||||||||
Curtailments | — | (2 | ) | (2 | ) | — | — | (2 | ) | |||||||||||||||||||||||||||||||||||||||
Past service cost | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||||||||
Total operating expense/(income) | 25 | — | 25 | 34 | 1 | 60 | ||||||||||||||||||||||||||||||||||||||||||
Total operating expense | 27 | 2 | 29 | 36 | (1 | ) | 64 | |||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (75 | ) | (6 | ) | (81 | ) | — | — | (81 | ) | (85 | ) | (7 | ) | (92 | ) | — | — | (92 | ) | ||||||||||||||||||||||||||||
Interest on plan liabilities | 79 | 6 | 85 | — | 3 | 88 | 78 | 7 | 85 | — | 3 | 88 | ||||||||||||||||||||||||||||||||||||
Net finance (income)/expense | 4 | — | 4 | — | 3 | 7 | (7 | ) | — | (7 | ) | — | 3 | (4 | ) | |||||||||||||||||||||||||||||||||
Net income statement charge | 29 | — | 29 | 34 | 4 | 67 | 20 | 2 | 22 | 36 | 2 | 60 | ||||||||||||||||||||||||||||||||||||
Actual return on plan assets | 214 | 7 | 221 | — | — | 221 | ||||||||||||||||||||||||||||||||||||||||||
Actual (loss)/return on plan assets | 153 | 13 | 166 | — | — | 166 | ||||||||||||||||||||||||||||||||||||||||||
F-52
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | Other | Other | Other | Other | Other | Other | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
UK Group | funded | unfunded | UK Group | funded | unfunded | UK Group | funded | unfunded | UK Group | funded | unfunded | |||||||||||||||||||||||||||||||||||||||||||||||||||||
plan | plans | plans | Total | plan | plans | plans | Total | plan | plans | plans | Total | plan | plans | plans | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of plan assets | 1,744 | 109 | — | 1,853 | 1,528 | 105 | — | 1,633 | 1,478 | 100 | — | 1,578 | 1,744 | 109 | — | 1,853 | ||||||||||||||||||||||||||||||||||||||||||||||||
Present value of defined benefit obligation | (1,682 | ) | (117 | ) | (12 | ) | (1,811 | ) | (1,683 | ) | (115 | ) | (12 | ) | (1,810 | ) | (1,429 | ) | (149 | ) | (16 | ) | (1,594 | ) | (1,682 | ) | (117 | ) | (12 | ) | (1,811 | ) | ||||||||||||||||||||||||||||||||
Net pension asset/(liability) | 62 | (8 | ) | (12 | ) | 42 | (155 | ) | (10 | ) | (12 | ) | (177 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net pension (liability)/asset | 49 | (49 | ) | (16 | ) | (16 | ) | 62 | (8 | ) | (12 | ) | 42 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other post-retirement medical benefit obligation | (47 | ) | (48 | ) | (68 | ) | (47 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other pension accruals | (28 | ) | (25 | ) | (34 | ) | (28 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net retirement benefit obligations | (33 | ) | (250 | ) | (118 | ) | (33 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysed as: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement benefit asset | 62 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement benefit assets | 49 | 62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement benefit obligations | (95 | ) | (250 | ) | (167 | ) | (95 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Amounts recognised for defined benefit plans | 79 | 102 | 21 | (74 | ) | 79 | 102 | |||||||||||||||||
Amounts recognised for post-retirement medical benefit plans | 1 | 5 | 5 | 3 | 1 | 5 | ||||||||||||||||||
Total recognised in year | 80 | 107 | 26 | (71 | ) | 80 | 107 | |||||||||||||||||
Cumulative amounts recognised | 124 | 44 | (63 | ) | 53 | 124 | 44 | |||||||||||||||||
F-54
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||
Other | Other | Other | Other | |||||||||||||||||||||||||||||||||||||||||||||
UK Group | funded | UK Group | funded | UK Group | funded | UK Group | funded | |||||||||||||||||||||||||||||||||||||||||
plan | plans | Total | plan | plans | Total | plan | plans | Total | plan | plans | Total | |||||||||||||||||||||||||||||||||||||
% | % | |||||||||||||||||||||||||||||||||||||||||||||||
Equities | �� | 34.3 | 3.4 | 37.7 | 46.6 | 3.9 | 50.5 | 28.0 | 3.1 | 31.1 | 34.3 | 3.4 | 37.7 | |||||||||||||||||||||||||||||||||||
Bonds | 34.9 | 2.0 | 36.9 | 23.8 | 2.1 | 25.9 | 40.8 | 2.2 | 43.0 | 34.9 | 2.0 | 36.9 | ||||||||||||||||||||||||||||||||||||
Properties | 7.7 | — | 7.7 | 9.2 | — | 9.2 | 7.4 | 0.1 | 7.5 | 7.7 | — | 7.7 | ||||||||||||||||||||||||||||||||||||
Other | 17.2 | 0.5 | 17.7 | 14.0 | 0.4 | 14.4 | 17.5 | 0.9 | 18.4 | 17.2 | 0.5 | 17.7 |
F-53
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||
UK Group | Other | UK Group | Other | UK Group | Other | UK Group | Other | |||||||||||||||||||||||||||||||||||||||||
plan | plans | Total | plan | plans | Total | plan | plans | Total | plan | plans | Total | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Fair value of plan assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Opening fair value of plan assets | 1,528 | 105 | 1,633 | 1,390 | 110 | 1,500 | 1,744 | 109 | 1,853 | 1,528 | 105 | 1,633 | ||||||||||||||||||||||||||||||||||||
