Cover Page
Cover Page | 12 Months Ended |
Dec. 31, 2019shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Trading Symbol | PSO |
Entity Registrant Name | PEARSON PLC |
Entity Central Index Key | 0000938323 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 782,098,929 |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Voluntary Filers | No |
Title of 12(b) Security | Ordinary Shares |
Security Exchange Name | NYSE |
Entity Address, Country | GB |
Entity Interactive Data Current | Yes |
American Depositary Shares | |
Document Information [Line Items] | |
Title of 12(b) Security | American Depositary Shares |
Security Exchange Name | NYSE |
No Trading Symbol Flag | true |
Consolidated income statement
Consolidated income statement - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Continuing operations | |||
Sales | £ 3,869 | £ 4,129 | £ 4,513 |
Cost of goods sold | (1,858) | (1,943) | (2,066) |
Gross profit | 2,011 | 2,186 | 2,447 |
Operating expenses | (1,806) | (1,907) | (2,202) |
Other net gains and losses | 16 | 230 | 128 |
Share of results of joint ventures and associates | 54 | 44 | 78 |
Operating profit | 275 | 553 | 451 |
Finance costs | (84) | (91) | (110) |
Finance income | 41 | 36 | 80 |
Profit before tax | 232 | 498 | 421 |
Income tax | 34 | 92 | (13) |
Profit for the year | 266 | 590 | 408 |
Attributable to: | |||
Equity holders of the company | 264 | 588 | 406 |
Non-controlling interest | £ 2 | £ 2 | £ 2 |
Earnings per share attributable to equity holders of the company during the year (expressed in pence per share) | |||
- basic | £ 34 | £ 75.6 | £ 49.9 |
- diluted | £ 34 | £ 75.5 | £ 49.9 |
Consolidated statement of compr
Consolidated statement of comprehensive income - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement [LineItems] | |||
Profit/(loss) for the year | £ 266 | £ 590 | £ 408 |
Items that may be reclassified to the income statement | |||
Currency translation adjustment disposed | 4 | (4) | (51) |
Attributable tax | 5 | (4) | 9 |
Items that are not reclassified to the income statement | |||
Fair value gain on other financial assets | 20 | 8 | 13 |
Attributable tax | (4) | (4) | |
Attributable tax | 22 | 9 | (42) |
Other comprehensive income/(expense) for the year | (217) | 124 | (155) |
Total comprehensive income for the year | 49 | 714 | 253 |
Attributable to: | |||
Equity holders of the company | 47 | 712 | 251 |
Non-controlling interest | 2 | 2 | 2 |
Group [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (113) | 91 | (158) |
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | (145) | 22 | 175 |
Associates [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (2) | (1) | (104) |
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | £ (4) | £ 3 | £ 7 |
Consolidated balance sheet
Consolidated balance sheet - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Non-current assets | ||
Property, plant and equipment | £ 618 | £ 237 |
Intangible assets | 2,900 | 3,009 |
Investments in joint ventures and associates | 7 | 392 |
Deferred income tax assets | 59 | 60 |
Financial assets – derivative financial instruments | 29 | 67 |
Retirement benefit assets | 429 | 571 |
Other financial assets | 122 | 93 |
Trade and other receivables | 313 | 100 |
Total non-current assets | 4,477 | 4,529 |
Current assets | ||
Intangible assets – pre-publication | 870 | 817 |
Inventories | 169 | 164 |
Trade and other receivables | 1,275 | 1,178 |
Financial assets – derivative financial instruments | 25 | 1 |
Cash and cash equivalents (excluding overdrafts) | 437 | 568 |
Total current assets | 2,776 | 2,728 |
Assets classified as held for sale | 397 | 648 |
Total assets | 7,650 | 7,905 |
Non-current liabilities | ||
Financial liabilities - borrowings | (1,572) | (674) |
Financial liabilities - derivative financial instruments | (24) | (36) |
Deferred income tax liabilities | (48) | (136) |
Retirement benefit obligations | (92) | (100) |
Provisions for other liabilities and charges | (13) | (145) |
Other liabilities | (86) | (155) |
Non-current liabilities | (1,835) | (1,246) |
Current liabilities | ||
Trade and other liabilities | (1,278) | (1,400) |
Financial liabilities - borrowings | (92) | (46) |
Financial liabilities - derivative financial instruments | (15) | (23) |
Current income tax liabilities | (55) | (72) |
Provisions for other liabilities and charges | (52) | (20) |
Total current liabilities | (1,492) | (1,561) |
Liabilities classified as held for sale | (573) | |
Total liabilities | (3,327) | (3,380) |
Net assets | 4,323 | 4,525 |
Equity | ||
Share capital | 195 | 195 |
Share premium | 2,614 | 2,607 |
Treasury shares | (24) | (33) |
Capital redemption reserve | 11 | 11 |
Fair value reserve | 39 | 19 |
Translation reserve | 567 | 678 |
Retained earnings | 911 | 1,039 |
Total equity attributable to equity holders of the company | 4,313 | 4,516 |
Non-controlling interest | 10 | 9 |
Total equity | £ 4,323 | £ 4,525 |
Consolidated statement of chang
Consolidated statement of changes in equity - GBP (£) £ in Millions | Total | Share capital [member] | Share premium [member] | Treasury shares [member] | Capital redemption reserve [member] | Fair value reserve [member] | Translation reserve [member] | Retained earnings [member] | Equity attributable to equity holders of the company [member] | Non-controlling interest [member] |
Beginning Balance at Dec. 31, 2016 | £ 4,348 | £ 205 | £ 2,597 | £ (79) | £ 905 | £ 716 | £ 4,344 | £ 4 | ||
Statement [LineItems] | ||||||||||
Profit/(loss) for the year | 408 | 406 | 406 | 2 | ||||||
Other comprehensive income/(expense) | (155) | £ 13 | (313) | 145 | (155) | |||||
Total comprehensive income/(expense) | 253 | 13 | (313) | 551 | 251 | 2 | ||||
Equity-settled transactions | 33 | 33 | 33 | |||||||
Issue of ordinary shares under share option schemes | 5 | 5 | 5 | |||||||
Buyback of equity | (300) | (5) | £ 5 | (300) | (300) | |||||
Release of treasury shares | 18 | (18) | ||||||||
Changes in non-controlling interest | (2) | (2) | 2 | |||||||
Dividends | (318) | (318) | (318) | |||||||
Ending balance at Dec. 31, 2017 | 4,021 | 200 | 2,602 | (61) | 5 | 13 | 592 | 662 | 4,013 | 8 |
Statement [LineItems] | ||||||||||
Profit/(loss) for the year | 590 | 588 | 588 | 2 | ||||||
Other comprehensive income/(expense) | 124 | 8 | 86 | 30 | 124 | |||||
Total comprehensive income/(expense) | 714 | 8 | 86 | 618 | 712 | 2 | ||||
Equity-settled transactions | 37 | 37 | 37 | |||||||
Tax on equity-settled transactions | 4 | 4 | 4 | |||||||
Issue of ordinary shares under share option schemes | 6 | 1 | 5 | 6 | ||||||
Buyback of equity | (2) | (6) | 6 | (2) | (2) | |||||
Release of treasury shares | 28 | (28) | ||||||||
Transfer of gain on disposal of FVOCI investment | (2) | 2 | ||||||||
Dividends | (137) | (136) | (136) | (1) | ||||||
Ending balance at Dec. 31, 2018 | 4,525 | 195 | 2,607 | (33) | 11 | 19 | 678 | 1,039 | 4,516 | 9 |
Statement [LineItems] | ||||||||||
Beginning balance | Previously stated [member] | 4,447 | 195 | 2,607 | (33) | 11 | 19 | 678 | 961 | 4,438 | 9 |
Adjustment on initial application (Increase decrease due to application of IFRS 16 [member]) at Dec. 31, 2018 | (83) | (83) | (83) | |||||||
Adjustment on initial application (Increase decrease due to application of IFRIC 23 [member]) at Dec. 31, 2018 | 5 | 5 | 5 | |||||||
Statement [LineItems] | ||||||||||
Profit/(loss) for the year | 266 | 264 | 264 | 2 | ||||||
Other comprehensive income/(expense) | (217) | 20 | (111) | (126) | (217) | |||||
Total comprehensive income/(expense) | 49 | 20 | (111) | 138 | 47 | 2 | ||||
Equity-settled transactions | 25 | 25 | 25 | |||||||
Tax on equity-settled transactions | (5) | (5) | (5) | |||||||
Issue of ordinary shares under share option schemes | 7 | 7 | 7 | |||||||
Purchase of treasury shares | (52) | (52) | (52) | |||||||
Release of treasury shares | 61 | (61) | ||||||||
Dividends | (148) | (147) | (147) | (1) | ||||||
Ending balance at Dec. 31, 2019 | £ 4,323 | £ 195 | £ 2,614 | £ (24) | £ 11 | £ 39 | £ 567 | £ 911 | £ 4,313 | £ 10 |
Consolidated cash flow statemen
Consolidated cash flow statement - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | |||
Net cash generated from operations | £ 480 | £ 547 | £ 462 |
Interest paid | (81) | (42) | (89) |
Tax paid | (30) | (43) | (75) |
Net cash generated from operating activities | 369 | 462 | 298 |
Cash flows from investing activities | |||
Acquisition of subsidiaries, net of cash acquired | (45) | (5) | (11) |
Additional capital invested in associates | (40) | ||
Purchase of investments | (12) | (10) | (3) |
Purchase of property, plant and equipment | (55) | (70) | (82) |
Purchase of intangible assets | (138) | (130) | (150) |
Disposal of subsidiaries, net of cash disposed | (101) | 83 | 19 |
Proceeds from sale of associates | 18 | 411 | |
Proceeds from sale of investments | 5 | 6 | |
Proceeds from sale of property, plant and equipment | 1 | 128 | |
Proceeds from sale of liquid resources | 10 | 20 | |
Lease receivables repaid | 26 | ||
Loans repaid by/(advance to) related parties | (49) | 46 | (13) |
Investment in liquid resources | (2) | (18) | |
Interest received | 17 | 20 | 20 |
Investment income | 2 | ||
Dividends received from joint ventures and associates | 64 | 117 | 458 |
Net cash generated from/(used in) investing activities | (325) | 211 | 651 |
Cash flows from financing activities | |||
Proceeds from issue of ordinary shares | 7 | 6 | 5 |
Buyback of equity | (153) | (149) | |
Purchase of treasury shares | (52) | ||
Proceeds from borrowings | 230 | 2 | |
Repayment of borrowings | (48) | (441) | (1,294) |
Repayment of lease liabilities | (91) | (4) | (5) |
Dividends paid to company's shareholders | (147) | (136) | (318) |
Dividends paid to non-controlling interest | (1) | (1) | |
Net cash used in financing activities | (102) | (729) | (1,759) |
Effects of exchange rate changes on cash and cash equivalents | (33) | (49) | 16 |
Net decrease in cash and cash equivalents | (91) | (105) | (794) |
Cash and cash equivalents at beginning of year | 525 | 630 | 1,424 |
Cash and cash equivalents at end of year | £ 434 | £ 525 | £ 630 |
Accounting policies
Accounting policies | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Accounting policies | 1a. Accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. Basis of preparation These consolidated financial statements have been prepared on the going concern basis and in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. In respect of the accounting standards applicable to the Group; there is no difference between EU-adopted These consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and liabilities (including derivative financial instruments) at fair value. These accounting policies have been consistently applied to all years presented, unless otherwise stated. 1. Interpretations and amendments to published standards effective 2019 • IFRS 16 Leases • IFRIC 23 Uncertainty over Income Tax Treatments • IFRS 9 and IFRS 7 Amendments The impact of the adoption of these new standards is set out in notes 1b, 1c and 1d. A number of other new pronouncements are also effective from 1 January 2019 but they do not have a material impact on the consolidated financial statements. Additional disclosure has been given where relevant. 2. Standards, interpretations and amendments to published standards that are not yet effective 3. Critical accounting assumptions and judgements The areas requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are discussed in the relevant accounting policies under the following headings and in the notes to the accounts where appropriate: Intangible assets: Goodwill Intangible assets: Pre-publication Taxation Revenue: Provisions for returns Employee benefits: Pensions In addition, certain assumptions have been used and judgements exercised in the valuation of the other receivable which arose on the disposal of the US K12 Courseware business (see note 14). Consolidation 1. Business combinations The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred in the operating expenses line of the income statement. Identifiable assets acquired and identifiable liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The determination of fair values often requires significant judgements and the use of estimates, and, for material acquisitions, the fair value of the acquired intangible assets is determined by an independent valuer. The excess of the consideration transferred, the amount of any non-controlling See the ‘Intangible assets’ policy for the accounting policy on goodwill. If this is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the income statement. On an acquisition-by-acquisition non-controlling non-controlling IFRS 3 ‘Business Combinations’ has not been applied retrospectively to business combinations before the date of transition to IFRS. Management exercises judgement in determining the classification of its investments in its businesses, in line with the following: 2. Subsidiaries 3. Transactions with non-controlling non-controlling non-controlling non-controlling 4. Joint ventures and associates The Group’s share of its joint ventures’ and associates’ post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. The Group’s share of its joint ventures’ and associates’ results is recognised as a component of operating profit as these operations form part of the core publishing business of the Group and are an integral part of existing wholly-owned businesses. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in a joint venture or associate equals or exceeds its interest in the joint venture or associate, the Group does not recognise further losses unless the Group has incurred obligations or made payments on behalf of the joint venture or associate. Unrealised gains and losses on transactions between the Group and its joint ventures and associates are eliminated to the extent of the Group’s interest in these entities. 5. Contribution of a subsidiary to an associate or joint venture Foreign currency translation 1. Functional and presentation currency 2. Transactions and balances year-end 3. Group companies i) Assets and liabilities are translated at the closing rate at the date of the balance sheet ii) Income and expenses are translated at average exchange rates iii) All resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. The Group treats specific inter-company loan balances, which are not intended to be repaid in the foreseeable future, as part of its net investment. