Pearson plc 2001 Annual Report - Notes to the Accounts - Notes to consolidated statement of cash flows


	2001			2000
all figures in Ł millions	continuing	discontinued	total	continuing	discontinued	total

a. Reconciliation of operating (loss)/profit to net cash inflow from operating activities
Total operating (loss)/profit	(56)	2	(54)	150	61	211
Share of operating loss of joint ventures and associates	69	(2)	67	44	(33)	11
Depreciation charges	125	–	125	94	6	100
Goodwill amortisation and impairment	357	–	357	187	1	188
(Increase) in stocks	(6)	–	(6)	(96)	(1)	(97)
Decrease in debtors	102	–	102	62	(9)	53
(Decrease) in creditors	(103)	–	(103)	(103)	(16)	(119)
Increase/(decrease) in operating provisions	3	–	3	(4)	–	(4)
Other and non-cash items	(1)	–	(1)	18	–	18

Net cash inflow from operating activities	490	–	490	352	9	361

Purchase of fixed assets and finance lease payments	(172)	–	(172)	(139)	(10)	(149)
Sale of operating tangible fixed assets	36	–	36	21	1	22
Dividends from associates	7	18	25	6	43	49
Other	(11)	–	(11)	(8)	–	(8)

Operating cash flow	350	18	368	232	43	275

Analysed between:
Operating cash flow before internet enterprises and other items	535	18	553	537	43	580
Cash effect of other items:
Dorling Kindersley exceptional payments	–	–	–	(46)	–	(46)
Integration costs:
Simon & Schuster/NCS	(26)	–	(26)	(36)	–	(36)
Dorling Kindersley	(43)	–	(43)	(25)	–	(25)
Cash effect of internet enterprises	(116)	–	(116)	(198)	–	(198)

Operating cash flow	350	18	368	232	43	275

note The Dorling Kindersley exceptional payments in 2000 are in respect of creditors on the acquisition balance sheet beyond normal trading terms.

Operating cash flow has been disclosed as it is part of Pearson’s corporate and operating measures.


all figures in Ł millions	cash	over- drafts	sub- total	short-term deposits	debt due within one year	debt due after one year	finance leases	total

b. Analysis of net debt
At 31 December 2000	425	(110)	315	91	(2)	(2,705)	(16)	(2,317)
Exchange differences	(10)	1	(9)	1	–	(16)	–	(24)
Debt issue costs	–	–	–	–	–	1	–	1
Other non-cash items	–	–	–	–	(100)	99	(5)	(6)
Net cash flow	(115)	49	(66)	1	(3)	14	7	(47)

At 31 December 2001	300	(60)	240	93	(105)	(2,607)	(14)	(2,393)

At 31 December 1999	288	(38)	250	40	(9)	(2,276)	(15)	(2,010)
Exchange differences	14	(7)	7	(1)	(1)	(122)	(1)	(118)
Acquired with subsidiary*	–	–	–	–	–	–	(11)	(11)
Television assets contributed*	–	–	–	(82)	–	60	2	(20)
Debt issue costs	–	–	–	–	–	4	–	4
Other non-cash items	–	–	–	–	–	(17)	(1)	(18)
Net cash flow	123	(65)	58	134	8	(354)	10	(144)

At 31 December 2000	425	(110)	315	91	(2)	(2,705)	(16)	(2,317)

* Excluding cash and overdrafts.
note Finance leases are included within other creditors in the balance sheet (see note 21).


all figures in Ł millions	2001	2000

c. Reconciliation of net cash flow to movement in net debt
(Increase)/decrease in net debt from net cash flow	(66)	58
Decrease in net debt from management of liquid resources	1	134
Decrease/(increase) in net debt from other borrowings	11	(346)
Decrease in finance leases	7	10
Television assets contributed	–	(20)
Acquired with subsidiary	–	(11)
Debt issue costs	1	4
Other non-cash items	(6)	(18)
Exchange differences	(24)	(118)

Movement in net debt in the year	(76)	(307)
Net debt at beginning of the year	(2,317)	(2,010)

Net debt at end of the year	(2,393)	(2,317)

d. Tax paid includes Ł27m (2000: Ł30m) relating to items excluded from operating profit.

2001 Annual Report
	Financial Highlights

	Chairman's Statement

	Chief Executive's Review

	The Pearson Goals

	Corporate & Operating Measures

	Operating Review

	Financial Review

	Board of Directors

	Directors' Report

	Personnel Committee Report

	Consolidated Profit and Loss Account

	Consolidated Balance Sheet

	Consolidated Statement of Cash Flows

	Statement of Total Recognised Gains and Losses

	Reconciliation of Movements in Equity Shareholders' Funds

	Independent Auditors' Report to the Members of Pearson plc

	Five Year Summary

	Corporate and Operating Measures (2)

	Shareholder Information


	Notes to the Accounts