Exchange differences | — | 1 | 1 | — | (12 | ) | (12 | ) | — | 23 | 23 | — | 1 | 1 | ||||||||||||||||||||||||||||||||||
Expected return on plan assets | 96 | 7 | 103 | 85 | 7 | 92 | 104 | 7 | 111 | 96 | 7 | 103 | ||||||||||||||||||||||||||||||||||||
Actuarial gains and losses | 32 | (3 | ) | 29 | 68 | 6 | 74 | |||||||||||||||||||||||||||||||||||||||||
Actuarial gains and (losses) | (234 | ) | (34 | ) | (268 | ) | 32 | (3 | ) | 29 | ||||||||||||||||||||||||||||||||||||||
Contributions by employer | 152 | 5 | 157 | 43 | 2 | 45 | 54 | 3 | 57 | 152 | 5 | 157 | ||||||||||||||||||||||||||||||||||||
Contributions by employee | 8 | — | 8 | 7 | — | 7 | 9 | — | 9 | 8 | — | 8 | ||||||||||||||||||||||||||||||||||||
Benefits paid | (72 | ) | (6 | ) | (78 | ) | (65 | ) | (8 | ) | (73 | ) | (72 | ) | (8 | ) | (80 | ) | (72 | ) | (6 | ) | (78 | ) | ||||||||||||||||||||||||
Other movements | (127 | ) | — | (127 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Closing fair value of plan assets | 1,744 | 109 | 1,853 | 1,528 | 105 | 1,633 | 1,478 | 100 | 1,578 | 1,744 | 109 | 1,853 | ||||||||||||||||||||||||||||||||||||
Present value of defined benefit obligation | ||||||||||||||||||||||||||||||||||||||||||||||||
Opening defined benefit obligation | (1,683 | ) | (127 | ) | (1,810 | ) | (1,661 | ) | (142 | ) | (1,803 | ) | (1,682 | ) | (129 | ) | (1,811 | ) | (1,683 | ) | (127 | ) | (1,810 | ) | ||||||||||||||||||||||||
Exchange differences | — | 1 | 1 | — | 15 | 15 | — | (38 | ) | (38 | ) | — | 1 | 1 | ||||||||||||||||||||||||||||||||||
Current service cost | (29 | ) | (2 | ) | (31 | ) | (27 | ) | (2 | ) | (29 | ) | (33 | ) | (3 | ) | (36 | ) | (29 | ) | (2 | ) | (31 | ) | ||||||||||||||||||||||||
Past service cost | — | (1 | ) | (1 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Interest cost | (84 | ) | (7 | ) | (91 | ) | (78 | ) | (7 | ) | (85 | ) | (93 | ) | (7 | ) | (100 | ) | (84 | ) | (7 | ) | (91 | ) | ||||||||||||||||||||||||
Actuarial gains and losses | 50 | — | 50 | 25 | 3 | 28 | ||||||||||||||||||||||||||||||||||||||||||
Actuarial gains and (losses) | 189 | 5 | 194 | 50 | — | 50 | ||||||||||||||||||||||||||||||||||||||||||
Contributions by employee | (8 | ) | — | (8 | ) | (7 | ) | — | (7 | ) | (9 | ) | — | (9 | ) | (8 | ) | — | (8 | ) | ||||||||||||||||||||||||||||
Benefits paid | 72 | 6 | 78 | 65 | 8 | 73 | 72 | 8 | 80 | 72 | 6 | 78 | ||||||||||||||||||||||||||||||||||||
Acquisition through business combination | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||||||||
Other movements | 127 | — | 127 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Closing defined benefit obligation | (1,682 | ) | (129 | ) | (1,811 | ) | (1,683 | ) | (127 | ) | (1,810 | ) | (1,429 | ) | (165 | ) | (1,594 | ) | (1,682 | ) | (129 | ) | (1,811 | ) | ||||||||||||||||||||||||
F-55
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Opening defined benefit obligation | (48 | ) | (60 | ) | (47 | ) | (48 | ) | ||||||||
Exchange differences | — | 8 | (19 | ) | — | |||||||||||
Current service cost | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Past service cost | — | 2 | (5 | ) | — | |||||||||||
Interest cost | (2 | ) | (3 | ) | (3 | ) | (2 | ) | ||||||||
Actuarial gains and losses | 1 | 5 | ||||||||||||||
Actuarial gains and (losses) | 3 | 1 | ||||||||||||||
Benefits paid | 3 | 4 | 4 | 3 | ||||||||||||
Reclassifications | — | (3 | ) | |||||||||||||
Closing defined benefit obligation | (47 | ) | (48 | ) | (68 | ) | (47 | ) | ||||||||
F-54
2007 | 2006 | 2005 | 2004 | 2003 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||
Fair value of plan assets | 1,853 | 1,633 | 1,500 | 1,280 | 1,164 | 1,578 | 1,853 | 1,633 | 1,500 | 1,280 | ||||||||||||||||||||||||||||||
Present value of defined benefit obligation | (1,811 | ) | (1,810 | ) | (1,803 | ) | (1,615 | ) | (1,454 | ) | (1,594 | ) | (1,811 | ) | (1,810 | ) | (1,803 | ) | (1,615 | ) | ||||||||||||||||||||
Net pension asset/(liability) | 42 | (177 | ) | (303 | ) | (335 | ) | (290 | ) | (16 | ) | 42 | (177 | ) | (303 | ) | (335 | ) | ||||||||||||||||||||||
Experience adjustments on plan assets | 29 | 74 | 140 | 67 | 88 | (268 | ) | 29 | 74 | 140 | 67 | |||||||||||||||||||||||||||||
Experience adjustments on plan liabilities | 50 | 28 | (119 | ) | (127 | ) | (113 | ) | 194 | 50 | 28 | (119 | ) | (127 | ) |
2007 | 2008 | |||||||||||||||
1% increase | 1% decrease | 1% increase | 1% decrease | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Effect on: | ||||||||||||||||
(Decrease)/increase in defined benefit obligation — UK Group plan | (222 | ) | 275 | (180.1 | ) | 209.6 | ||||||||||
(Decrease)/increase of aggregate of service cost and interest cost — UK Group plan | (4.6 | ) | 5.8 | (2.2 | ) | 1.1 | ||||||||||
