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  Pearson Annual Report 1998    

Notes to the Accounts


7. Taxation


    1998 1997

  Corporation tax at 31% (1997: 31.5%) 134 37
  Deferred taxation (4) 11
  Double taxation relief (1) (1)
  Associates 8 5
  Overseas tax 45 30
  Deferred taxation 1 2
  Associates 5 5



  Tax rate reconciliation    
  UK tax rate 31.0 31.5
  Effect of utilisation of tax losses in the US (2.7) (4.3)
  Other items (0.3) 2.2

  Tax rate reflected in adjusted earnings 28.0 29.4
  Effect of profits/(losses) excluded from adjusted earnings 1.9 39.5

  Tax rate reflected in earnings 29.9 68.9

NOTE: The Group continues to have substantial tax losses available in the US which are not recognised in the accounts and more than offset both 1998 and 1997 US profits, so reducing the Group tax rate reflected in adjusted earnings. Relief has not been taken for the Simon & Schuster integration costs to the extent that they arose in the US, hence increasing the effective tax rate on earnings. This was largely offset by the fact that, as in 1997, the tax payable on profits on disposals benefited from the use of losses brought forward, indexation and from other differences between book and tax bases for the calculation of gains. 1997 was also affected by no relief being taken for the provision against the goodwill on the sale of Mindscape Inc.

1998 Annual Report
* Introduction
* Chairman's statement
* Chief Executive's review
* Financial Review
* Financial Policy
* Report of the directors
* Personnel committee report
* Auditors' report
* Consolidated profit and loss account
* Consolidated balance sheet
* Consolidated statement of cash flows
* Statement of total recognised gains and losses
* Note of historical cost profits and losses
* Reconciliation of movements in equity shareholders' funds
* Principal subsidiaries and associates
* Five year summary
* Shareholder information
* Notes to the accounts



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