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. The principal overseas currency for the Group is the US dollar. The average rate for the year against sterling was $1.28 (2018: $1.34) and the year-end Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for intended use. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives as follows: Buildings (freehold): 20 – 50 years Buildings (leasehold): over the period of the lease Plant and equipment: 3 – 10 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The carrying value of an asset is written down to its recoverable amount if the carrying value of the asset is greater than its estimated recoverable amount. Intangible assets 1. Goodwill non-controlling Goodwill is tested at least annually for impairment and carried at cost less accumulated impairment losses. An impairment loss is recognised to the extent that the carrying value of goodwill exceeds the recoverable amount. The recoverable amount is the higher of fair value less costs of disposal and value in use. These calculations require the use of estimates in respect of forecast cash flows and discount rates and significant management judgement in respect of CGU and cost allocation; impairment is a key source of estimation uncertainty and has a significant risk of resulting in a material adjustment to the carrying amount of relevant assets within the next financial year. A summary of these assets by CGU and a description of the key assumptions and sensitivities is included in note 11. Goodwill is allocated to aggregated cash-generating units for the purpose of impairment testing. The allocation is made to those aggregated cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 2. Acquired software 3. Internally developed software 4. Acquired intangible assets 5. Pre-publication Pre-publication Pre-publication Pre-publication The assessment of the useful economic life and the recoverability of pre-publication Reviews are performed regularly to estimate recoverability of pre-publication pre-publication The investment in pre-publication Other financial assets Other financial assets are non-derivative Marketable securities and cash deposits with maturities of greater than three months are classified and subsequently measured at fair value through profit and loss. They are remeasured at each balance sheet date by using market data and the use of established valuation techniques. Any movement in the fair value is immediately recognised in finance income or finance costs in the income statement. Investments in the equity instruments of other entities are classified and subsequently measured at fair value through other comprehensive income. Changes in fair value are recorded in equity in the fair value reserve via other comprehensive income. On subsequent disposal of the asset, the net fair value gains or losses are reclassified from the fair value reserve to retained earnings. Any dividends received from equity investments classified as fair value through other comprehensive income are recognised in the income statement unless they represent a return of capital. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method or an approximation thereof, such as the first in first out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Provisions are made for slow-moving and obsolete stock. Royalty advances Advances of royalties to authors are included within trade and other receivables when the advance is paid less any provision required to adjust the advance to its net realisable value. The realisable value of royalty advances relies on a degree of management estimation in determining the profitability of individual author contracts. If the estimated realisable value of author contracts is overstated, this will have an adverse effect on operating profits as these excess amounts will be written off. The recoverability of royalty advances is based upon an annual detailed management review of the age of the advance, the future sales projections for new authors and prior sales history of repeat authors. The royalty advance is expensed at the contracted or effective royalty rate as the related revenues are earned. Royalty advances which will be consumed within one year are held in current assets. Royalty advances which will be consumed after one year are held in non-current Cash and cash equivalents Cash and cash equivalents in the cash flow statement include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included in borrowings in current liabilities in the balance sheet. Short-term deposits and marketable securities with maturities of greater than three months do not qualify as cash and cash equivalents and are reported as financial assets. Movements on these financial assets are classified as cash flows from financing activities in the cash flow statement where these amounts are used to offset the borrowings of the Group or as cash flows from investing activities where these amounts are held to generate an investment return. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, net of income taxes, is deducted from equity attributable to the company’s equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders. Ordinary shares purchased under a buyback programme are cancelled and the nominal value of the shares is transferred to a capital redemption reserve. Borrowings Borrowings are recognised initially at fair value, which is proceeds received net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value being recognised in the income statement over the period of the borrowings using the effective interest method. Accrued interest is included as part of borrowings. Where a debt instrument is in a fair value hedging relationship, an adjustment is made to its carrying value in the income statement to reflect the hedged risk. Where a debt instrument is in a net investment hedge relationship gains and losses on the effective portion of the hedge are recognised in other comprehensive income. Derivative financial instruments Derivatives are recognised at fair value and remeasured at each balance sheet date. The fair value of derivatives is determined by using market data and the use of established estimation techniques such as discounted cash flow and option valuation models. For derivatives in a hedge relationship, the currency basis spread is excluded from the designation as a hedging instrument. Changes in the fair value of derivatives are recognised immediately in finance income or costs. However, derivatives relating to borrowings and certain foreign exchange contracts are designated as part of a hedging transaction. The accounting treatment is summarised as follows: Typical reason for designation Reporting of gains and losses on Reporting of gains and Net investment hedge The derivative creates a foreign currency liability which is used to hedge changes in the value of a subsidiary which transacts in that currency. Recognised in other comprehensive income. On disposal, the accumulated value of gains and losses reported in other comprehensive income is transferred to the income statement. Fair value hedges The derivative transforms the interest profile on debt from fixed rate to floating rate. Changes in the value of the debt as a result of changes in interest rates and foreign exchange rates are offset by equal and opposite changes in the value of the derivative. When the Group’s debt is swapped to floating rates, the contracts used are designated as fair value hedges. Gains and losses on the derivative are reported in finance income or finance costs. However, an equal and opposite change is made to the carrying value of the debt (a ‘fair value adjustment’) with the benefit/cost reported in finance income or finance costs. The net result should be a zero charge on a perfectly effective hedge. If the debt and derivative are disposed of, the value of the derivative and the debt (including the fair value adjustment) are reset to zero. Any resultant gain or loss is recognised in finance income or finance costs. Non-hedge These are not designated as hedging instruments. Typically these are short-term contracts to convert debt back to fixed rates or foreign exchange contracts where a natural offset exists. No hedge accounting applies. Policy applicable from 1 January 2018: IFRS 9 The Group adopted IFRS 9 ‘Financial Instruments’ at 1 January 2018 and applied the new rules in accordance with the transitional provisions. Comparatives for 2017 have not been restated. The Group assessed the impact of adopting IFRS 9 and the only material adjustment was a £13m increase in the provision for losses against trade debtors which was reflected as an adjustment to retained earnings at 1 January 2018. The adjustment arises from adoption of the expected credit loss model for impairments under IFRS 9. Although there is a transition impact from adoption of the new model there was no material impact on profit before tax for 2018. Also under IFRS 9, the Group’s equity financial investments continue to be recognised at fair value and the Group has elected to take the option to recognise all movements in fair value in other comprehensive income (FVOCI). Gains or losses realised on the subsequent sale of these financial assets (FVOCI investments) are no longer recycled through the profit and loss account, but are instead reclassified from the FVOCI reserve to retained earnings. IFRS 9 also introduced a new, simpler hedge accounting model with a principles-based approach designed to align the accounting result with the economic hedging strategy. The Group has confirmed that its previous hedge relationships continue to qualify as hedges under IFRS 9 in 2018. Taxation Current tax is recognised at the amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred income tax is provided, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided in respect of the undistributed earnings of subsidiaries, associates and joint ventures other than where it is intended that those undistributed earnings will not be remitted in the foreseeable future. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited directly to equity or other comprehensive income, in which case the tax is also recognised in equity or other comprehensive income. The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the estimates in relation to the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises tax provisions when it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are based on management’s best judgement of the application of tax legislation and best estimates of future settlement amounts (see note 7). Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Deferred tax assets and liabilities require management judgement and estimation in determining the amounts to be recognised. In particular, when assessing the extent to which deferred tax assets should be recognised, significant judgement is used when considering the timing of the recognition and estimation is used to determine the level of future taxable income together with any future tax planning strategies (see note 13). Employee benefits 1. Pensions When the calculation results in a potential asset, the recognition of that asset is limited to the asset ceiling – that is the present value of any economic benefits available in the form of refunds from the plan or a reduction in future contributions. Management uses judgement to determine the level of refunds available from the plan in recognising an asset. The determination of the pension cost and defined benefit obligation of the Group’s defined benefit pension schemes depends on the selection of certain assumptions, which include the discount rate, inflation rate, salary growth and longevity (see note 25). Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. The service cost, representing benefits accruing over the year, is included in the income statement as an operating cost. Net interest is calculated by applying the discount rate to the net defined benefit obligation and is presented as finance costs or finance income. Obligations for contributions to defined contribution pension plans are recognised as an operating expense in the income statement as incurred. 