(Decrease)/increase in defined benefit obligation — US plan | (6.7 | ) | 7.3 | (12.2 | ) | 14.5 |
F-56
2007 | 2008 | |||||||||||||||
1% increase | 1% decrease | 1% increase | 1% decrease | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Effect on: | ||||||||||||||||
(Decrease)/increase in post-retirement medical benefit obligation | (3.7 | ) | 4.1 | |||||||||||||
Increase/(decrease) in post-retirement medical benefit obligation | 3.3 | (2.9 | ) | |||||||||||||
Increase/(decrease) of aggregate of service cost and interest cost | 0.1 | (0.1 | ) | 0.2 | (0.1 | ) |
F-55
26. | Share-based payments |
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Pearson plans | 23 | 18 | 13 | 25 | 23 | 18 | ||||||||||||||||||
Interactive Data plans | 7 | 7 | 10 | 8 | 7 | 7 | ||||||||||||||||||
Total share-based payment costs | 30 | 25 | 23 | 33 | 30 | 25 | ||||||||||||||||||
F-57
F-56
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||
Number of | average | Number of | average | Number of | average | Number of | average | |||||||||||||||||||||||||
share | exercise | share | exercise | share | exercise | share | exercise | |||||||||||||||||||||||||
options | price | options | price | options | price | options | price | |||||||||||||||||||||||||
000s | £ | 000s | £ | 000s | £ | 000s | £ | |||||||||||||||||||||||||
Outstanding at beginning of year | 18,861 | 13.36 | 21,677 | 13.15 | 16,781 | 13.15 | 18,861 | 13.36 | ||||||||||||||||||||||||
Granted during the year | 773 | 6.90 | 837 | 6.30 | 1,437 | 5.35 | 773 | 6.90 | ||||||||||||||||||||||||
Exercised during the year | (1,326 | ) | 5.80 | (1,396 | ) | 5.36 | (683 | ) | 4.85 | (1,326 | ) | 5.80 | ||||||||||||||||||||
Forfeited during the year | (1,434 | ) | 19.63 | (1,828 | ) | 15.39 | (3,082 | ) | 11.56 | (1,434 | ) | 19.63 | ||||||||||||||||||||
Expired during the year | (93 | ) | 7.68 | (429 | ) | 6.72 | (74 | ) | 6.06 | (93 | ) | 7.68 | ||||||||||||||||||||
Outstanding at end of year | 16,781 | 13.15 | 18,861 | 13.36 | 14,379 | 13.14 | 16,781 | 13.15 | ||||||||||||||||||||||||
Options exercisable at end of year | 13,999 | 14.63 | 15,595 | 14.14 | 11,527 | 14.97 | 13,999 | 14.63 | ||||||||||||||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||
Number of | average | Number of | average | Number of | average | Number of | average | |||||||||||||||||||||||||
share | contractual | share | contractual | share | contractual | share | contractual | |||||||||||||||||||||||||
Range of exercise prices | options | life | options | life | options | life | options | life | ||||||||||||||||||||||||
£ | 000s | Years | 000s | Years | 000s | Years | 000s | Years | ||||||||||||||||||||||||
0 — 5 | 930 | 1.56 | 1,649 | 1.94 | 453 | 1.23 | 930 | 1.56 | ||||||||||||||||||||||||
5 — 10 | 4,909 | 3.22 | 5,254 | 3.85 | 5,113 | 2.84 | 4,909 | 3.22 | ||||||||||||||||||||||||
10 — 15 | 7,257 | 2.62 | 7,638 | 3.63 | 5,481 | 1.97 | 7,257 | 2.62 | ||||||||||||||||||||||||
15 — 20 | 980 | 1.85 | 1,050 | 2.88 | 908 | 0.84 | 980 | 1.85 | ||||||||||||||||||||||||
20 — 25 | 400 | 2.19 | 424 | 3.19 | 350 | 1.19 | 400 | 2.19 | ||||||||||||||||||||||||
>25 | 2,305 | 2.19 | 2,846 | 3.22 | 2,074 | 1.19 | 2,305 | 2.19 | ||||||||||||||||||||||||
16,781 | 2.62 | 18,861 | 3.42 | 14,379 | 2.05 | 16,781 | 2.62 | |||||||||||||||||||||||||
F-58F-57
2007 | 2006 | 2008 | 2007 | |||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||
average | average | average | average | |||||||||||||
Fair value | £2.53 | £1.92 | £1.67 | £2.53 | ||||||||||||
Weighted average share price | £8.91 | £7.66 | £6.96 | £8.91 | ||||||||||||
Weighted average exercise price | £6.90 | £6.30 | £5.35 | £6.90 | ||||||||||||
Expected volatility | 19.72 | % | 23.12 | % | 21.41 | % | 19.72 | % | ||||||||
Expected life | 4.0 years | 4.0 years | 4.1 years | 4.0 years | ||||||||||||
Risk free rate | 5.34 | % | 4.42 | % | 4.28 | % | 5.34 | % | ||||||||
Expected dividend yield | 3.29 | % | 3.52 | % | 4.54 | % | 3.29 | % | ||||||||
Forfeiture rate | 3.5 | % | 5.0 | % | 3.6 | % | 3.5 | % |
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||
Number | average | Number | average | Number of | average | Number of | average | |||||||||||||||||||||||||
of shares | fair value | of shares | fair value | shares | fair value | shares | fair value | |||||||||||||||||||||||||
000s | £ | 000s | £ | 000s | £ | 000s | £ | |||||||||||||||||||||||||
Annual Bonus Share Matching Plan | 143 | 7.67 | 90 | 6.27 | 253 | 6.73 | 143 | 7.67 | ||||||||||||||||||||||||
Long-Term Incentive Plan | 3,377 | 7.12 | 3,585 | 6.96 | 4,152 | 5.78 | 3,377 | 7.12 |
F-58
F-59
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||||
Number | average | average | Number | average | average | Number | average | average | Number | average | average | |||||||||||||||||||||||||||||||||||||
