| All figures in £ millions | Notes | 2010 | 2009 |
|---|---|---|---|
| Profit | 1,300 | 462 | |
| Adjustments for: | |||
| Income tax | 480 | 198 | |
| Depreciation | 10 | 82 | 85 |
| Amortisation of acquired intangible assets | 11 | 113 | 103 |
| Amortisation of other intangible assets | 11 | 51 | 44 |
| Loss on sale of property, plant and equipment | 3 | 2 | |
| Net finance costs | 3, 6 | 73 | 95 |
| Share of results of joint ventures and associates | 12 | (41) | (30) |
| Profit on disposal of discontinued operations | 3 | (1,037) | – |
| Loss on disposal | 10 | – | |
| Acquisition costs | 11 | – | |
| Net foreign exchange adjustment from transactions | (3) | (14) | |
| Share-based payment costs | 26 | 39 | 37 |
| Pre-publication | 29 | (16) | |
| Inventories | 37 | 32 | |
| Trade and other receivables | (82) | (14) | |
| Trade and other liabilities | 165 | 103 | |
| Retirement benefit obligations | (64) | (72) | |
| Provisions for other liabilities and charges | 3 | (3) | |
| Net cash generated from operations | 1,169 | 1,012 | |
| Dividends from joint ventures and associates | 23 | 22 | |
| Purchase of property, plant and equipment | (76) | (62) | |
| Purchase of intangible assets | (56) | (58) | |
| Finance lease principal payments | (3) | (2) | |
| Proceeds from sale of property, plant and equipment | – | 1 | |
| Operating cash flow | 1,057 | 913 | |
| Operating tax paid | (85) | (103) | |
| Net operating finance costs paid | (68) | (87) | |
| Free cash flow | 904 | 723 | |
| Dividends paid (including to non-controlling interests) | (298) | (293) | |
| Net movement of funds from operations | 606 | 430 | |
| Acquisitions and disposals (net of tax) | 150 | (218) | |
| Purchase of treasury shares | (77) | (33) | |
| New equity | 12 | 8 | |
| Other movements on financial instruments | 2 | 3 | |
| Net movement of funds | 693 | 190 | |
| Exchange movements on net debt | (31) | 178 | |
| Total movement in net debt | 662 | 368 |
Net cash generated from operations is translated at an exchange rate approximating to the rate at the date of cash flow. The difference between this rate and the average rate used to translate profit gives rise to a currency adjustment in the reconciliation between net profit and net cash generated from operations. This adjustment reflects the timing difference between recognition of profit and the related cash receipts or payments.
Operating cash flow, operating free cash flow and total free cash flow are non-GAAP measures and have been disclosed as they are part of Pearson’s corporate and operating measures.
In the cash flow statement, proceeds from sale of property, plant and equipment comprise:
| All figures in £ millions | 2010 | 2009 |
|---|---|---|
| Net book amount | 3 | 3 |
| Loss on sale of property, plant and equipment | (3) | (2) |
| Proceeds from sale of property, plant and equipment | – | 1 |
The principal other non-cash transactions are movements in finance lease obligations of £2m (2009: £8m).