2. Other post-retirement obligations 3. Share-based payments Provisions Provisions are recognised if the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are discounted to present value where the effect is material. Prior to 1 January 2019 the Group recognised a provision for onerous lease contracts when the expected benefits to be derived from a contract were less than the unavoidable costs of meeting the obligations under the contract. The calculation of onerous lease provisions involved estimates of potential sublet income, lease terms including rent free periods, void periods, lease incentives and running costs. On the initial application of IFRS 16 on 1 January 2019, onerous lease provisions have been offset against the relevant right-of-use The provision was based on the present value of future payments for surplus leased properties under non-cancellable sub-leasing Revenue recognition The Group’s revenue streams are courseware, assessments and services. Courseware includes curriculum materials provided in book form and/or via access to digital content. Assessments includes test development, processing and scoring services provided to governments, educational institutions, corporations and professional bodies. Services includes the operation of schools, colleges and universities, including sistemas in Brazil, as well as the provision of online learning services in partnership with universities and other academic institutions. Revenue is recognised in order to depict the transfer of control of promised goods and services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. This process begins with the identification of our contract with a customer, which is generally through a master services agreement, customer purchase order, or a combination thereof. Within each contract, judgement is applied to determine the extent to which activities within the contract represent distinct performance obligations to be delivered and the total amount of transaction price to which we expect to be entitled. The transaction price determined is net of sales taxes, rebates and discounts, and after eliminating sales within the Group. Where a contract contains multiple performance obligations such as the provision of supplementary materials or online access with textbooks, revenue is allocated on the basis of relative standalone selling prices. Where a contract contains variable consideration significant estimation is required to determine the amount to which the Group is expected to be entitled. Revenue is recognised on contracts with customers when or as performance obligations are satisfied which is the period or the point in time where control of goods or services transfers to the customer. Judgement is applied to determine first whether control passes over time and if not, then the point in time at which control passes. Where revenue is recognised over time judgement is used to determine the method which best depicts the transfer of control. Where an input method is used significant estimation is required to determine the progress towards delivering the performance obligation. Revenue from the sale of books is recognised net of a provision for anticipated returns. This provision is based primarily on historical return rates, customer buying patterns and retailer behaviours including stock levels (see note 22). If these estimates do not reflect actual returns in future periods then revenues could be understated or overstated for a particular period. When the provision for returns is remeasured at each reporting date to reflect changes in estimates, a corresponding adjustment is also recorded to revenue. The Group may enter into contracts with another party in addition to our customer. In making the determination as to whether revenue should be recognised on a gross or net basis, the contract with the customer is analysed to understand which party controls the relevant good or service prior to transferring to the customer. This judgement is informed by facts and circumstances of the contract in determining whether the Group has promised to provide the specified good or service or whether the Group is arranging for the transfer of the specified good or service, including which party is responsible for fulfilment, has discretion to set the price to the customer and is responsible for inventory risk. On certain contracts, where the Group acts as an agent, only commissions and fees receivable for services rendered are recognised as revenue. Any third party costs incurred on behalf of the principal that are rechargeable under the contractual arrangement are not included in revenue. Income from recharges of freight and other activities which are incidental to the normal revenue-generating activities is included in other income. Additional details on the Group’s revenue streams are also included in note 3. Policy applicable from 1 January 2018: IFRS 15 The Group adopted IFRS 15 ‘Revenue from Contracts with Customers’ at 1 January 2018 and applied the modified retrospective approach. Comparatives for 2017 have not been restated and continued to be reported under IAS 18 and IAS 11. The cumulative impact of adoption has been recognised as a £108m decrease to retained earnings with a corresponding decrease in net assets at 1 January 2018. The changes were impacted by four areas: unexercised customer rights (breakage), Online Program Management (OPM) marketing, administration fees, and commissions costs. Additionally, the provision for sales returns, which was previously netted off in trade receivables, from 1 January 2018 is now shown in two parts: as a separate sales return liability within trade and other liabilities, and an inventory returns asset within inventory. The adoption of IFRS 15 increased 2018 sales and profit by £9m and £7m, respectively. Had the Group been applying IFRS 15 during 2017, it is estimated that both sales and profit before tax would have been £2m higher for the full year, with the balance sheet impact at the beginning and end of the year being similar. Leases Policy applicable from 1 January 2019 The Group as a lessee The Group assesses whether a contract is or contains a lease at the inception of the contract. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognises a right-of-use The right-of-use right-of-use right-of-use right-of-use Management uses judgement to determine the lease term where extension and termination options are available within the lease. The Group as a lessor: When the Group is an intermediate lessor, the head lease and sub-lease sub-lease right-of-use sub-leases Policy applicable before 1 January 2019 Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in financial liabilities – borrowings. The interest element of the finance cost is charged to the income statement over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases by the lessee. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Dividends Final dividends are recorded in the Group’s financial statements in the period in which they are approved by the company’s shareholders. Interim dividends are recorded when paid. Discontinued operations A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or meets the criteria to be classified as held for sale. Discontinued operations are presented in the income statement as a separate line and are shown net of tax. Assets and liabilities held for sale Assets and liabilities are classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell if it is highly probable that the carrying amount will be recovered principally through a sale transaction rather than through continuing use. No depreciation is charged in respect of non-current non-current Trade receivables Trade receivables are stated at fair value after provision for bad and doubtful debts. Provisions for bad and doubtful debts are based on the expected credit loss model. The ‘simplified approach’ is used with the expected loss allowance measured at an amount equal to the lifetime expected credit losses. Trade receivables are also stated after provision for anticipated future sales returns (also see Revenue recognition policy). 1b. Change of accounting policy: IFRS 16 The Group has adopted IFRS 16 ‘Leases’ at 1 January 2019 and applied the modified retrospective approach. Comparatives for 2018 have not been restated and the cumulative impact of adoption has been recognised as a decrease to net assets with a corresponding decrease in retained earnings at 1 January 2019 as follows: All figures in £ millions 2019 Non-current Property, plant and equipment (right-of-use 424 Investment in joint ventures and associates (2 ) Deferred income tax assets 1 Trade and other receivables 185 Current assets Trade and other receivables 7 Non-current Financial liabilities – borrowings (792 ) Deferred income tax liabilities 14 Provisions for other liabilities and charges 101 Other liabilities 58 Current liabilities Financial liabilities – borrowings (89 ) Trade and other liabilities 10 Total decrease in retained earnings at 1 January 2019 (83 ) The Group’s lease portfolio consists of approximately 750 property leases together with a number of vehicle and equipment leases. The lease liability has been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate at transition. The right-of-use right-of-use On transition the Group elected not to reassess whether a contract is, or contains, a lease, instead relying on the assessment already made applying IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether and Arrangement contains a Lease’. In addition, the Group applied the available practical expedients as follows: • Relied on its assessment of whether leases are onerous immediately prior to the date of initial application. • Applied the short-term leases exemptions to leases with lease term ending within 12 months at the date of the initial application. • Excluded the initial direct costs from the measurement of the right-to-use • Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease. Adoption of the new standard has a material impact on the Group. The lease liability brought onto the balance sheet at transition was £ |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2019 | |
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Segment information | 2. Segment information The primary segments for management and reporting are geographies as outlined below. In addition, the Group separately discloses the results from the Penguin Random House associate. The chief operating decision-maker is the Pearson executive. North America: Courseware, Assessments and Services businesses in the US and Canada. Core: Courseware, Assessments and Services businesses in more mature markets including UK, Europe, Asia Pacific and North Africa. Growth: Courseware, Assessments and Services businesses in emerging markets including Brazil, India, South Africa, Hispano-America, Hong Kong and China, and the Middle East. For more detail on the services and products included in each business segment refer to Item 4. 2019 All figures in £ millions Notes North Core Growth Penguin Corporate Group Sales 2,534 838 497 — — 3,869 Adjusted operating profit 361 92 63 65 — 581 Cost of major restructuring (110 ) (28 ) (19 ) (2 ) — (159 ) Intangible charges (62 ) (7 ) (82 ) (12 ) — (163 ) Other net gains and losses 13 8 (5 ) — — 16 Operating profit (loss) 202 65 (43 ) 51 — 275 Finance costs 6 (84 ) Finance income 6 41 Profit before tax 232 Income tax 7 34 Profit for the year 266 Segment assets 4,316 1,957 484 — 489 7,246 Associates 12 — 7 — 397 — 404 Total assets 4,316 1,964 484 397 489 7,650 Other segment items Share of results of joint ventures and associates 12 — 3 — 51 — 54 Capital expenditure 10, 11 176 35 51 — — 262 Pre-publication investment 20 189 81 49 — — 319 Depreciation 10 75 23 25 — — 123 Amortisation 11, 20 305 85 147 — — 537 2018 All figures in £ millions Notes North Core Growth Penguin Corporate Group Sales 2,784 806 539 — — 4,129 Adjusted operating profit 362 57 59 68 — 546 Cost of major restructuring (78 ) (16 ) — (8 ) — (102 ) Intangible charges (72 ) (8 ) (19 ) (14 ) — (113 ) Other net gains and losses 4 — 226 — — 230 UK pension GMP equalisation — (8 ) — — — (8 ) Operating profit 216 25 266 46 — 553 Finance costs 6 (91 ) Finance income 6 36 Profit before tax 498 Income tax 7 92 Profit for the year 590 Segment assets 4,366 1,975 536 — 636 7,513 Associates 12 — 5 — 387 — 392 Total assets 4,366 1,980 536 387 636 7,905 Other segment items Share of results of joint ventures and associates 12 (4 ) 1 1 46 — 44 Capital expenditure 10, 11 135 25 36 — — 196 Pre-publication 20 234 90 64 — — 388 Depreciation 10 41 12 13 — — 66 Amortisation 11, 20 344 92 89 — — 525 Included in the North America segment above is £60m in pre-publication 2017 All figures in £ millions Notes North Core Growth Penguin Corporate Group Sales 2,929 815 769 — — 4,513 Adjusted operating profit 394 50 38 94 — 576 Cost of major restructuring (60 ) (11 ) (8 ) — — (79 ) Intangible charges (89 ) (12 ) (37 ) (28 ) — (166 ) Other net gains and losses (3 ) — 35 96 — 128 Impact of US tax reform — — — (8 ) — (8 ) Operating profit 242 27 28 154 — 451 Finance costs 6 (110 ) Finance income 6 80 Profit before tax 421 Income tax 7 (13 ) Profit for the year 408 Segment assets 4,116 1,914 667 — 793 7,490 Joint ventures 12 — — 3 — — 3 Associates 12 4 3 — 388 — 395 Total assets 4,120 1,917 670 388 793 7,888 Other segment items Share of results of joint ventures and associates 12 5 1 1 71 — 78 Capital expenditure 10,11 162 35 43 — — 240 Pre-publication 20 218 84 59 — — 361 Depreciation 10 56 13 21 — — 90 Amortisation 11,20 348 103 110 — — 561 There were no material inter-segment sales in either 2019, 2018 or 2017. Adjusted operating profit is shown in the above tables as it is the key financial measure used by management to evaluate the performance of the Group and allocate resources to business segments. The measure also enables investors to more easily, and consistently, track the underlying operational performance of the Group and its business segments over time by separating out those items of income and expenditure relating to acquisition and disposal transactions, major restructuring programmes and certain other items that are also not representative of underlying performance, which are explained below. Cost of major restructuring: In May 2017, the Group announced a restructuring programme, to run between 2017 and 2019, to drive significant cost savings. This programme began in the second half of 2017 and net costs incurred were £79m in 2017, £102m in 2018 and £159m in 2019 and relate to delivery of cost efficiencies in the enabling functions and the US Higher Education Courseware business together with further rationalisation of the property and supplier portfolio. The restructuring costs in 2019 relate predominantly to staff redundancies while the restructuring costs in 2018 relate predominantly to staff redundancies and the net cost of property rationalisation including the net impact of the consolidation of the Group’s property footprint in London. The costs of this restructuring programme are significant enough to exclude from the adjusted operating profit measure so as to better highlight the underlying performance (see note 4). Intangible charges: These represent charges relating to acquired intangibles, acquisition costs and movements in contingent acquisition and disposal consideration. These charges are excluded as they reflect past acquisition activity and do not necessarily reflect the current year performance of the Group. Intangible amortisation charges in 2019 were £163m, including an impairment charge of £65m relating to acquired intangibles in Brazil, compared with a charge of £113m in 2018 and £166m in 2017. Other net gains and losses: These represent profits and losses on the sale of subsidiaries, joint ventures, associates and other financial assets and are excluded from