of share | exercise | exercise | of share | exercise | exercise | of share | exercise | exercise | of share | exercise | exercise | |||||||||||||||||||||||||||||||||||||
options | price | price | options | price | price | options | price | price | options | price | price | |||||||||||||||||||||||||||||||||||||
000s | $ | £ | 000s | $ | £ | 000s | $ | £ | 000s | $ | £ | |||||||||||||||||||||||||||||||||||||
Outstanding at beginning of year | 10,506 | 16.33 | 8.34 | 10,068 | 15.16 | 8.37 | 9,827 | 18.21 | 9.15 | 10,506 | 16.33 | 8.34 | ||||||||||||||||||||||||||||||||||||
Granted during the year | 1,560 | 27.17 | 13.65 | 1,835 | 20.58 | 10.52 | 1,449 | 24.95 | 17.35 | 1,560 | 27.17 | 13.65 | ||||||||||||||||||||||||||||||||||||
Exercised during the year | (1,935 | ) | 14.88 | 7.48 | (1,252 | ) | 12.88 | 6.58 | (895 | ) | 15.37 | 10.69 | (1,935 | ) | 14.88 | 7.48 | ||||||||||||||||||||||||||||||||
Forfeited during the year | (293 | ) | 20.38 | 10.24 | (139 | ) | 19.02 | 9.72 | (99 | ) | 22.05 | 15.34 | (293 | ) | 20.38 | 10.24 | ||||||||||||||||||||||||||||||||
Expired during the year | (11 | ) | 18.12 | 9.10 | (6 | ) | 11.46 | 5.86 | (18 | ) | 12.17 | 8.46 | (11 | ) | 18.12 | 9.10 | ||||||||||||||||||||||||||||||||
Outstanding at end of year | 9,827 | 18.21 | 9.15 | 10,506 | 16.33 | 8.34 | 10,264 | 19.38 | 13.48 | 9,827 | 18.21 | 9.15 | ||||||||||||||||||||||||||||||||||||
Options exercisable at end of year | 6,199 | 15.27 | 7.67 | 6,547 | 14.11 | 7.21 | 6,865 | 16.89 | 11.75 | 6,199 | 15.27 | 7.67 | ||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||
Number | average | Number | average | Number | average | Number | average | |||||||||||||||||||||||||
of share | contractual | of share | contractual | of share | contractual | of share | contractual | |||||||||||||||||||||||||
Range of exercise prices | options | life | options | life | options | life | options | life | ||||||||||||||||||||||||
$ | 000s | Years | 000s | Years | 000s | Years | 000s | Years | ||||||||||||||||||||||||
0 — 4.4 | — | — | 30 | 3.1 | — | — | — | — | ||||||||||||||||||||||||
4.4 — 7.5 | 72 | 2.1 | 157 | 2.3 | 47 | 1.3 | 72 | 2.1 | ||||||||||||||||||||||||
7.5 — 12 | 1,745 | 3.4 | 2,164 | 4.4 | 1,502 | 2.4 | 1,745 | 3.4 | ||||||||||||||||||||||||
12 — 20 | 3,464 | 5.6 | 4,640 | 6.4 | 2,987 | 4.6 | 3,464 | 5.6 | ||||||||||||||||||||||||
> 20 | 4,546 | 8.5 | 3,515 | 9.0 | 5,728 | 8.0 | 4,546 | 8.5 | ||||||||||||||||||||||||
9,827 | 6.6 | 10,506 | 6.8 | 10,264 | 6.2 | 9,827 | 6.6 | |||||||||||||||||||||||||
F-60F-59
Long-Term Incentive Plan | Employee Stock Purchase Plan | Long-Term Incentive Plan | Employee Stock Purchase Plan | |||||||||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||
average | average | average | average | average | average | average | average | |||||||||||||||||||||||||
Fair value | $ 6.60 | $ 6.57 | $ 4.76 | $ 3.98 | $ 5.58 | $ 6.60 | $ 6.59 | $ 4.76 | ||||||||||||||||||||||||
Weighted average share price | $27.17 | $20.58 | $17.77 | $15.58 | $24.95 | $27.17 | $22.95 | $17.77 | ||||||||||||||||||||||||
Weighted average exercise price | $27.17 | $20.58 | $17.77 | $15.58 | $24.95 | $27.17 | $22.95 | $17.77 | ||||||||||||||||||||||||
Expected volatility | 23.40 | % | 25.90 | % | 20.50 | % | 18.32 | % | 24.20 | % | 23.40 | % | 33.70 | % | 20.50 | % | ||||||||||||||||
Expected life | 5.0 years | 4.7 years | 0.5 years | 0.5 years | 5.7 years | 5.0 years | 0.5 years | 0.5 years | ||||||||||||||||||||||||
Risk free rate | 4.2% to 4.9% | 4.6% to 5.1% | 4.3% to 5.1% | 3.7% to 5.2% | 1.5% to 3.5% | 4.2% to 4.9% | 2.0% to 2.4% | 4.3% to 5.1% | ||||||||||||||||||||||||
Expected dividend yield | 1.9 | % | 0.0 | % | 2.0 | % | 0.0 | % | 2.2 | % | 1.9 | % | 2.1 | % | 2.0 | % | ||||||||||||||||
Forfeiture rate | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
2007 | 2006 | |||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
Number | average | average | Number | average | average | |||||||||||||||||||
of shares | fair value | fair value | of shares | fair value | fair value | |||||||||||||||||||
000s | $ | £ | 000s | $ | £ | |||||||||||||||||||
2000 Long-Term Incentive Plan | 185 | 27.07 | 13.60 | 196 | 20.82 | 10.64 |
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 |
27. | Share capital and share premium |
Number | Ordinary | Share | Number | Ordinary | Share | |||||||||||||||||||
of shares | shares | premium | of shares | shares | premium | |||||||||||||||||||
000s | £m | £m | 000s | £m | £m | |||||||||||||||||||
At 1 January 2006 | 804,020 | 201 | 2,477 | |||||||||||||||||||||
Issue of ordinary shares — share option schemes | 2,089 | 1 | 10 | |||||||||||||||||||||
At 31 December 2006 | 806,109 | 202 | 2,487 | |||||||||||||||||||||
At 1 January 2007 | 806,109 | 202 | 2,487 | |||||||||||||||||||||
