Pearson

Notes to the consolidated financial statements

2. Segment information

The Group is organised into five business segments:

North American Education

Educational publishing, assessment and testing for the school and higher education market within the USA and Canada;

International Education

Educational publishing, assessment and testing for the school and higher education market outside of North America;

Professional

Business and technology publishing, training, testing and certification for professional bodies;

FT Group

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

Penguin

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

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

The results of the Interactive Data segment are shown as discontinued.

All figures in £ millions	Notes								2010
		North American Education	International Education	Professional	FT Group	Penguin	Corporate	Discontinued operations	Group
Continuing operations
Sales (external)		2,640	1,234	333	403	1,053	–	–	5,663
Sales (inter-segment)		–	–	5	–	3	–	–	8
Adjusted operating profit		469	171	51	60	106	–	–	857
Amortisation of acquired intangibles		(53)	(35)	(7)	(9)	(1)	–	–	(105)
Acquisition costs		(1)	(7)	(2)	(1)	–	–	–	(11)
Other net gains and losses		–	(10)	–	12	–	–	–	2
Operating profit		415	119	42	62	105	–	–	743
Finance costs	6								(109)
Finance income	6								36
Profit before tax									670
Income tax	7								(146)
Profit for the year from continuing operations									524
Segment assets		4,401	2,122	601	447	1,138	1,888	–	10,597
Joint ventures	12	15	–	1	1	1	–	–	18
Associates	12	24	6	–	23	–	–	–	53
Total assets		4,440	2,128	602	471	1,139	1,888	–	10,668
Other segment items
Share of results of joint ventures and associates	12	(3)	1	1	42	–	–	–	41
Capital expenditure	10, 11	45	27	16	17	18	–	21	144
Pre-publication investment	20	215	61	7	–	36	–	–	319
Depreciation	10	23	19	9	5	13	–	13	82
Amortisation	11, 20	307	111	18	23	43	–	12	514

All figures in £ millions	Notes								2009
		North American Education	International Education	Professional	FT Group	Penguin	Corporate	Discontinued operations	Group
Continuing operations
Sales (external)		2,470	1,035	275	358	1,002	–	–	5,140
Sales (inter-segment)		–	–	7	–	24	–	–	31
Adjusted operating profit		403	141	43	39	84	–	–	710
Amortisation of acquired intangibles		(49)	(32)	(1)	(8)	(1)	–	–	(91)
Operating profit		354	109	42	31	83	–	–	619
Finance costs	6								(122)
Finance income	6								26
Profit before tax									523
Income tax	7								(146)
Profit for the year from continuing operations									377
Segment assets		4,382	1,635	377	420	1,173	924	471	9,382
Joint ventures	12	13	–	1	1	3	–	–	18
Associates	12	–	5	–	7	–	–	–	12
Total assets		4,395	1,640	378	428	1,176	924	471	9,412
Other segment items
Share of results of joint ventures and associates	12	(2)	6	1	25	–	–	–	30
Capital expenditure	10, 11	38	22	12	15	10	–	29	126
Pre-publication investments	20	220	58	8	–	36	–	–	322
Depreciation	10	24	16	10	5	9	–	21	85
Amortisation	11, 20	274	89	13	20	42	–	16	454

In 2010, sales from the provision of goods were £4,200m (2009: £3,838m) and sales from the provision of services were £1,463m (2009: £1,302m). 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 and other 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, deferred taxation and other financial assets 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 software (see notes 10 and 11).

Property, plant and equipment and intangible assets acquired through business combination were £311m (2009: £153m) (see note 29). Capital expenditure, depreciation and amortisation include amounts relating to discontinued operations.

The Group operates in the following main geographic areas:

All figures in £ millions	Sales		Non-current assets
	2010	2009	2010	2009
Continuing operations
UK	790	694	1,031	904
Other European countries	415	387	237	179
USA	3,361	3,146	3,790	3,607
Canada	228	198	235	204
Asia Pacific	577	497	364	319
Other countries	292	218	376	121
Total continuing	5,663	5,140	6,033	5,334
Discontinued operations
UK	31	54	–	37
Other European countries	48	86	–	63
USA	196	317	–	204
Canada	2	2	–	–
Asia Pacific	18	23	–	21
Other countries	1	2	–	–
Total discontinued	296	484	–	325
Total	5,959	5,624	6,033	5,659

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 subsidiary’s 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 and trade and other receivables.