adjusted operating profit as they distort the performance of the Group as reported on a statutory basis. Other net gains of £16m in 2019 mainly relate to the sale of the US K12 Courseware business. Other net gains of £230m in 2018 relate to the sale of the Wall Street English language teaching business (WSE), realising a gain of £207m, the disposal of the Group’s equity interest in UTEL, the online university partnership in Mexico, realising a gain of £19m, and various other smaller disposal items for a net gain of £4m . UK pension GMP equalisation: In 2018, also excluded is the impact of adjustments arising from clarification of guaranteed minimum pension (GMP) equalisation legislation in the UK as this relates to historical circumstances. Impact of US tax reform: In 2017, as a result of US tax reform, the Group’s share of profit from associates was adversely impacted by £8m. This amount was excluded from adjusted operating profit as it is considered to be a transition adjustment that is not expected to recur in the near future. Corporate costs are allocated to business segments on an appropriate basis depending on the nature of the cost and therefore the total segment result is equal to the Group operating profit. Segment assets, excluding corporate assets, consist of property, plant and equipment, intangible assets, inventories, receivables, deferred taxation and other financial assets and exclude cash and cash equivalents and derivative assets. Corporate assets comprise cash and cash equivalents, marketable securities and derivative financial instruments. Capital expenditure comprises additions to property, plant and equipment and software (see notes 10 and 11). Property, plant and equipment and intangible assets acquired through business combinations were £23m (2018: £nil), (2017: £nil) (see note 30). The Group operates in the following main geographic areas: Sales Non-current assets All figures in £ millions 2019 2018 2017 2019 2018 UK 385 377 384 694 900 Other European countries 244 246 262 125 143 US 2,417 2,627 2,770 2,604 2,162 Canada 105 126 126 163 250 Asia Pacific 441 455 643 149 146 Other countries 277 298 328 103 137 Total 3,869 4,129 4,513 3,838 3,738 Sales are allocated based on the country in which the customer is located. This does not differ materially from the location where the order is received. The geographical split of non-current Non-current |
Revenue from contracts with cus
Revenue from contracts with customers | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Revenue from contracts with customers | 3. Revenue from contracts with customers The following tables analyse the Group’s revenue streams. Courseware includes curriculum materials provided in book form and/or via access to digital content. Assessments includes test development, processing and scoring services provided to governments, educational institutions, corporations and professional bodies. Services includes the operation of schools, colleges and universities, including sistemas in Brazil, as well as the provision of online learning services in partnership with universities and other academic institutions. 2019 All figures in £ millions North Core Growth Group Sales: Courseware School Courseware 86 169 118 373 Higher Education Courseware 975 81 44 1,100 English Courseware 14 56 107 177 1,075 306 269 1,650 Assessments School and Higher Education Assessments 309 264 26 599 Clinical Assessments 175 52 — 227 Professional and English Certification 390 168 80 638 874 484 106 1,464 Services School Services 319 2 46 367 Higher Education Services 266 45 26 337 English Services — 1 50 51 585 48 122 755 Total 2,534 838 497 3,869 2018 All figures in £ millions North Core Growth Group Sales: Courseware School Courseware 378 172 127 677 Higher Education Courseware 1,042 87 57 1,186 English Courseware 16 58 102 176 1,436 317 286 2,039 Assessments School and Higher Education Assessments 1 298 237 23 558 Clinical Assessments 1 174 55 — 229 Professional and English Certification 344 150 64 558 816 442 87 1,345 Services School Services 288 2 47 337 Higher Education Services 244 40 29 313 English Services — 5 90 95 532 47 166 745 Total 2,784 806 539 4,129 2017 All figures in £ millions North Core Growth Group Sales: Courseware School Courseware 394 171 139 704 Higher Education Courseware 1,146 93 63 1,302 English Courseware 20 60 102 182 1,560 324 304 2,188 Assessments School and Higher Education Assessments 1 318 256 23 597 Clinical Assessments 1 183 46 — 229 Professional and English Certification 341 138 60 539 842 440 83 1,365 Services School Services 274 5 54 333 Higher Education Services 253 34 32 319 English Services — 12 296 308 527 51 382 960 Total 2,929 815 769 4,513 1 The analysis of Assessments revenues in 2018 and 2017 have been re-presented The Group derived revenue from the transfer of goods and services over time and at a point in time in the following major product lines: 2019 All figures in £ millions North Core Growth Total Courseware Products transferred at a point in time (sale or return) 448 291 178 917 Products transferred at a point in time (other) — — 37 37 Products and services transferred over time 627 15 54 696 1,075 306 269 1,650 Assessments Products transferred at a point in time 113 55 6 174 Products and services transferred over time 761 429 100 1,290 874 484 106 1,464 Services Products transferred at a point in time — 26 — 26 Products and services transferred over time 585 22 122 729 585 48 122 755 Total 2,534 838 497 3,869 2018 All figures in £ millions North Core Growth Total Courseware Products transferred at a point in time (sale or return) 718 313 197 1,228 Products transferred at a point in time (other) — — 35 35 Products and services transferred over time 718 4 54 776 1,436 317 286 2,039 Assessments 1 Products transferred at a point in time 106 52 — 158 Products and services transferred over time 710 390 87 1,187 816 442 87 1,345 Services Products transferred at a point in time — 26 38 64 Products and services transferred over time 532 21 128 681 532 47 166 745 Total 2,784 806 539 4,129 1 The analysis of Assessments revenues in 2018 has been re-presented a. Nature of goods and services The following is a description of the nature of the Group’s performance obligations within contracts with customers broken down by revenue stream, along with significant judgements and estimates made within each of those revenue streams. Courseware Revenue is generated from customers through the sales of print and digital courseware materials to schools, bookstores and direct to individual learners. Goods and services may be sold separately or purchased together in bundled packages. The goods and services included in bundled arrangements are considered distinct performance obligations, except for where Pearson provides both a licence of intellectual property and an on-going The transaction price is allocated between distinct performance obligations on the basis of their relative standalone selling prices. In determining the transaction price, variable consideration exists in the form of discounts and anticipated returns. Discounts reduce the transaction price on a given transaction. A provision for anticipated returns is made based primarily on historical return rates, customer buying patterns and retailer behaviours including stock levels (see note 24). If these estimates do not reflect actual returns in future periods then revenues could be understated or overstated for a particular period. Variable consideration as described above is determined using the expected value approach. The sales return liability at the end of 2019 was £122m (see note 24). This represents 3% of annual sales subject to sale or return. While payment for these goods and services generally occurs at the start of these arrangements, the length of time between payment and delivery of the performance obligations is generally short-term in nature or the reason for early payment relates to reasons other than financing, including customers securing a vendor in a longer-term arrangement or the transfer of goods or services is at the discretion of the customer. For these reasons and the use of the practical expedient on short-term financing, significant financing components are not recognised within Courseware transactions. Revenue from the sale of physical books is recognised at a point in time when control passes. This is generally at the point of shipment when title passes to the customer, when the Group has a present right to payment and the significant risks and rewards of ownership have passed to the customer. Revenue from physical books sold through the direct print rental method is recognised over the rental period, as the customer is simultaneously receiving and consuming the benefits of this rental service through the passage of time. Revenue from the sale of digital courseware products is recognised on a straight-line basis over the subscription period, unless hosted by a third party or representative of a downloadable product, in which case Pearson has no on-going Revenue from the sale of ‘off-the-shelf’ Assessments Revenue is primarily generated from multi-year contractual arrangements related to large-scale assessment delivery, such as contracts to process qualifying tests for individual professions and government departments, and is recognised as performance occurs. Under these arrangements, while the agreement spans multiple years, the contract duration has been determined to be each testing cycle based on contract structure, including clauses regarding termination. While in some cases the customer may have the ability to terminate during the term for convenience, significant financial or qualitative barriers exist limiting the potential for such terminations in the middle of a testing cycle. Within each testing cycle, a variety of service activities are performed such as test administration, delivery, scoring, reporting, item development, operational services and programme management. These services are not treated as distinct in the context of the customer contract as Pearson provides an integrated managed service offering and these activities are accounted for together as one comprehensive performance obligation. Within each testing cycle, the transaction price may contain both fixed and variable amounts. Variable consideration within these transactions primarily relates to expected testing volumes to be delivered in the cycle. The assumptions, risks and uncertainties inherent to long-term contract accounting can affect the amounts and timing of revenue and related expenses reported. Variable consideration is measured using the expected value method, except where amounts are contingent upon a future event’s occurrence, such as performance bonuses. Such event-driven contingency payments are measured using the most likely amount approach. To the extent that a higher degree of uncertainty exists regarding variable consideration, these amounts are excluded from the transaction price and expensed when the uncertainty is reasonably removed. Customer payments are generally defined in the contract through a payment schedule, which may require customer acceptance for services rendered. Pearson has a history of providing satisfactory services which are accepted by the customer. While a delay between rendering of services and payment may exist, payment terms are within 12 months and the Group has elected to use the practical expedient available in IFRS 15 Revenue from Contracts with Customers and not identify a significant financing component on these transactions. Revenue is recognised for Assessment contracts over time as the customer is benefiting as performance takes place through a continuous transfer of control to the customer. This continuous transfer of control to the customer is supported by clauses in the contracts which may allow the customer to terminate for convenience, compensate us for work performed to date, and take possession of work in process. As control transfers over time, revenue is recognised based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgement and is based on the nature of the services provided. Revenue is recognised on a percentage completion basis, calculated using the proportion of the total estimated costs incurred to date. Percentage of completion is used to recognise the transfer of control of services provided as these services are not provided evenly throughout the testing cycle and involve varying degrees of effort during the term. Losses on contracts are recognised in the period in which the loss first becomes foreseeable. Contract losses are determined to be the amount by which estimated total costs of the contract exceed the estimated total revenues that will be generated. In Assessments contracts driven primarily by transactions directly to end users, Pearson’s main obligation to the customer involves test delivery and scoring. Test delivery and scoring are defined as a single performance obligation delivered over time whether the test is subsequently manually scored or digitally scored on the day of the assessment. Customers may also purchase print and digital supplemental materials. Print products in this revenue stream are recognised at a point in time when control passes to the customer upon shipment. Recognition of digital revenue will occur based on the extent of Pearson’s on-going Services Revenue is primarily generated from multi-year contractual arrangements related to large-scale educational service delivery to academic institutions, such as schools and higher education universities. Under these arrangements, while an agreement may span multiple years, the contract duration has been determined to be each academic period based on the structure of contracts, including clauses regarding termination. While in some cases the customer may have the ability to terminate during the term for convenience, significant financial or qualitative barriers exist limiting the potential for such terminations in the middle of an academic period. The academic period for this customer base is normally an academic year for schools and a semester for higher education universities. Within