Issue of ordinary shares — share option schemes | 1,919 | — | 12 | 1,919 | — | 12 | ||||||||||||||||||
At 31 December 2007 | 808,028 | 202 | 2,499 | 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-61F-60
28. | Treasury shares |
Pearson plc | Interactive Data | Total | Pearson plc | Interactive Data | Total | |||||||||||||||||||||||||||||||||||
Number | Number | Number | Number | |||||||||||||||||||||||||||||||||||||
of shares | of shares | of shares | of shares | |||||||||||||||||||||||||||||||||||||
000s | £m | 000s | £m | £m | 000s | £m | 000s | £m | £m | |||||||||||||||||||||||||||||||
At 1 January 2006 | 5,249 | 110 | 4,552 | 43 | 153 | |||||||||||||||||||||||||||||||||||
Purchase of treasury shares | 4,700 | 36 | 1,500 | 16 | 52 | |||||||||||||||||||||||||||||||||||
Release of treasury shares | (1,188 | ) | (16 | ) | — | — | (16 | ) | ||||||||||||||||||||||||||||||||
At 31 December 2006 | 8,761 | 130 | 6,052 | 59 | 189 | |||||||||||||||||||||||||||||||||||
At 1 January 2007 | 8,761 | 130 | 6,052 | 59 | 189 | |||||||||||||||||||||||||||||||||||
Purchase of treasury shares | 4,900 | 40 | 1,177 | 16 | 56 | 4,900 | 40 | 1,177 | 16 | 56 | ||||||||||||||||||||||||||||||
Release of treasury shares | (1,900 | ) | (29 | ) | — | — | (29 | ) | (1,900 | ) | (29 | ) | — | — | (29 | ) | ||||||||||||||||||||||||
At 31 December 2007 | 11,761 | 141 | 7,229 | 75 | 216 | 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-62F-61
29. | Other reserves and retained earnings |
Total | Total | |||||||||||||||||||||||||||||||||||||||
Translation | Fair value | other | Retained | Translation | Fair value | other | Retained | |||||||||||||||||||||||||||||||||
Notes | reserve | reserve | reserves | earnings | Notes | reserve | reserve | reserves | earnings | |||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||
At 1 January 2006 | (175 | ) | — | (175 | ) | 1,214 | ||||||||||||||||||||||||||||||||||
At 1 January 2007 | (592 | ) | — | (592 | ) | 1,568 | ||||||||||||||||||||||||||||||||||
Net exchange differences on translation of foreign operations | (417 | ) | — | (417 | ) | — | 25 | — | 25 | — | ||||||||||||||||||||||||||||||
Profit for the year attributable to equity holders of the Company | — | — | — | 446 | ||||||||||||||||||||||||||||||||||||
Dividends paid to equity holders of the Company | 10 | — | — | — | (220 | ) | ||||||||||||||||||||||||||||||||||
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 | — | — | — | 25 | 26 | — | — | — | 30 | ||||||||||||||||||||||||||||||
Actuarial gains on retirement benefit obligations | 25 | — | — | — | 107 | |||||||||||||||||||||||||||||||||||
Treasury shares released under employee share plans | 28 | — | — | — | (16 | ) | ||||||||||||||||||||||||||||||||||
Taxation on items charged to equity | 8 | — | — | — | 12 | |||||||||||||||||||||||||||||||||||
At 31 December 2006 | (592 | ) | — | (592 | ) | 1,568 | ||||||||||||||||||||||||||||||||||
Net exchange differences on translation of foreign operations | 25 | — | 25 | — | ||||||||||||||||||||||||||||||||||||
Cumulative translation adjustment disposed | 32 | 53 | — | 53 | — | |||||||||||||||||||||||||||||||||||
Profit for the year attributable to equity holders of the Company | — | — | — | 284 | ||||||||||||||||||||||||||||||||||||
Dividends paid to equity holders of the Company | 10 | — | — | — | (238 | ) | ||||||||||||||||||||||||||||||||||
Equity settled transactions | 26 | — | — | — | 30 | |||||||||||||||||||||||||||||||||||
Actuarial gains on retirement benefit obligations | 25 | — | — | — | 80 | |||||||||||||||||||||||||||||||||||
Actuarial gains on retirement benefit obligations — Group | 25 | — | — | — | 80 | |||||||||||||||||||||||||||||||||||
Treasury shares released under employee share plans | 28 | — | — | — | (29 | ) | 28 | — | — | — | (29 | ) | ||||||||||||||||||||||||||||
Taxation on items charged to equity | 8 | — | — | — | 29 | 7 | — | — | — | 29 | ||||||||||||||||||||||||||||||
At 31 December 2007 | (514 | ) | — | (514 | ) | 1,724 | (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 | ||||||||||||||||||||||||||||||||||||
30. | Business combinations |
F-63F-62
2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | Harcourt | ||||||||||||||||||||||||||||||||||||||||||||||
Harcourt | eCollege | Other | Total | Total | Assessment | Money-Media | Other | Total | Total | |||||||||||||||||||||||||||||||||||||||
Notes | Fair value | Fair value | Fair value | Fair value | Fair value | Notes | Fair value | Fair value | Fair value | Fair value | Fair value | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | 11 | 6 | 5 | — | 11 | 13 | 10 | 6 | — | — | 6 | 11 | ||||||||||||||||||||||||||||||||||||
Intangible assets | 12 | 81 | 100 | 16 | 197 | 156 | 11 | 174 | 10 | 36 | 220 | 197 | ||||||||||||||||||||||||||||||||||||
