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4. Operating expenses
| All figures in £ millions | 2007 | 2006 |
|---|---|---|
| By function: | ||
| Cost of goods sold | 1,910 | 1,841 |
| Operating expenses | ||
| Distribution costs | 264 | 288 |
| Administrative and other expenses | 1,538 | 1,462 |
| Other income | (101) | (99) |
| Total operating expenses | 1,701 | 1,651 |
| Total | 3,611 | 3,492 |
| All figures in £ millions | Notes | 2007 | 2006 |
|---|---|---|---|
| By nature: | |||
| Utilisation of inventory | 18 | 732 | 702 |
| Depreciation of property, plant and equipment | 10 | 65 | 68 |
| Amortisation of intangible assets – Pre-publication | 17 | 192 | 210 |
| Amortisation of intangible assets – Other | 11 | 70 | 48 |
| Employee benefit expense | 5 | 1,288 | 1,225 |
| Operating lease rentals | 129 | 122 | |
| Other property costs | 122 | 121 | |
| Royalties expensed | 365 | 360 | |
| Advertising, promotion and marketing | 195 | 190 | |
| Information technology costs | 70 | 71 | |
| Other costs | 484 | 474 | |
| Other income | (101) | (99) | |
| Total | 3,611 | 3,492 |
During the year the Group obtained the following services from the Group’s auditor:
| All figures in £ millions | 2007 | 2006 |
|---|---|---|
| Fees payable to the Company’s auditor for the audit of parent company and consolidated accounts |
1 | 1 |
| The audit of the Company’s subsidiaries pursuant to legislation | 2 | 4 |
| Other services pursuant to legislation | 1 | 4 |
| Tax services | 2 | 1 |
| Other services | 1 | 1 |
| Total | 7 | 11 |
Reconciliation between audit and non-audit service fees is shown below:
| All figures in £ millions | 2007 | 2006 |
|---|---|---|
| Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act |
4 | 9 |
| Non-audit fees | 3 | 2 |
| Total audit fees | 7 | 11 |
Other services pursuant to legislation represent fees payable for services in relation to other statutory filings or engagements that are required to be carried out by the appointed auditor. In particular, this includes fees for attestation under section 404 of the Sarbanes-Oxley Act.
Tax services include services related to tax planning and various other tax advisory services.
Other services include services related to the disposal of the Data Management business, due diligence on acquisitions and advisory services in relation to information technology and section 404.