each academic period, a variety of services are provided such as programme development, student acquisition, education technology and student support services. These services are not distinct in the context of the customer contract as Pearson provides an integrated managed service offering and these activities are accounted for together as a comprehensive performance obligation. Where Services are provided to university customers, volume and transaction price are fixed at the start of the semester. Where Services are provided to School customers, the transaction price may contain both fixed and variable amounts which require estimation during the academic period. Estimation is required where consideration is based upon average enrolments or other metrics which are not known at the start of the academic year. Variable consideration is measured using the expected value method. To the extent that a higher degree of uncertainty exists regarding variable consideration, these amounts are excluded from the transaction price and recognised when the uncertainty is reasonably removed. Customer payments are generally defined in the contract as occurring shortly after invoicing. Where there is a longer payment term offered to a customer through a payment schedule, payment terms are within 12 months and the Group has elected to use the practical expedient available in IFRS 15 and not identify a significant financing component on these transactions. Revenue is recognised for Service contracts over time as the customer is benefiting as performance takes place through a continuous transfer of control to the customer. This continuous transfer of control to the customer is supported by clauses in the contracts which may allow the customer to terminate for convenience, compensate for work performed to date, and take possession of work in process. As control transfers over time, revenue is recognised based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgement and is based on the nature of the products or services provided. Within the comprehensive service obligation, the timing of services occurs relatively evenly over each academic period and, as such, time elapsed is used to recognise the transfer of control to the customer on a straight-line basis. Losses on contracts are recognised in the period in which the loss first becomes foreseeable. Contract losses are determined to be the amount by which estimated total costs of the contract exceed the estimated total revenues that will be generated. In cases of optional or add-on b. Disaggregation of revenue The tables in notes 2 and 3 show revenue from contracts with customers disaggregated by operating segment, geography and revenue stream. These disaggregation categories are appropriate as they represent the key groupings used in managing and evaluating underlying performance of each of the businesses. The categories also reflect groups of similar types of transactional characteristics, among similar customers, with similar accounting conclusions. c. Contract balances Transactions within the Courseware revenue stream generally entail customer billings at or near the contract’s inception and accordingly Courseware deferred income balances are primarily related to subscription performance obligations to be delivered over time. Transactions within the Assessments and Services revenue streams generally entail customer billings over time based on periodic intervals, progress towards milestones or enrolment census dates. As the performance obligations within these arrangements are delivered over time, the extent of accrued income or deferred income will ultimately depend upon the difference between revenue recognised and billings to date. Refer to note 22 for opening and closing balances of accrued income. Refer to note 24 for opening and closing balances of deferred income. Revenue recognised during the period from changes in deferred income was driven primarily by the release of revenue over time from digital subscriptions. d. Contract costs The Group capitalises incremental costs to obtain contracts with customers where it is expected these costs will be recoverable. Incremental costs to obtain contracts with customers are considered those which would not have been incurred if the contract had not been obtained. For the Group, these costs relate primarily to sales commissions. The Group has elected to use the practical expedient as allowable by IFRS 15 whereby such costs will be expensed as incurred where the expected amortisation period is one year or less. Where the amortisation period is greater than one year, these costs are amortised over the contract term on a systematic basis consistent with the transfer of the underlying goods and services within the contract to which these costs relate, which will generally be on a ratable basis. Impairment of capitalised contract costs was £nil in 2019, 2018 and 2017. The Group does not recognise any material costs to fulfil contracts with customers as these types of activities are governed by other accounting standards. Refer to note 22 for further details of opening and closing balances of these costs reflected within deferred contract costs. e. Remaining transaction price The below table depicts the remaining transaction price on unsatisfied or partially unsatisfied performance obligations from contracts with customers. 2019 All figures in £ millions Sales Deferred Committed Total remaining 2020 2021 2022 Courseware Products transferred at a point in time (sale or return) 917 1 — 1 1 — — Products transferred at a point in time (other) 37 1 — 1 1 — — Products and services transferred over time 696 118 — 118 82 13 23 Assessments Products transferred at a point in time 174 — — — — — — Products and services transferred over time 1,290 206 375 581 433 146 2 Services Products transferred at a point in time 26 3 — 3 3 — — Products and services transferred over time – subscriptions 310 11 — 11 11 — — Products and services transferred over time – other ongoing performance obligations 419 20 106 126 125 1 — Total 3,869 360 481 841 656 160 25 2018 All figures in £ millions Sales Deferred Committed Total remaining 2019 2020 2021 Courseware Products transferred at a point in time (sale or return) 1,228 1 — 1 1 — — Products transferred at a point in time (other) 35 — — — — — — Products and services transferred over time 776 679 8 687 272 131 284 Assessments 1 Products transferred at a point in time 158 — — — — — — Products and services transferred over time 1,187 196 402 598 420 173 5 Services Products transferred at a point in time 64 — — — — — — Products and services transferred over time – subscriptions 310 17 — 17 13 3 1 Products and services transferred over time – other ongoing performance obligations 371 19 145 164 162 1 1 Total 4,129 912 555 1,467 868 308 291 1 The analysis of Assessments revenues in 2018 has been re-presented Committed sales amounts are equal to the transaction price from contracts with customers, excluding those amounts previously recognised as revenue and amounts currently recognised in deferred income. The total of committed sales and deferred income is equal to the remaining transaction price. Time bands stated above represent the expected timing of when the remaining transaction price will be recognised as revenue. |
Operating expenses
Operating expenses | 12 Months Ended |
Dec. 31, 2019 | |
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Operating expenses | 4. Operating expenses All figures in £ millions 2019 2018 2017 By function: Cost of goods sold 1,858 1,943 2,066 Operating expenses Distribution costs 73 88 84 Selling, marketing and product development costs 631 759 896 Administrative and other expenses 999 1,039 1,207 Restructuring costs 157 90 79 Other income (54 ) (69 ) (64 ) Total net operating expenses 1,806 1,907 2,202 Other net gains and losses (16 ) (230 ) (128 ) Total 3,648 3,620 4,140 Included in other income is service fee income from Penguin Random House of £4m (2018: £3m, 2017: £3m). Included in administrative and other expenses are research and efficacy costs of £13m (2018: £14m, 2017: £14m). In addition to the restructuring costs shown above, there were major restructuring costs in relation to associates of £2m (2018: £12m, 2017: £nil). An analysis of major restructuring costs is as follows: All figures in £ millions 2019 2018 2017 By nature: Product costs 16 12 15 Employee costs 90 56 11 Depreciation and amortisation 14 1 13 Property and facilities 12 (5 ) 24 Technology and communications 2 1 2 Professional and outsourced services 17 9 12 General and administrative costs 6 16 2 Total restructuring – operating expenses 157 90 79 Share of associate restructuring 2 12 — Total 159 102 79 In May 2017, the Group announced a restructuring programme to run between 2017 and 2019 to drive further significant cost savings. The costs of this programme have been excluded from adjusted operating profit so as to better highlight the underlying performance (see note 8). In 2018, property and facilities costs include gains on the disposal of properties sold as part of the restructuring programme. All figures in £ millions Notes 2019 2018 2017 By nature: Royalties expensed 242 236 246 Other product costs 466 516 564 Employee benefit expense 5 1,452 1,637 1,805 Contract labour 139 161 152 Employee-related expense 94 115 127 Promotional costs 254 233 229 Depreciation of property, plant and equipment 10 123 66 90 Amortisation of intangible assets – pre-publication 20 271 338 338 Amortisation of intangible assets – software 11 115 88 85 Amortisation and impairment of intangible assets – other 11 151 99 138 Property and facilities 96 147 202 Technology and communications 196 192 218 Professional and outsourced services 480 396 322 Other general and administrative costs 104 85 140 Costs capitalised to intangible assets (465 ) (390 ) (324 ) Other net gains and losses (16 ) (230 ) (128 ) Other income (54 ) (69 ) (64 ) Total 3,648 3,620 4,140 During the year the Group obtained the following services from the Group’s auditors: All figures in £ millions 2019 2018 2017 The audit of parent company and consolidated financial statements 5 4 4 The audit of the company’s subsidiaries 2 2 2 Total audit fees 7 6 6 Audit-related and other assurance services — 1 1 Other non-audit — — 1 Total other services — 1 2 Total non-audit — 1 2 Total 7 7 8 Reconciliation between audit and non-audit All figures in £ millions 2019 2018 2017 Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act 7 6 6 Non-audit — 1 2 Total 7 7 8 Fees for attestation under section 404 of the Sarbanes-Oxley Act are allocated between fees payable for the audits of consolidated and subsidiary accounts. Included in non-audit |
Employee information
Employee information | 12 Months Ended |
Dec. 31, 2019 | |
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Employee information | 5. Employee information All figures in £ millions Notes 2019 2018 2017 Employee benefit expense Wages and salaries (including termination costs) 1,258 1,421 1,567 Social security costs 100 112 130 Share-based payment costs 26 25 37 33 Retirement benefits – defined contribution plans 25 57 56 57 Retirement benefits – defined benefit plans 25 13 23 19 Other post-retirement medical benefits 25 (1 ) (12 ) (1 ) Total 1,452 1,637 1,805 The details of the emoluments of the Directors of Pearson plc are shown in the report on Directors’ remuneration. Average number employed 2019 2018 2017 Employee numbers North America 13,564 14,113 16,295 Core 4,951 5,192 5,291 Growth 3,693 4,521 8,268 Other 526 496 485 Total 22,734 24,322 30,339 |
Net finance costs
Net finance costs | 12 Months Ended |
Dec. 31, 2019 | |
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Net finance costs | 6. Net finance costs All figures in £ millions Notes 2019 2018 2017 Interest payable on financial liabilities at amortised cost and associated derivatives (22 ) (42 ) (99 ) Interest on lease liabilities (45 ) — — Net foreign exchange losses (5 ) (36 ) — Finance costs associated with transactions — (1 ) (6 ) Derivatives not in a hedge relationship (12 ) (7 ) (5 ) Derivatives in a hedge relationship — (5 ) — Finance costs (84 ) (91 ) (110 ) Interest receivable on financial assets at amortised cost 15 18 20 Interest on lease receivables 11 — — Net finance income in respect of retirement benefits 25 13 11 3 Net foreign exchange gains — — 44 Derivatives not in a hedge relationship 2 6 12 Derivatives in a hedge relationship — 1 1 Finance income 41 36 80 Net finance costs (43 ) (55 ) (30 ) Included in interest receivable is £1m (2018: £1m, 2017: £1m) of interest receivable from related parties. Net movement in fair value of hedges is explained in note 16. For further information on adjusted measures above, see note 8. |
Income tax
Income tax | 12 Months Ended |
Dec. 31, 2019 | |