Intangible assets — Pre-publication | 18 | 16 | 2 | — | 18 | 4 | 20 | 27 | — | — | 27 | 18 | ||||||||||||||||||||||||||||||||||||
Inventories | 15 | — | — | 15 | 14 | 7 | — | — | 7 | 15 | ||||||||||||||||||||||||||||||||||||||
Trade and other receivables | 12 | 13 | 3 | 28 | 24 | 48 | 2 | 4 | 54 | 28 | ||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | — | — | — | — | 28 | 5 | — | 11 | 16 | — | ||||||||||||||||||||||||||||||||||||||
Trade and other liabilities | (23 | ) | (12 | ) | (3 | ) | (38 | ) | (52 | ) | (40 | ) | (4 | ) | (8 | ) | (52 | ) | (38 | ) | ||||||||||||||||||||||||||||
Financial liabilities — Borrowings | — | (1 | ) | (1 | ) | (3 | ) | — | — | — | — | (1 | ) | |||||||||||||||||||||||||||||||||||
Current income tax | 2 | 2 | — | 4 | — | |||||||||||||||||||||||||||||||||||||||||||
Current income tax liabilities | — | — | (3 | ) | (3 | ) | 4 | |||||||||||||||||||||||||||||||||||||||||
Net deferred income tax liabilities | 14 | (21 | ) | (24 | ) | — | (45 | ) | (26 | ) | 13 | — | — | (4 | ) | (4 | ) | (45 | ) | |||||||||||||||||||||||||||||
Retirement benefit obligations | 25 | — | — | — | — | (2 | ) | |||||||||||||||||||||||||||||||||||||||||
Provisions for other liabilities and charges | 23 | (1 | ) | — | (1 | ) | (2 | ) | (3 | ) | 23 | (19 | ) | — | (7 | ) | (26 | ) | (2 | ) | ||||||||||||||||||||||||||||
Equity minority interest | — | — | — | — | (9 | ) | ||||||||||||||||||||||||||||||||||||||||||
Minority interest | — | — | (2 | ) | (2 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Assets held for sale | 3 | — | — | 3 | — | |||||||||||||||||||||||||||||||||||||||||||
Net assets acquired at fair value | 87 | 85 | 15 | 187 | 144 | 211 | 8 | 27 | 246 | 187 | ||||||||||||||||||||||||||||||||||||||
Goodwill | 12 | 68 | 181 | 55 | 304 | 246 | 11 | 113 | 25 | 15 | 153 | 304 | ||||||||||||||||||||||||||||||||||||
Total | 155 | 266 | 70 | 491 | 390 | 324 | 33 | 42 | 399 | 491 | ||||||||||||||||||||||||||||||||||||||
Satisfied by: | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash | (155 | ) | (266 | ) | (47 | ) | (468 | ) | (382 | ) | (321 | ) | (33 | ) | (40 | ) | (394 | ) | (468 | ) | ||||||||||||||||||||||||||||
Deferred consideration | — | — | (12 | ) | (12 | ) | (17 | ) | — | — | — | — | (12 | ) | ||||||||||||||||||||||||||||||||||
Net prior year adjustments | — | — | (11 | ) | (11 | ) | 9 | (3 | ) | — | (2 | ) | (5 | ) | (11 | ) | ||||||||||||||||||||||||||||||||
Total consideration | (155 | ) | (266 | ) | (70 | ) | (491 | ) | (390 | ) | (324 | ) | (33 | ) | (42 | ) | (399 | ) | (491 | ) | ||||||||||||||||||||||||||||
Carrying value of net assets acquired | 25 | 15 | 1 | 41 | 48 | |||||||||||||||||||||||||||||||||||||||||||
Carrying value of net assets/(liabilities) acquired | 81 | (2 | ) | (1 | ) | 78 | 41 | |||||||||||||||||||||||||||||||||||||||||
Fair value adjustments | 62 | 70 | 14 | 146 | 96 | 130 | 10 | 28 | 168 | 146 | ||||||||||||||||||||||||||||||||||||||
Fair value to the Group | 87 | 85 | 15 | 187 | 144 | |||||||||||||||||||||||||||||||||||||||||||
Fair value | 211 | 8 | 27 | 246 | 187 | |||||||||||||||||||||||||||||||||||||||||||
F-64F-63
Harcourt | Harcourt Assessment | |||||||||||||||||||||||
Carrying | Fair | Provisional | Carrying | Fair | ||||||||||||||||||||
value | value adjs | fair value | value | value adjs | Fair value | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Property, plant and equipment | 6 | — | 6 | 7 | (1 | ) | 6 | |||||||||||||||||
Intangible assets | — | 81 | 81 | 10 | 164 | 174 | ||||||||||||||||||
Intangible assets — Pre-publication | 14 | 2 | 16 | 35 | (8 | ) | 27 | |||||||||||||||||
Inventories | 15 | — | 15 | 8 | (1 | ) | 7 | |||||||||||||||||
Trade and other receivables | 12 | — | 12 | 50 | (2 | ) | 48 | |||||||||||||||||
Cash and cash equivalents | 5 | — | 5 | |||||||||||||||||||||
Trade and other liabilities | (23 | ) | — | (23 | ) | (39 | ) | (1 | ) | (40 | ) | |||||||||||||
Current income tax | 2 | — | 2 | |||||||||||||||||||||
Net deferred income tax liabilities | — | (21 | ) | (21 | ) | |||||||||||||||||||
Provisions for other liabilities and charges | (1 | ) | — | (1 | ) | (3 | ) | (16 | ) | (19 | ) | |||||||||||||
Assets held for sale | 8 | (5 | ) | 3 | ||||||||||||||||||||
Net assets acquired at fair value | 25 | 62 | 87 | 81 | 130 | 211 | ||||||||||||||||||
Goodwill | 68 | 113 | ||||||||||||||||||||||
Total | 155 | 324 | ||||||||||||||||||||||
eCollege | Money-Media | |||||||||||||||||||||||
Carrying | Fair | Provisional | Carrying | Fair | ||||||||||||||||||||
value | value adjs | fair value | value | value adjs | Fair value | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Property, plant and equipment | 5 | — | 5 | |||||||||||||||||||||
Intangible assets | 2 | 98 | 100 | — | 10 | 10 | ||||||||||||||||||
