Annual report and accounts 2008

Notes contentsNotes to consolidated financial statements

2. Segment information

Following the adoption of IFRS 8 ‘Operating Segments’ and changes in the organisational structure of the Education business, the Group has revised its reporting segments. The Group is now organised into six segments:

North American Education Educational publishing and testing for the school and higher education market within the USA and Canada;

International Education Educational publishing and testing for the school and higher education market outside of North America;

Professional Business and technology publishing and testing and certification for professional bodies;

FT Publishing Publisher of the Financial Times, business magazines and specialist information;

Interactive Data Provider of financial and business information to financial institutions and retail investors;

Penguin Publisher with brand imprints such as Penguin, Putnam, Berkley, Viking, Dorling Kindersley.

For more detail on the services and products included in each business segment refer to the business review.

All figures in £ millions	Notes								2008
		North American Education	International Education	Professional	FT Publishing	Interactive Data	Penguin	Corporate	Group
Sales (external)		2,002	866	244	390	406	903	—	4,811
Sales (inter-segment)		—	—	4	—	—	22	—	26
Adjusted operating profit		303	135	36	74	121	93	—	762
Amortisation of acquired intangibles		(45)	(22)	(1)	(7)	(9)	(2)	—	(86)
Operating profit		258	113	35	67	112	91	—	676
Finance costs	6								(136)
Finance income	6								45
Profit before tax									585
Income tax	7								(172)
Profit for the year from continuing operations									413
Segment assets		4,952	1,358	423	482	524	1,211	923	9,873
Joint ventures	12	—	8	—	2	—	3	—	13
Associates	12	—	4	—	6	—	—	—	10
Assets — continuing operations		4,952	1,370	423	490	524	1,214	923	9,896
Assets — discontinued operations		—	—	—	—	—	—	—	—
Total assets		4,952	1,370	423	490	524	1,214	923	9,896
Other segment items
Share of results of joint ventures and associates	12	—	5	—	19	—	1	—	25
Capital expenditure	10, 11, 20	224	82	22	17	25	51	—	421
Depreciation	10	25	12	8	13	13	9	—	80
Amortisation	11, 20	219	69	12	12	12	36	—	360

All figures in £ millions	Notes								2007
		North American Education	International Education	Professional	FT Publishing	Interactive Data	Penguin	Corporate	Group
Continuing operations
Sales (external)		1,667	735	226	344	344	846	—	4,162
Sales (inter-segment)		1	—	—	—	—	19	—	20
Adjusted operating profit		273	92	27	56	97	74	—	619
Amortisation of acquired intangibles		(20)	(10)	(1)	(6)	(7)	(1)	—	(45)
Operating profit		253	82	26	50	90	73	—	574
Finance costs	6								(150)
Finance income	6								44
Profit before tax									468
Income tax	7								(131)
Profit for the year from continuing operations									337
Segment assets		3,536	1,013	291	397	330	937	651	7,155
Joint ventures	12	—	5	—	4	—	2	—	11
Associates	12	1	3	—	5	—	—	—	9
Assets — continuing operations		3,537	1,021	291	406	330	939	651	7,175
Assets — discontinued operations		—	—	117	—	—	—	—	117
Total assets		3,537	1,021	408	406	330	939	651	7,292
Other segment items
Share of results of joint ventures and associates	12	—	6	1	16	—	—	—	23
Capital expenditure	10, 11, 20	136	109	20	28	19	44	—	356
Depreciation	10	26	7	9	9	10	7	—	68
Amortisation	11, 20	159	45	11	9	8	30	—	262

In 2008, sales from the provision of goods were £3,411m (2007: £3,053m) and sales from the provision of services were £1,400m (2007: £1,109m). Sales from the Group's educational publishing, consumer publishing and newspaper business are classified as being from the provision of goods and sales from its assessment and testing, market pricing, corporate training and management service businesses are classified as being from the provision of services.

Corporate costs are allocated to business segments on an appropriate basis depending on the nature of the cost and therefore the segment result is equal to the Group operating profit. Inter-segment pricing is determined on an arm's-length basis. Segment assets consist of property, plant and equipment, intangible assets, inventories, receivables, retirement benefit assets and deferred taxation and exclude cash and cash equivalents and derivative assets. Corporate assets comprise cash and cash equivalents, marketable securities and derivative financial instruments. Capital expenditure comprises additions to property, plant and equipment and intangible assets, including pre-publication but excluding goodwill (see notes 10, 11 and 20).

Property, plant and equipment and intangible assets acquired through business combination were £253m (2007: £226m) (see note 30). Capital expenditure, depreciation and amortisation include amounts relating to discontinued operations. Discontinued operations relate to the Data Management business in 2008 and to the Data Management business, Government Solutions, Datamark and Les Echos in 2007 (see note 3).

The Group operates in the following main geographic areas:

All figures in £ millions	Sales			Non-current assets
	2008	2007		2008	2007
Continuing operations
UK	754	721		701	724
Other European countries	463	381		224	140
USA	2,861	2,448		4,624	3,146
Canada	167	143		209	183
Asia Pacific	415	351		179	114
Other countries	151	118		14	11
Total continuing	4,811	4,162		5,951	4,318
Discontinued operations
UK	—	1		—	—
Other European countries	—	82		—	—
USA	8	78		—	117
Canada	—	—		—	—
Other countries	—	6		—	—
Total discontinued	8	167		—	117
Total	4,819	4,329		5,951	4,435

Sales are allocated based on the country in which the customer is located. This does not differ materially from the location where the order is received. Non-current assets are based on the subsidiaries country of domicile. This is not materially different to the location of the assets. Non-current assets comprise property, plant and equipment, intangible assets, investments in joint ventures and associates, other receivables and non-current assets classified as held for sale.