Notes to the Accounts

16. Other fixed asset investments

note • The valuations of unlisted investments are directors’ valuations as at 31 December 2000. If all investments were realised at valuation there would be no liability for taxation.

note • The Pearson Employee Share Trust and Pearson plc Employee Share Ownership Trusts hold 4.2m (1999: 1m) Pearson plc ordinary shares which had a market value of £66m at 31 December 2000 (1999: £19m). These shares have been acquired by the trusts, using funds provided by Pearson plc, to meet obligations under various executive and employee option and restricted share plans. Under these plans the participants become entitled to shares after a specified number of years and subject to certain performance criteria being met. Pearson aims to hedge its liability under the plans by buying shares through the trusts to meet the anticipated future liability. The anticipated future liability is regularly re-assessed during the year and additional shares are purchased when required to meet an increase in this liability. The cost of funding and administering the trusts are charged to the profit and loss account in the period to which they relate. The cost of the shares is being amortised over the performance period of the associated plans. Dividends on the shares held by the trusts have been waived.