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Income tax | 7. Income tax All figures in £ millions Notes 2019 2018 2017 Current tax Credit/(charge) in respect of current year (51 ) 92 (121 ) Adjustments in respect of prior years 21 34 (2 ) Total current tax credit/(charge) (30 ) 126 (123 ) Deferred tax In respect of temporary differences 59 (6 ) 96 Other adjustments in respect of prior years 5 (28 ) 14 Total deferred tax (charge)/credit 13 64 (34 ) 110 Total tax credit/(charge) 34 92 (13 ) The adjustments in respect of prior years in 2019, 2018 and 2017 primarily arise from revising the previous year’s reported tax provision to reflect the tax returns subsequently filed. This results in a change between deferred and current tax as well as an absolute benefit to the total tax charge. The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the UK tax rate as follows: All figures in £ millions 2019 2018 2017 Profit before tax 232 498 421 Tax calculated at UK rate (2019: 19%, 2018: 19%, 2017: 19.25%) (44 ) (94 ) (81 ) Effect of overseas tax rates (2 ) (28 ) 15 Joint venture and associate income reported net of tax 10 8 15 Intangible impairment not subject to tax — — — Intra-group financing benefit 11 25 26 Movement in provisions for tax uncertainties 3 111 49 Impact of US tax reform — — (1 ) Net expense not subject to tax (10 ) (29 ) (39 ) Benefit from change in US tax accounting treatment — 25 — Gains and losses on sale of businesses not subject to tax 57 77 8 Utilisation of previously unrecognised tax losses and credits — — (1 ) Unrecognised tax losses (17 ) (9 ) (16 ) Adjustments in respect of prior years 26 6 12 Total tax credit/(charge) 34 92 (13 ) UK (12 ) 37 (36 ) Overseas 46 55 23 Total tax credit/(charge) 34 92 (13 ) Tax rate reflected in earnings (14.7 )% (18.5 )% 3.1 % Included in net expense not subject to tax are foreign taxes not creditable, the tax impact of share-based payments and other expenses not deductible. Factors which may affect future tax charges include changes in tax legislation, transfer pricing regulations, the level and mix of profitability in different countries, and settlements with tax authorities. The movement in provisions for tax uncertainties primarily reflects releases due to the expiry of relevant statutes of limitation, utilisation of brought forward provisions and the establishment of provisions for new uncertain tax positions. The current tax liability of £55m (2018: £72m) includes £152m (2018: £181m) of provisions for tax uncertainties principally in respect of a number of issues in the US, the UK and China. The issues provided for include the allocation between territories of proceeds of historical business disposals and the potential disallowance of intra-Group recharges. The Group is currently under audit in a number of countries, and the timing of any resolution of these audits is uncertain. Of the balance of £152m, £88m relates to 2015 and earlier and is mostly under audit. In most countries, tax years up to and including 2014 are now statute barred from examination by tax authorities. Of the remaining balance, £18m relates to 2016, £30m to 2017, £4m to 2018 and £12m to 2019. If relevant enquiry windows pass with no audit, management believes it is reasonably possible that provision levels will reduce by an estimated £3m within the next 12 months. However the tax authorities may take a different view from management and the final liability may be greater than provided. For items currently under audit if tax authorities are successful, any incremental exposure is not expected to be material this year (2018: £25m). Contingent liabilities relating to tax are disclosed in note 34. The tax benefit/(charge) recognised in other comprehensive income is as follows: All figures in £ millions 2019 2018 2017 Net exchange differences on translation of foreign operations 5 (4 ) 9 Fair value gain on other financial assets (4 ) — (4 ) Remeasurement of retirement benefit obligations 22 9 (42 ) 23 5 (37 ) A tax charge of £ 5 |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 2019 | |
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Earnings per share | 8. Earnings per share Basic Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the company and held as treasury shares. Diluted Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to take account of all dilutive potential ordinary shares and adjusting the profit attributable, if applicable, to account for any tax consequences that might arise from conversion of those shares. All figures in £ millions Notes 2019 2018 2017 Earnings/(loss) for the year from continuing operations 266 590 408 Non-controlling (2 ) (2 ) (2 ) Earnings/(loss) attributable to equity holders of the company 264 588 406 Weighted average number of shares (millions) 777.0 778.1 813.4 Effect of dilutive share options (millions) 0.5 0.6 0.3 Weighted average number of shares (millions) for diluted earnings 777.5 778.7 813.7 Earnings/(loss) per share Basic 34.0p 75.6p 49.9p Diluted 34.0p 75.5p 49.9p |
Dividends
Dividends | 12 Months Ended |
Dec. 31, 2019 | |
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Dividends | 9. Dividends All figures in £ millions 2019 2018 2017 Final paid in respect of prior year 13.5p (2018: 12.0p, 2017: 34.0p) 101 93 277 Interim paid in respect of current year 6.0p (2018: 5.5p, 2017: 5.0p) 46 43 41 147 136 318 The Directors are proposing a final dividend in respect of the financial year ended 31 December 2019 of 13.5p per share which will absorb an estimated £106m of shareholders’ funds. It will be paid on 7 May 2020 to shareholders who are on the register of members on 27 March 2020. These financial statements do not reflect this dividend. |
Property, plant and equipment
Property, plant and equipment | 12 Months Ended |
Dec. 31, 2019 | |
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Property, plant and equipment | 10. Property, plant and equipment Right-of-use Owned assets All figures in £ millions Land and buildings Plant and equipment Land and buildings Plant and equipment Assets in course of construction Total Cost At 1 January 2018 — — 330 527 29 886 Exchange differences — — 11 14 1 26 Additions — — 32 22 12 66 Disposals — — (75 ) (97 ) — (172 ) Reclassifications — — 19 (8 ) (11 ) — Transfer to intangible assets — — — — (11 ) (11 ) Transfer to intangible assets – pre-publication — — — — (2 ) (2 ) At 31 December 2018 — — 317 458 18 793 Adjustment on initial application of IFRS 16 (see note 1b) 418 6 — — — 424 Exchange differences (9 ) — (8 ) (15 ) — (32 ) Additions 64 2 — 18 40 124 Disposals (13 ) (4 ) (13 ) (108 ) (8 ) (146 ) Reclassifications — — 4 (4 ) — — Transfer of finance leases — 19 — (19 ) — — Transfer to intangible assets — — — (3 ) (4 ) (7 ) Transfer to intangible assets – pre-publication — — — (2 ) (10 ) (12 ) At 31 December 2019 460 23 300 325 36 1,144 Right-of-use Owned assets All figures in £ millions Land and buildings Plant and equipment Land and buildings Plant and equipment Assets in course of construction Total Depreciation At 1 January 2018 — — (197 ) (408 ) — (605 ) Exchange differences — — (5 ) (11 ) — (16 ) Charge for the year — — (20 ) (46 ) — (66 ) Disposals — — 34 97 — 131 Reclassifications — — (7 ) 7 — — At 31 December 2018 — — (195 ) (361 ) — (556 ) Exchange differences 2 — 6 13 — 21 Charge for the year (60 ) (4 ) (21 ) (38 ) — (123 ) Disposals — — 10 116 — 126 Transfer of finance leases — (12 ) — 12 — — Transfer to intangible assets — — — 3 — 3 Transfer to intangible assets – pre-publication — — — 3 — 3 At 31 December 2019 (58 ) (16 ) (200 ) (252 ) — (526 ) Carrying amounts At 1 January 2018 — — 133 119 29 281 At 31 December 2018 — — 122 97 18 237 At 31 December 2019 402 7 100 73 36 618 Depreciation expense of £42m (2018: £18m) has been included in the income statement in cost of goods sold and £81m (2018: £48m) in operating expenses. Prior to 1 January 2019 the Group leased certain equipment under a number of finance lease agreements. The net carrying amount of leased plant and equipment included within property, plant and equipment in 2018 was £7m. On the initial application of IFRS 16 these finance leases have been transferred from owned assets to right-of-use |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 31, 2019 | |
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Intangible assets | 11. Intangible assets All figures in £ millions Goodwill Software Acquired relationships Acquired Acquired Other Total Cost At 1 January 2018 2,030 882 889 281 184 489 4,755 Exchange differences 74 32 39 (2 ) — 1 144 Additions – internal development — 124 — — — — 124 Additions – purchased — 6 — — — — 6 Disposals — (94 ) (18 ) (12 ) — (33 ) (157 ) Disposal through business disposal — (2 ) — — — — (2 ) Transfer from property, plant and equipment — 11 — — — — 11 Transfer to assets classified as held for sale 7 — — — — — 7 At 31 December 2018 2,111 959 910 267 184 457 4,888 Exchange differences (57 ) (22 ) (29 ) (10 ) (5 ) (20 ) (143 ) Additions – internal development — 137 — — — — 137 Additions – purchased — 1 — — — — 1 Disposals — (15 ) (88 ) (19 ) — (47 ) (169 ) Acquisition through business combination 18 — — — — 23 41 Transfer from property, plant and equipment — 7 — — — — 7 Transfer to intangible assets – pre-publication — (28 ) — — — — (28 ) Movement in held for sale 67 — — — — — 67 At 31 December 2019 2,139 1,039 793 238 179 413 4,801 All figures in £ millions Goodwill Software Acquired relationships Acquired Acquired Other Total Amortisation At 1 January 2018 — (493 ) (580 ) (180 ) (178 ) (360 ) (1,791 ) Exchange differences — (23 ) (26 ) 1 2 (10 ) (56 ) Charge for the year — (88 ) (59 ) (14 ) (2 ) (24 ) (187 ) Disposals — 92 18 12 — 33 155 At 31 December 2018 — (512 ) (647 ) (181 ) (178 ) (361 ) (1,879 ) Exchange differences — 16 22 7 4 19 68 Charge for the year — (115 ) (51 ) (23 ) (2 ) (75 ) (266 ) Disposals — 10 88 19 — 46 163 Transfer from property, plant and equipment — (3 ) — — — — (3 ) Transfer to intangible assets – pre-publication — 16 — — — — 16 At 31 December 2019 — (588 ) (588 ) (178 ) (176 ) (371 ) (1,901 ) Carrying amounts At 1 January 2018 2,030 389 309 101 6 129 2,964 At 31 December 2018 2,111 447 263 86 6 96 3,009 At 31 December 2019 2,139 451 205 60 3 42 2,900 Goodwill The goodwill carrying value of £2,139m relates to acquisitions completed after 1 January 1998. Prior to 1 January 1998 all goodwill was written off to reserves on the date of acquisition. For acquisitions completed between 1 January 1998 and 31 December 2002, no value was ascribed to intangibles other than goodwill which was amortised over a period of up to 20 years. On adoption of IFRS on 1 January 2003, the Group chose not to restate the goodwill balance and at that date the balance was frozen (i.e. amortisation ceased). If goodwill had been restated, then a significant value would have been ascribed to other intangible assets, which would be subject to amortisation, and the carrying value of goodwill would be significantly lower. For acquisitions completed after 1 January 2003, value has been ascribed to other intangible assets which are amortised. Other intangible assets Other intangibles acquired include content, technology and software rights. Intangible assets are valued separately for each acquisition and the primary method of valuation used is the discounted cash flow method. The majority of acquired intangibles are amortised using an amortisation profile based on the projected cash flows underlying the acquisition date valuation of the intangible asset, which generally results in a larger proportion of amortisation being recognised in the early years of the asset’s life. The Group keeps the expected pattern of consumption under review. Amortisation of £19m (2018: £18m) is included in the income statement in cost of goods sold and £182m (2018: £169m) in operating expenses. Impairment of £65m (2018: £nil), of which £53m relates to other intangibles acquired and £12m to acquired trademarks and brands, is included in operating expenses. The range of useful economic lives for each major class of intangible asset (excluding goodwill and software) is shown below: 2019 Class of intangible asset Useful economic life Acquired customer lists, contracts and relationships 3-20 years Acquired trademarks and brands 2-20 Acquired publishing rights 5-20 Other intangibles acquired 2-20 The expected amortisation profile of acquired intangible assets is shown below: 2019 All figures in £ millions One to Six to More than Total Class of intangible asset Acquired customer lists, contracts and relationships 154 49 2 205 Acquired trademarks and brands 42 14 4 60 Acquired publishing rights 3 — — 3 Other intangibles acquired 31 11 — 42 Impairment tests for cash-generating units (CGUs) containing goodwill Impairment tests have been carried out where appropriate as described below. Goodwill was allocated to CGUs, or an aggregation of CGUs, where goodwill could not be reasonably allocated to individual business units. CGUs have been revised in 2019. Impairment reviews were conducted on these revised CGUs as summarised below: 2019 CGUs 2019 All figures in £ millions Goodwill North American Courseware — OPM 18 Virtual Schools 386 Assessments 1,035 Core 700 Growth (includes the separate CGUs of Brazil, China, India and South Africa) — Total 2,139 Goodwill is tested at least annually for impairment. The recoverable amount of each aggregated CGU is based on the higher of value in use and fair value less costs of disposal. The value in use was higher than the fair value less costs of disposal in each of the CGUs. Other than goodwill there are no intangible assets with indefinite lives. 