Pearson Annual Report and Accounts 2010 - Notes to the consolidated financial statements

Financial statement
- Group accounts
  - Consolidated income statement
  - Consolidated statement of comprehensive income
  - Consolidated balance sheet
  - Consolidated statement of changes in equity
  - Consolidated cash flow statement
  - Independent auditors’ report to the members of Pearson plc
  - Notes to the consolidated financial statements
- Parent company accounts

Notes to the consolidated financial statements

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6. Net finance costs

All figures in £ millions	Notes	2010	2009
Interest payable		(82)	(92)
Finance costs in respect of retirement benefits	25	(12)	(12)
Net foreign exchange losses		(9)	(7)
Other losses on financial instruments in a hedging relationship:
– fair value hedges		–	(1)
Other losses on financial instruments not in a hedging relationship:
– derivatives		(6)	(10)
Finance costs		(109)	(122)
Interest receivable		9	6
Net foreign exchange gains		18	–
Other gains on financial instruments in a hedging relationship:
– fair value hedges		–	4
Other gains on financial instruments not in a hedging relationship:
– amortisation of transitional adjustment on bonds		2	3
– derivatives		7	13
Finance income		36	26
Net finance costs		(73)	(96)
Analysed as:
Net interest payable		(73)	(86)
Finance costs in respect of retirement benefits	25	(12)	(12)
Net finance costs reflected in adjusted earnings – continuing operations		(85)	(98)
Other net finance income		12	2
Total net finance costs		(73)	(96)

The £nil net gain (2009: £3m net gain) on fair value hedges comprises a £40m loss (2009: £96m gain) on the underlying bonds offset by a £40m gain (2009: £93m loss) on the related derivative financial instruments.