Annual report and accounts 2008

Notes contentsNotes to consolidated financial statements

4. Operating expenses

All figures in £ millions	2008	2007
By function:
Cost of goods sold	2,174	1,910
Operating expenses
Distribution costs	198	202
Administrative and other expenses	1,890	1,600
Other income	(102)	(101)
Total operating expenses	1,986	1,701
Total	4,160	3,611

All figures in £ millions	Notes	2008	2007
By nature:
Utilisation of inventory	21	832	732
Depreciation of property, plant and equipment	10	80	65
Amortisation of intangible assets — Pre-publication	20	244	192
Amortisation of intangible assets — Other	11	116	70
Employee benefit expense	5	1,553	1,288
Operating lease rentals		134	129
Other property costs		116	122
Royalties expensed		415	365
Advertising, promotion and marketing		244	195
Information technology costs		76	70
Other costs		452	484
Other income		(102)	(101)
Total		4,160	3,611

During the year the Group obtained the following services from the Group’s auditor:

All figures in £ millions	2008	2007
Fees payable to the company’s auditor for the audit of parent company and consolidated financial statements	3	3
The audit of the company’s subsidiaries pursuant to legislation	2	1
Tax services	2	2
Other services	1	1
Total	8	7

Reconciliation between audit and non-audit service fees is shown below:

All figures in £ millions	2008	2007
Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act	5	4
Non-audit fees	3	3
Total audit fees	8	7

Fees for attestation under section 404 of the Sarbanes-Oxley Act are allocated between fees payable for the audits of consolidated and subsidiary accounts.

Tax services include services related to tax planning and various other tax advisory matters.

Other services include due diligence on acquisitions and services related to the disposal of the Data Management business.