2018 CGUs All figures in £ millions 2018 North America 930 Core 701 Growth (includes the separate CGUs of Brazil, China, India and South Africa) — Pearson VUE 480 Total 2,111 Following a reassessment of the relative risk in the Brazil CGU compared to Pearson as a whole, it was determined in the course of the impairment review that neither the value in use nor the fair value less costs of disposal of the Brazil CGU supported the carrying value of the CGU. As the goodwill related to the Brazil CGU was fully impaired in prior years, the acquired intangibles of the Brazil CGU were impaired by £65m, bringing their carrying value to £27m. The Brazil CGU incorporates all the Group’s trading operations in Brazil. A pre-tax discount rate of 16.3% was used to determine the value in use of the Brazil CGU. At 31 December 2018, the impairment review showed headroom of £20m in the Brazil CGU. Determination of CGUs and reallocation of goodwill Pearson identifies its CGUs based on its operating model and how data is collected and reviewed for management reporting and strategic planning purposes in accordance with IAS 36 “Impairment of assets”. In 2019, the CGUs and aggregation of CGUs have been revised to take account of the following: • The implementation of a new Enterprise Resource Planning (ERP) system in North America meant that ledgers are structured on a legal entity basis rather than the previous divisional basis. This has meant it is no longer possible to identify the carrying values of the Pearson VUE business separately from the wider Assessments business. As a result, the Pearson VUE business has been combined with the Assessments business as one CGU for impairment testing. • The disposal of the US K12 Courseware business in 2019 has caused management to disaggregate the North America CGU. At 1 January 2019, the goodwill of the previous North America and Pearson VUE CGUs was therefore reallocated between North American Courseware, OPM, Virtual Schools and Assessments, based on their relative fair value at 1 January 2019 amended to take into account previous impairments taken. No goodwill was allocated to the North American Courseware CGU reflecting the significant impairments taken in 2015 and 2016. Key assumptions For the purpose of estimating the value in use of the CGUs, management has used an income approach based on present value techniques. The calculations use cash flow projections based on financial budgets approved by management covering a three-year period, whilst a projection to 2030 was available and used for the OPM CGU, as the three-year projection reflected the investment phase and not the longer-term return of this business, and because the long-term nature of OPM’s contracts allows for reliable forecasts to be prepared beyond three years. OPM relies on contracts with key customers and the forecast to 2030 assumes these are renewed or replaced. The key assumptions used by management in the value in use calculations were: Discount rates Perpetuity growth rates The key assumptions used by management in setting the financial budgets were as follows: Forecast sales growth rates Operating profits The table below shows the key assumptions for those CGUs for which the carrying value of goodwill is significant in comparison to the total carrying value of goodwill: Discount rate Perpetuity Virtual Schools 10 % 2 % Core 10 % 2 % Assessments 10 % 2 % Comparative figures have not been shown as CGUs have been changed in 2019. Sensitivities Impairment testing for the year ended 31 December 2019 has identified the following CGUs, or groups of CGUs, as being sensitive to reasonably possible changes in key assumptions. The table below shows the headroom at 31 December 2019 and the changes in the key assumptions required in order for the recoverable amount to equal the carrying value. Headroom at 31 December 2019 Discount rate Discount rate for zero headroom Perpetuity growth rate Perpetuity growth rate for zero headroom Contribution* reduction p.a. for zero headroom North American Courseware £ 115m 10.0 % 10.3 % 2.0 % 1.6 % £ 9m OPM £ 81m 10.0 % 10.3 % 2.0 % 0.3 % £ 7m Core £ 191m 10.0 % 10.7 % 2.0 % 1.2 % £ 15m Brazil — 16.3 % 16.3 % 4.1 % 4.1 % — * CGU contribution is operating profit excluding fixed costs and corporate overheads. |
Investments in joint ventures a
Investments in joint ventures and associates | 12 Months Ended |
Dec. 31, 2019 | |
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Investments in joint ventures and associates | 12. Investments in joint ventures and associates The amounts recognised in the balance sheet are as follows: All figures in £ millions 2019 2018 Associates 7 392 Joint ventures — — Associates classified as held for sale 397 — Total 404 392 The amounts recognised in the income statement are as follows: All figures in £ millions 2019 2018 Associates 54 43 Joint ventures — 1 Total 54 44 Investment in associates The Group has the following material associates: Principal place Ownership Nature of Measurement Penguin Random House Ltd UK/Global 25 % See below Equity Penguin Random House LLC US 25 % See below Equity On 1 July 2013, Penguin Random House was formed, upon the completion of an agreement between Pearson and Bertelsmann to merge their respective trade publishing companies, Penguin and Random House, with the parent companies owning 47% and 53% of the combined business respectively. On 5 October 2017, Pearson sold a 22% stake in Penguin Random House to Bertelsmann, retaining a 25% share. Pearson owns its 25% interest in Penguin Random House via 25% interests in each of the two entities listed in the table above. Despite the separate legal structures of the two Penguin Random House entities, Pearson regards Penguin Random House as one combined global business. Pearson discloses Penguin Random House separately, presenting disclosures related to its interests in Penguin Random House on a combined basis. The shareholder agreement includes protective rights for Pearson as the minority shareholder, including rights to dividends. Management considers ownership percentage, Board composition and the additional protective rights, and exercises judgement to determine that Pearson has significant influence over Penguin Random House and Bertelsmann has the power to direct the relevant activities and therefore control. Following the transaction in 2017 the assessment of significant influence did not change. Penguin Random House does not have a quoted market price. In December 2019, the Group announced the sale of its remaining 25% interest in Penguin Random House. At the end of 2019 the Group’s share of the assets of Penguin Random House has been classified as held for sale on the balance sheet. (see note 32). The summarised financial information of the material associate is detailed below: 2019 2018 All figures in £ millions Penguin Penguin Assets Non-current 1,346 1,043 Current assets 2,273 1,929 Liabilities Non-current (1,357 ) (1,104 ) Current liabilities (1,874 ) (1,546 ) Net assets 388 322 Sales 2,916 2,775 Profit for the year 205 185 Other comprehensive income/(expense) (27 ) 13 Total comprehensive income 178 198 Dividends received from associate in relation to profits 63 67 Re-capitalisation — 50 The information above reflects the amounts presented in the financial statements of the associate, adjusted for fair value and similar adjustments. The tax on Penguin Random House LLC is settled by the partners. For the purposes of clear and consistent presentation, the tax has been shown in the associate line items in the consolidated income statement and consolidated balance sheet, recording the Group’s share of profit after tax consistently for the Penguin Random House associates. A reconciliation of the summarised financial information to the carrying value of the material associate is shown below: 2019 2018 All figures in £ millions Penguin Penguin Opening net assets 322 368 Adjustment on initial application of IFRS 16 (7 ) — Exchange differences (9 ) 18 Profit for the year 205 185 Other comprehensive income/(expense) (27 ) 13 Dividends, net of tax paid (260 ) (262 ) Capital contribution 164 — Closing net assets 388 322 Share of net assets 97 80 Goodwill 300 307 Carrying value of associate 397 387 Information on other individually immaterial associates is detailed below: All figures in £ millions 2019 2018 Profit/(loss) for the year 3 (3 ) Total comprehensive (expense)/income 3 (3 ) Transactions with material associates From time to time the Group loans funds to Penguin Random House which are unsecured and interest is calculated based on market rates. The amount outstanding at 31 December 2019 was £49m (2018: £nil) and interest received was £1m (2018: £1m). The loans are provided under a working capital facility and fluctuate during the year. The Group also has a current asset receivable of £16m (2018: £17m) from Penguin Random House arising from the provision of services. Included in other income (note 4) is £4m (2018: £3m) of service fees. In 2018 the Group received a further re-capitalisation dividend of £50m which was triggered by the Group’s decision to sell a 22% stake in Penguin Random House in 2017. Investment in joint ventures Information on joint ventures, all of which are individually immaterial, is detailed below: All figures in £ millions 2019 2018 Profit for the year — 1 Total comprehensive income — 1 |
Deferred income tax
Deferred income tax | 12 Months Ended |
Dec. 31, 2019 | |
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Deferred income tax | 13. Deferred income tax All figures in £ millions 2019 2018 Deferred income tax assets 59 60 Deferred income tax liabilities (48 ) (136 ) Net deferred income tax 11 (76 ) Substantially all of the deferred income tax assets are expected to be recovered after more than one year. Deferred income tax assets and liabilities shall be offset when there is a legally enforceable right to offset current income tax assets with current income tax liabilities and where the deferred income taxes relate to the same fiscal authority. At 31 December 2019, the Group has unrecognised deferred income tax assets of £28m (2018: £31m) in respect of UK losses, £20m (2018: £28m) in respect of US losses and approximately £100m (2018: £90m) in respect of losses in other territories. The UK losses are capital losses. The US losses relate to federal and state taxes. Federal tax losses can be carried forward indefinitely; state tax losses have expiry periods of between five and 20 years. Other deferred tax assets of £25m (2018: £12m) have not been recognised. Deferred tax assets of £41m (2018: £43m) have been recognised in countries that reported a tax loss in either the current or preceding year. The majority arises in Brazil in respect of tax deductible goodwill. It is considered more likely than not that there will be sufficient future taxable profits to realise these assets. The recognition of the deferred income tax assets is supported by management’s forecasts of the future profitability of the relevant countries. In some cases deferred income tax assets are forecast to be recovered through taxable profits over a period that exceeds five years. Management consider these forecasts are sufficiently reliable to support the recovery of the assets. The movement in deferred income tax assets and liabilities during the year is as follows: All figures in £ millions Trading Returns Retirement Deferred Goodwill and Other Total Deferred income tax assets/(liabilities) At 1 January 2018 9 34 (44 ) 42 (155 ) 64 (50 ) Exchange differences — 1 1 6 (16 ) (5 ) (13 ) Income statement (charge)/benefit 11 (4 ) (21 ) 20 (34 ) (14 ) (42 ) Disposal through business disposal — — — — — 16 16 Tax benefit in other comprehensive income — — 9 — — — 9 Tax benefit in equity — — — — — 4 4 At 31 December 2018 20 31 (55 ) 68 (205 ) 65 (76 ) Adjustment on initial application of IFRS 16 (see note 1b) — — — — — 15 15 Exchange differences (1 ) (1 ) (1 ) (3 ) 6 (5 ) (5 ) Income statement benefit/(charge) 70 (10 ) (4 ) (24 ) — 32 64 Tax benefit/(charge) in other comprehensive income — — 22 — — (4 ) 18 Tax charge in equity — — — — — (5 ) (5 ) At 31 December 2019 89 20 (38 ) 41 (199 ) 98 11 Other deferred income tax items include temporary differences in respect of share-based payments, provisions, depreciation, interest limitation and royalty advances. As at 31 December 2019, no deferred tax assets or liabilities were classified as held for sale (2018: £98m asset). In 2018 there was a charge of £8m relating to assets and liabilities held for sale. |
Classification of financial ins
Classification of financial instruments | 12 Months Ended |
Dec. 31, 2019 | |
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Classification of financial instruments | 14. Classification of financial instruments The accounting classification of each class of the Group’s financial assets, and their carrying values, is as follows: 2019 2018 Fair value Amortised Fair value Amortised All figures in £ millions Notes FVOCI FVTPL Fair value Financial Total FVOCI FVTPL Fair value Financial Total Investments in unlisted securities 15 122 — — — 122 93 — — — 93 Cash and cash equivalents 17 — — — 437 437 — — — 568 568 Derivative financial instruments 16 — 6 48 — 54 — 4 64 — 68 Trade receivables 22 — — — 918 918 — — — 904 904 Other receivable — 182 — — 182 — — — — — Trade receivables – within assets classified as held for sale — — — — — — — — 49 49 Total financial assets 122 188 48 1,355 1,713 93 4 64 1,521 1,682 The carrying value of the Group’s financial assets is equal to, or approximately equal to, the market value. The other receivable relates to the receivable which arose on the disposal of the US K12 Courseware business and is included in other receivables, non-current The accounting classification of each class of the Group’s financial liabilities, together with their carrying values and market values, is as follows: 2019 2018 Fair value Amortised Fair value Amortised All figures in £ millions Notes FVTPL Fair value Other Total Total FVTPL Fair value Other Total Total Derivative financial instruments 16 (7 ) (32 ) — (39 ) (39 ) — (59 ) — (59 ) (59 ) Trade payables 24 — — (358 ) (358 ) (358 ) — — (311 ) (311 ) (311 ) Trade payables – within liabilities classified as held for sale — — — — — — — (22 ) (22 ) (22 ) Bank loans and overdrafts 18 — — (3 ) (3 ) (3 ) — — (43 ) (43 ) (43 ) Other borrowings due within one year 18 — — (89 ) (89 ) (89 ) — — (3 ) (3 ) (3 ) Borrowings due after more than one year 18 — — (1,572 ) (1,572 ) (1,574 ) — — (674 ) (674 ) (663 ) Total financial liabilities (7 ) (32 ) (2,022 ) (2,061 ) (2,063 ) — (59 ) (1,053 ) (1,112 ) (1,101 ) The market value of leases has been stated at book value. Fair value measurement As shown above, the Group’s derivative assets and liabilities, unlisted securities and marketable securities are held at fair value. Financial instruments that are measured subsequently to initial recognition at fair value are grouped into levels 1 to 3, based on the degree to which the fair value is observable, as follows: Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group’s bonds valued at £595m (2018: £661m) are classified as level 1. The Group’s derivative assets valued at £54m (2018: £68m) and derivative liabilities valued at £39m (2018: £59m) are classified as level 2. The Group’s investments in unlisted securities are valued at £122m (2018: £93m) and holding in other receivable is valued at £182m (2018: £nil); both are classified as level 3. The following table analyses the movements in level 3 fair value remeasurements: 2019 2018 All figures in £ millions Other receivable Investments in unlisted securities Total Investments in unlisted securities At beginning of year — 93 93 77 Exchange differences 1 (3 ) (2 ) 4 Acquisition of investments and other receivable 181 12 193 13 Fair value movements — 20 20 7 Disposal of investments — — — (8 ) At end of year 182 122 304 93 The fair value of the investments in unlisted securities is determined by reference to the financial performance of the underlying asset, recent funding rounds and amounts realised on the sale of similar assets. The fair value of the other receivable, which arose on the disposal of the US K12 Courseware business, is determined using present value techniques whereby the expected value of future cash flows is discounted using a rate which is representative of the creditworthiness of the US K12 Courseware business. The key inputs used in the present value calculations are forecast sales, discount rate and the expected date of a subsequent sale of the US K12 Courseware business. If the forecast sales used in the calculations were increased/ decreased by 5%, the value of the receivable would increase/decrease by approximately £20m. If the discount rate used in the calculations of 3.25% was increased/decreased by 1%, the value of the receivable would decrease/increase by approximately £5m. The calculations are not materially sensitive to reasonable changes in the expected date of a subsequent sale of the K12 business. |