Intangible assets — Pre-publication | 2 | — | 2 | |||||||||||||||||||||
Trade and other receivables | 13 | — | 13 | 2 | — | 2 | ||||||||||||||||||
Trade and other liabilities | (10 | ) | (2 | ) | (12 | ) | (4 | ) | — | (4 | ) | |||||||||||||
Financial liabilities — Borrowings | (1 | ) | — | (1 | ) | |||||||||||||||||||
Current income tax | 2 | — | 2 | |||||||||||||||||||||
Net deferred income tax assets/(liabilities) | 2 | (26 | ) | (24 | ) | |||||||||||||||||||
Net assets acquired at fair value | 15 | 70 | 85 | (2 | ) | 10 | 8 | |||||||||||||||||
Goodwill | 181 | 25 | ||||||||||||||||||||||
Total | 266 | 33 | ||||||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Cash — Current year acquisitions | (468 | ) | (382 | ) | (249 | ) | (394 | ) | (468 | ) | (382 | ) | ||||||||||||
Cash — Acquisitions yet to complete | (12 | ) | — | — | ||||||||||||||||||||
Deferred payments for prior year acquisitions and other items | (4 | ) | (9 | ) | — | (5 | ) | (4 | ) | (9 | ) | |||||||||||||
Cash and cash equivalents acquired | — | 28 | 3 | 16 | — | 28 | ||||||||||||||||||
Cash outflow on acquisition | (472 | ) | (363 | ) | (246 | ) | (395 | ) | (472 | ) | (363 | ) | ||||||||||||
F-65
F-64
31. | Non-current assets classified as held for sale |
Notes | 2007 | 2006 | Notes | 2008 | 2007 | |||||||||||||||||||
Property, plant and equipment | 11 | 7 | 9 | 10 | — | 7 | ||||||||||||||||||
Intangible assets — Goodwill | 96 | 221 | — | 96 | ||||||||||||||||||||
Intangible assets — Other | 12 | — | 7 | |||||||||||||||||||||
Intangible assets — Pre-publication | 2 | — | 20 | — | 2 | |||||||||||||||||||
Inventories | 4 | 1 | — | 4 | ||||||||||||||||||||
Trade and other receivables | 8 | 56 | — | 8 | ||||||||||||||||||||
Non-current assets classified as held for sale | 117 | 294 | — | 117 | ||||||||||||||||||||
Other liabilities | (9 | ) | (26 | ) | — | (9 | ) | |||||||||||||||||
Liabilities directly associated with non-current assets classified as held for sale | (9 | ) | (26 | ) | — | (9 | ) | |||||||||||||||||
Net assets classified as held for sale | 108 | 268 | — | 108 | ||||||||||||||||||||
F-66
32. | Disposals |
2007 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||
Government | 2006 | 2005 | Data | |||||||||||||||||||||||||||||||||||||||||||||
Solutions | Les Echos | Datamark | Other | Total | Total | Total | Management | Other | Total | Total | Total | |||||||||||||||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||||||||||||||||||
Disposal of subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | (10 | ) | (3 | ) | (3 | ) | — | (16 | ) | — | (48 | ) | (7 | ) | — | (7 | ) | (16 | ) | — | ||||||||||||||||||||||||||||
Intangible assets | (6 | ) | — | — | — | (6 | ) | — | — | (1 | ) | — | (1 | ) | (6 | ) | — | |||||||||||||||||||||||||||||||
Investments in associates and other financial assets | — | — | — | — | — | — | (5 | ) | ||||||||||||||||||||||||||||||||||||||||
Intangible assets — Pre-publication | (2 | ) | — | (2 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||
Inventories | — | — | (1 | ) | — | (1 | ) | — | (4 | ) | (4 | ) | (3 | ) | (7 | ) | (1 | ) | — | |||||||||||||||||||||||||||||
Trade and other receivables | (63 | ) | (26 | ) | (5 | ) | (1 | ) | (95 | ) | — | (59 | ) | (8 | ) | — | (8 | ) | (95 | ) | — | |||||||||||||||||||||||||||
Cash and cash equivalents | — | (14 | ) | — | — | (14 | ) | — | (134 | ) | — | — | — | (14 | ) | — | ||||||||||||||||||||||||||||||||
Deferred income tax liabilities | — | 2 | — | — | 2 | — | 8 | |||||||||||||||||||||||||||||||||||||||||
Net deferred income tax liabilities | — | — | — | 2 | — | |||||||||||||||||||||||||||||||||||||||||||
Trade and other liabilities | 23 | 42 | 6 | 2 | 73 | (1 | ) | 71 | 9 | — | 9 | 73 | (1 | ) | ||||||||||||||||||||||||||||||||||
Retirement benefit obligations | — | 3 | — | — | 3 | — | — | — | — | — | 3 | — | ||||||||||||||||||||||||||||||||||||
Provisions for other liabilities and charges | — | 1 | — | — | 1 | — | 3 | — | — | — | 1 | — | ||||||||||||||||||||||||||||||||||||
Equity minority interests | — | — | — | (8 | ) | (8 | ) | (4 | ) | 54 | ||||||||||||||||||||||||||||||||||||||
Minority interest | — | (5 | ) | (5 | ) | (8 | ) | (4 | ) | |||||||||||||||||||||||||||||||||||||||
Attributable goodwill | (221 | ) | (4 | ) | (17 | ) | (8 | ) | (250 | ) | (5 | ) | (104 | ) | (98 | ) | (8 | ) | (106 | ) | (250 | ) | (5 | ) | ||||||||||||||||||||||||
Cumulative translation adjustment | (53 | ) | — | — | — | (53 | ) | — | 14 | (49 | ) | — | (49 | ) | (53 | ) | — | |||||||||||||||||||||||||||||||
Net (assets)/liabilities disposed | (330 | ) | 1 | (20 | ) | (15 | ) | (364 | ) | (10 | ) | (204 | ) | |||||||||||||||||||||||||||||||||||
Net assets disposed | (160 | ) | (16 | ) | (176 | ) | (364 | ) | (10 | ) | ||||||||||||||||||||||||||||||||||||||
