NOTES TO THE CONSOLIDATED BALANCE SHEET 17 TO 29

NOTES TO THE CONSOLIDATED BALANCE SHEET

17 GOODWILL

* In the prior period the Group disclosed goodwill cost and goodwill amortisation. The presentation above has been restated to show goodwill brought forward at the IFRS transition date net of amortisation at deemed cost as required by IFRS 1.

The Group tests goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The impairment recognised for the year was £36.1 million. Of the impairment for the year, £10.2 million relates to the national newspaper division for Loot following continued decreases in advertising and circulation revenues and £1.1 million for Simply Switch due to poor trading, £5.2 million to the local media division in relation to a classified paid-for newspaper and £19.6 million relating to the exhibition division in relation to consumer shows in the USA.

In addition to the impairment of £36.1 million, a reduction in cost of £4.4 million has been recorded upon recognition of deferred tax assets relating to pre-acquisition losses.

In the prior period, of the total impairment charge of £35.1 million, £15.4 million relates to the exhibition division following a downturn in the consumer and gift markets it serves and £19.2 million relates to the national newspaper division as a result of decreases in advertising and circulation revenues at Loot.

When testing for impairment, the recoverable amounts for all the Group’s cash-generating units (CGUs) are measured at their value in use by discounting future expected cash flows. These calculations use cash flow projections based on management approved budgets and projections which reflect management’s current experience and future expectations of the markets in which the CGU operates. Risk adjusted discount rates used by the Group in its impairment tests range from 8.4% to 15.0%, the choice of rates depending on the market and maturity of the CGU; the growth rates used in the projections range between 3.0% and 5.0% and vary with management’s view of the CGU’s market position, maturity of the relevant market, and do not exceed the long-term average growth rate for the market in which it operates.

Goodwill arising on the acquisitions is principally attributable to the anticipated profitability relating to the distribution of the Group’s products in new and existing markets and anticipated operating synergies from the business combinations.

The only large single item of goodwill included in the net book value above relates to BCA, a business within Metal Bulletin, which has a carrying value of £113.5 million.

18 OTHER INTANGIBLE ASSETS

Intangible assets all have a finite life and are being amortised over their useful lives. The Group reviews the appropriateness of the carrying value of its intangible assets and tests intangible fixed assets for impairment if there are indicators that intangible fixed assets might be impaired. The impairment recognised for the year was £12.2 million (2006 £24.1 million). Of the charge for the year £11.9 million relates to Simply Switch in the national newspaper division following poor trading. The Group is satisfied that the carrying value at 30th September, 2007 remains recoverable in full.

When testing for impairment, the recoverable amounts for all the Group’s cash-generating units (CGUs) are measured at their value in use by discounting future expected cash flows. These calculations use cash flow projections based on management approved budgets and projections which reflect management’s current experience and future expectations of the markets in which the CGU operates. Risk adjusted discount rates used by the Group in its impairment tests range from 8.4% to 15.0%, the choice of rates depending on the market and maturity of the CGU; the growth rates used in the projections range between 3% and 5% and vary with management’s view of the CGU’s market position, maturity of the relevant market, and do not exceed the long-term average growth rate for the market in which it operates.

The carrying value of the Group’s larger intangible assets is further analysed as follows

19 PROPERTY, PLANT AND EQUIPMENT

(i) Included within exceptional operating costs is an impairment charge of £6.0 million (2006 £nil) relating to printing equipment within the national newspaper and related activities division. These assets are now considered obsolete due to excess capacity within the Group following a reduction in demand in the Group’s contract printing market.

Assets in the course of construction are not depreciated. Depreciation commences when the asset is available for use.

(i) During the year the Group’s new colour press facility at Didcot became available for use and has been transferred out of assets under construction.

20 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

Summary aggregated financial information for the Group’s joint ventures, extracted on a 100% basis from the joint ventures’ own financial accounts as at 30th September, 2007 is set out below:

At 30th September, 2007 there were no material contingent liabilities or capital commitments in respect of the Group’s joint ventures (2006 None).

Information on principal joint ventures from the latest available accounts (all incorporated in Great Britain and registered and operating in England and Wales unless otherwise stated).

Summary aggregated financial information for the Group’s associates, extracted on a 100% basis from the associates’ own financial accounts as at 30th September, 2007 is set out below:

Information on principal associates from the latest available accounts (all incorporated and operating in Great Britain unless otherwise stated).

Joint ventures and associates have been accounted for under the equity method using unaudited accounts to 30th September, 2007 provided in the case of listed associates that such information is public information at the latest practicable date for inclusion by the Group.

The Group has significant influence in Shopcreator plc and participates in its direction through board representation, even though its holding is below 20%.

21 NON-CURRENT ASSETS – AVAILABLE-FOR-SALE INVESTMENTS

The investments above represent listed equity securities and unlisted securities, which are recorded as non-current assets unless they are expected to be sold within one year, in which case they are recorded as current assets. The investments in listed securities have no fixed maturity or coupon rate and the fair value of these investments is based on quoted market prices.

Investments are analysed as follows:

The Group’s investment in XAP Corporation Inc has been impaired by £nil (2006 £12.0 million) following a review of its carrying value.

Since there is no active market upon which they are traded, other unlisted equity securities are recorded at cost, as their fair values cannot be reliably measured.

Information on principal investments, taken from latest published accounts (incorporated in Great Britain unless stated otherwise) is as follows:

22 INVENTORIES

23 TRADE AND OTHER RECEIVABLES

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

24 TRADING INVESTMENTS

The above investment represented the Group’s investment in Reuters Group plc ordinary share capital.

25 DISCONTINUED OPERATIONS

In March 2007 the Group sold Atalink Limited, a specialist and direct response publication company. The Group received £1.8 million on completion, with a further payment, expected to be £0.7 million, which will be received for the net current assets of the company on agreement of the completion accounts. An additional final payment of £0.5 million is receivable in March 2008. No profit or loss was made on disposal. The results of Atalink are included in the consolidated accounts up to the date of their disposal as part of discontinued operations.

In April 2007 the Group sold Energy Information Centre Limited, a leading company in the provision of wholesale and retail market intelligence outsourced procurement and energy risk management strategy. The Group received £4.7 million on completion, with a further payment expected to be £0.3 million, to be received for the net current assets of the company on agreement of the completion accounts. No profit or loss was made on disposal. The results of Energy Information Centre Limited are included in the consolidated accounts up to the date of their disposal as part of discontinued operations.

In May 2007 the Group sold the business and net assets of Systematics Limited, a database business principally in the farm machinery and construction sector, for £0.1 million. No profit or loss was made on disposal. The results of Systematics Limited are included in the consolidated accounts up to the date of their disposal as part of discontinued operations.

The Group’s income statement includes the following results from discontinued operations:

26 CASH AND CASH EQUIVALENTS

27 TRADE AND OTHER PAYABLES

The Directors consider that the carrying amount of trade and other payables approximates their fair value.

28 CURRENT TAX PAYABLE

29 ACQUISITION PUT OPTION COMMITMENTS

Written put options to acquire further stakes in subsidiaries, associates and joint ventures written at the time of business combinations, unless so deeply in the money that they represent in-substance ownership interests, are considered financial instruments under IAS 32 and IAS 39. Put options over a minority stake in a subsidiary give rise to a financial liability under IAS 32. Put options over an associate are within the scope of IAS 39 and are accounted for as derivatives at fair value through profit and loss. Where put options over associates have a fair value of nil, no accounting is required. Written put options are classified within current liabilities if exerciseable within one year.