Cash received | 286 | 174 | 20 | 15 | 495 | 10 | 513 | 111 | 15 | 126 | 495 | 10 | ||||||||||||||||||||||||||||||||||||
Deferred receipts | — | 2 | 2 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Other proceeds received | 35 | — | — | — | 35 | — | — | — | — | — | 35 | — | ||||||||||||||||||||||||||||||||||||
Costs | (10 | ) | (10 | ) | — | — | (20 | ) | — | (3 | ) | (4 | ) | (1 | ) | (5 | ) | (20 | ) | — | ||||||||||||||||||||||||||||
(Loss)/profit on sale | (19 | ) | 165 | — | — | 146 | — | 306 | (53 | ) | — | (53 | ) | 146 | — | |||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash flow from disposals | ||||||||||||
Cash — Current year disposals | 495 | 10 | 513 | |||||||||
Costs paid | (12 | ) | — | (3 | ) | |||||||
Cash and cash equivalents disposed | (14 | ) | — | (134 | ) | |||||||
Net cash inflow | 469 | 10 | 376 | |||||||||
F-67F-65
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 | 2007 | 2006 | 2005 | Notes | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||||||||||
Net profit | 310 | 469 | 644 | 323 | 310 | 469 | ||||||||||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||||||||
Income tax | 222 | 19 | 125 | 209 | 222 | 19 | ||||||||||||||||||||||||||
Depreciation | 11 | 68 | 77 | 80 | 10 | 80 | 68 | 77 | ||||||||||||||||||||||||
Amortisation of purchased intangible assets | 12 | 45 | 28 | 11 | 11 | 86 | 45 | 28 | ||||||||||||||||||||||||
Adjustment on recognition of pre-acquisition deferred tax | 12 | — | 7 | — | — | — | 7 | |||||||||||||||||||||||||
Amortisation of other intangible assets | 12 | 25 | 23 | 18 | 11 | 30 | 25 | 23 | ||||||||||||||||||||||||
Investment in pre-publication assets | 18 | (230 | ) | (213 | ) | (222 | ) | |||||||||||||||||||||||||
Amortisation of pre-publication assets | 18 | 192 | 210 | 192 | ||||||||||||||||||||||||||||
Loss on sale of property, plant and equipment | 1 | 2 | — | 1 | 1 | 2 | ||||||||||||||||||||||||||
Net finance costs | 7 | 106 | 74 | 70 | 6 | 91 | 106 | 74 | ||||||||||||||||||||||||
Share of results of joint ventures and associates | 13 | (23 | ) | (24 | ) | (14 | ) | 12 | (25 | ) | (23 | ) | (24 | ) | ||||||||||||||||||
Profit on sale of discontinued operations | 3 | (146 | ) | — | (346 | ) | ||||||||||||||||||||||||||
Loss/(profit) on sale of discontinued operations | 3 | 53 | (146 | ) | — | |||||||||||||||||||||||||||
Goodwill impairment of discontinued operation | 3 | 97 | — | — | 3 | — | 97 | — | ||||||||||||||||||||||||
Net foreign exchange gains/(losses) from transactions | 11 | (37 | ) | 39 | ||||||||||||||||||||||||||||
Net foreign exchange adjustment from transactions | 105 | 11 | (37 | ) | ||||||||||||||||||||||||||||
Share-based payment costs | 26 | 30 | 25 | 23 | 26 | 33 | 30 | 25 | ||||||||||||||||||||||||
Pre-publication | (58 | ) | (38 | ) | (3 | ) | ||||||||||||||||||||||||||
Inventories | (1 | ) | (16 | ) | (17 | ) | (12 | ) | (1 | ) | (16 | ) | ||||||||||||||||||||
Trade and other receivables | (5 | ) | (60 | ) | (4 | ) | (81 | ) | (5 | ) | (60 | ) | ||||||||||||||||||||
Trade and other liabilities | 80 | 54 | 71 | 82 | 80 | 54 | ||||||||||||||||||||||||||
Retirement benefit obligations | (126 | ) | (17 | ) | (17 | ) | (14 | ) | (126 | ) | (17 | ) | ||||||||||||||||||||
Provisions | 3 | — | — | |||||||||||||||||||||||||||||
Provisions for other liabilities and charges | (9 | ) | 3 | — | ||||||||||||||||||||||||||||
Net cash generated from operations | 659 | 621 | 653 | 894 | 659 | 621 | ||||||||||||||||||||||||||
F-66
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||||||||||
Net book amount | 15 | 10 | 3 | 3 | 15 | 10 | ||||||||||||||||||
Loss on sale of property, plant and equipment | (1 | ) | (2 | ) | — | (1 | ) | (1 | ) | (2 | ) | |||||||||||||
Proceeds from sale of property, plant and equipment | 14 | 8 | 3 | 2 | 14 | 8 | ||||||||||||||||||
34. | Contingencies |
F-68
35. | Commitments |
2007 | 2006 | |||||||
All figures in £ millions | ||||||||
Property, plant and equipment | 3 | — | ||||||
2008 | 2007 | |||||||
All figures in £ millions | ||||||||
Property, plant and equipment | — | 3 | ||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||
All figures in £ millions | All figures in £ millions | |||||||||||||||
Not later than one year | 123 | 123 | 149 | 123 | ||||||||||||
Later than one year and not later than two years | 116 | 113 | 138 | 116 | ||||||||||||
Later than two years and not later than three years | 102 | 103 | 129 | 102 | ||||||||||||
Later than three years and not later than four years | 93 | 90 | 118 | 93 | ||||||||||||
Later than four years and not later than five years | 85 | 83 | 108 | 85 | ||||||||||||
Later than five years | 834 | 857 | 970 | 834 | ||||||||||||
1,353 | 1,369 | 1,612 | 1,353 | |||||||||||||
36. | Related party transactions |
F-67
37. | Events after the balance sheet date |
F-69
F-70F-68