Other financial assets
Other financial assets | 12 Months Ended |
Dec. 31, 2019 | |
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Other financial assets | 15. Other financial assets All figures in £ millions 2019 2018 At beginning of year 93 77 Exchange differences (3 ) 4 Acquisition of investments 12 13 Fair value movements 20 7 Disposal of investments — (8 ) At end of year 122 93 Other financial assets include unlisted securities of £122m (2018: £93m) that are classified at fair value through other comprehensive income (FVOCI). The assets, which are not held for trading, relate to the Group’s interests in new and innovative educational ventures across the world. These are strategic investments and the Group considers the classification as FVOCI to be more relevant. None of the investments are individually significant to the financial statements. In 2018, equities held at a fair value of £8m were disposed. The cumulative gain on disposal was £nil and £2m was recycled from the fair value reserve to retained earnings. |
Derivative financial instrument
Derivative financial instruments and hedge accounting | 12 Months Ended |
Dec. 31, 2019 | |
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Derivative financial instruments and hedge accounting | 16. Derivative financial instruments and hedge accounting The Group’s approach to the management of financial risks is set out in note 19. The Group’s outstanding derivative financial instruments are as follows: 2019 2018 All figures in £ millions Gross notional Assets Liabilities Gross notional Assets Liabilities Interest rate derivatives – in a fair value hedge relationship 336 13 — 404 13 — Interest rate derivatives – not in a hedge relationship 557 2 (6 ) 362 3 — Cross-currency rate derivatives – in a hedge relationship 502 29 (31 ) 577 51 (35 ) FX derivatives – in a hedge relationship 555 6 (1 ) 434 — (24 ) FX derivatives – not in a hedge relationship 386 4 (1 ) 473 1 — Total 2,336 54 (39 ) 2,250 68 (59 ) Analysed as expiring: In less than one year 1,167 25 (15 ) 771 1 (23 ) Later than one year and not later than five years 694 13 (6 ) 795 22 (1 ) Later than five years 475 16 (18 ) 684 45 (35 ) Total 2,336 54 (39 ) 2,250 68 (59 ) The Group’s treasury policies only allow derivatives to be traded where the objective is risk mitigation. These are then designated for hedge accounting using the following criteria: • If the derivative and the underlying hedged exposure would normally be revalued through the income statement and valuation changes are expected to be perfectly or near perfectly equal and opposite, these will not be classified in a hedge relationship. • Where interest rate and cross currency interest rate swaps are used to convert fixed rate debt to floating and we expect to receive inflows equal to the fixed rate debt interest, these are classified as fair value hedges. • Where derivatives are used to create a future foreign currency liability to provide protection against currency movements affecting the valuation of an overseas investment, these are designated as a net investment hedge. The Group’s fixed rate USD debt is held as fixed rate instruments at amortised cost. The majority of the Group’s fixed rate euro debt is converted to a floating rate exposure using interest rate and cross-currency swaps. The Group receives interest under its euro debt related swap contracts to match the interest on the bonds (ranging from a receipt of 1.375% on its euro 2025 notes to 1.875% on its euro 2021 notes) and, in turn, pays either a floating US dollar or sterling variable rates of GBP Libor + 0.81% and US Libor + 1.36%. GBP and USD Interest rate swaps are subsequently used to fix an element of the interest charge. The all-in At the end of 2019, the currency split of the mark-to-market The Group’s portfolio of rate derivatives is diversified by maturity, counterparty and type. Natural offsets between transactions within the portfolio and the designation of certain derivatives as hedges significantly reduce the risk of income statement volatility. The sensitivity of the portfolio to changes in market rates is set out in note 19. Fair value hedges The Group uses Interest Rate Swaps and Cross Currency Swaps as Fair value hedges of the Groups euro issued debt. Interest rate exposure arises from movements in the fair value of the Group’s euro debt attributable to movements in euro interest rates. The hedged risk is the change in the euro bonds fair value attributable to interest rate movements. The hedged items are the Group’s euro bonds which are issued at a fixed rate. The hedging instruments are fixed to floating euro interest rate swaps where the Group receives fixed interest payments and pays three month Euribor. As the critical terms of the interest rate swaps match the bonds, there is an expectation that the value of the hedging instrument and the value of the hedged item will move in the opposite direction as a result of movements in the zero coupon Euribor curve. The hedge ratio is therefore expected to be 100%. Sources of hedge ineffectiveness are a reduction or modification in the hedged item or a material change in the credit risk of swap counterparties. A foreign currency exposure arises from foreign exchange fluctuations on translation of the Group’s euro debt into GBP. The hedged risk is the risk of changes in the GBPEUR spot rate that will result in changes in the value of the euro debt when translated into GBP. The hedged items are a portion of the Group’s euro bonds. The hedging instruments are floating to floating cross currency swaps which creates an exposure to euro strengthening against GBP within the hedge item. The final exchange on the cross currency swap creates an exposure to euro weakening against GBP. As the critical terms of the cross currency swap match the bonds there is an expectation that the value of the hedging instrument and the value of the hedged item move in the opposite direction as a result of movements in the EURGBP exchange rate. The hedge ratio is 100%. Sources of hedge ineffectiveness are a reduction or modification in the hedged item or a material change in the credit risk of swap counterparties. The Group held the following instruments to hedge exposures to changes in interest rates and foreign currency risk associated with borrowings: 2019 All figures in £ millions Carrying amount of Change in fair value of Nominal amounts of Derivative financial instruments for interest rate risk 13 — 336 Derivative financial instruments for currency risk 25 (21 ) 336 2018 All figures in £ millions Carrying amount of Change in fair value of Nominal amounts of Derivative financial instruments for interest rate risk 13 (7 ) 404 Derivative financial instruments for currency risk 51 3 404 The amounts at the reporting date relating to items designated as hedge items were as follows: 2019 All figures in £ millions Carrying amount Accumulated amount Change in fair value of Hedge Line item in profit or Interest rate risk Financial liabilities – borrowings (347 ) (9 ) — — n/a Currency risk Financial liabilities – borrowings (347 ) n/a 21 — n/a 2018 All figures in £ millions Carrying amount Accumulated amount Change in fair value of Hedge Line item in profit or Interest rate risk Financial liabilities – borrowings (416 ) (9 ) 7 — n/a Currency risk Financial liabilities – borrowings (416 ) n/a (3 ) — n/a Hedge of net investment in a foreign operation A foreign currency exposure arises from the translation of the Group’s net investments in its subsidiaries which have USD and euro functional currencies. The hedged risk is the risk of changes in the GBPUSD and GBPEUR spot rates that will result in changes in the value of the Group’s net investment in its USD and euro assets when translated into GBP. The hedged items are a portion of the Group’s assets which are denominated in USD and euro. The hedging instruments are debt and derivative financial instruments, including Cross Currency Swaps, FX Forwards and FX Collars which creates an exposure to USD and euro weakening against GBP. It is expected that the change in value of each of these items will mirror each other as there is a clear and direct economic relationship between the hedge and the hedged item in the hedge relationship. Hedge ineffectiveness would arise if the value of the hedged items fell below the value of the hedging instruments however this is unlikely as the value of the Group’s assets denominated in USD and euro are significantly greater than the proposed net investment programme. The amounts related to items designated as hedging instruments were as follows: 2019 All figures in £ millions Carrying Change in value of Nominal Hedging Hedge Derivative financial instruments (21 ) 13 (722 ) 13 — Financial liabilities – borrowings (246 ) 10 (246 ) 10 — 2018 All figures in £ millions Carrying Change in value of Nominal Hedging Hedge Derivative financial instruments (59 ) (22 ) (607 ) (22 ) — Financial liabilities – borrowings (256 ) (10 ) (256 ) (10 ) — In addition to the above, £3m of hedging gains were recognised in OCI in relation to derivative financial instruments that matured during the year. Included in the translation reserve is a cost of hedging reserve of £2m relating to the time value of FX collars which is not separately disclosed due to materiality. Offsetting arrangements with derivative counterparties All of the Group’s derivative financial instruments are subject to enforceable netting arrangements with individual counterparties, allowing net settlement in the event of default of either party. Derivative financial assets and liabilities subject to offsetting arrangements are as follows: 2019 2018 All figures in £ millions Gross Gross Net derivative Gross Gross Net Counterparties in an asset position 52 (34 ) 18 67 (44 ) 23 Counterparties in a liability position 2 (5 ) (3 ) 1 (15 ) (14 ) Total as presented in the balance sheet 54 (39 ) 15 68 (59 ) 9 All of the Group’s derivative financial instruments are subject to enforceable netting arrangements with individual counterparties, allowing net settlement in the event of default of either party. Offset arrangements in respect of cash balances are described in note 17. Counterparty exposure from all derivatives is managed, together with that from deposits and bank account balances, within credit limits that reflect published credit ratings and by reference to other market measures (e.g. market prices for credit default swaps) to ensure that there is no significant risk to any one counterparty. The Group has no material embedded derivatives that are required to be separately accounted for in accordance with IFRS 9 ‘Financial Instruments’. |
Cash and cash equivalents (excl
Cash and cash equivalents (excluding overdrafts) | 12 Months Ended |
Dec. 31, 2019 | |
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Cash and cash equivalents (excluding overdrafts) | 17. Cash and cash equivalents (excluding overdrafts) All figures in £ millions 2019 2018 Cash at bank and in hand 401 533 Short-term bank deposits 36 35 437 568 Short-term bank deposits are invested with banks and earn interest at the prevailing short-term deposit rates. At the end of 2019, the currency split of cash and cash equivalents was US dollar 30% (2018: 18%), sterling 12% (2018: 30%), and other 58% (2018: 52%). Cash and cash equivalents have fair values that approximate to their carrying value due to their short-term nature. Cash and cash equivalents include the following for the purpose of the cash flow statement: All figures in £ millions 2019 2018 Cash and cash equivalents 437 568 Bank overdrafts (3 ) (43 ) 434 525 The Group has certain cash pooling arrangements in US dollars, sterling, euro and Canadian dollars where both the company and the bank have a legal right of offset. Offsetting amounts are presented gross in the balance sheet. Offset arrangements in respect of derivatives are shown in note 16. |
Financial liabilities - borrowi
Financial liabilities - borrowings | 12 Months Ended |
Dec. 31, 2019 | |
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Financial liabilities - borrowings | 18. Financial liabilities – borrowings The Group’s current and non-current All figures in £ millions 2019 2018 Non-current 1.875% euro notes 2021 (nominal amount €195m; 2018 nominal amount €250m) 170 233 3.75% US dollar notes 2022 (nominal amount $117m) 89 92 3.25% US dollar notes 2023 (nominal amount $94m) 72 74 1.375% euro notes 2025 (nominal amount €300m) 262 273 Revolving credit facility 230 — Lease liabilities (see note 35) 749 2 1,572 674 Current Due within one year or on demand: Bank loans and overdrafts 3 43 Lease liabilities (see note 35) 89 3 92 46 Total borrowings 1,664 720 Included in the non-current Prior to 1 January 2019 the Group leased certain equipment under a number of finance lease agreements which were included within Financial liabilities – borrowings. On the application of IFRS 16 at 1 January 2019 (see note 1b) all lease liabilities are now included within Financial liabilities – borrowings. The maturities of the Group’s non-current All figures in £ millions 2019 2018 Between one and two years 251 1 Between two and five years 609 400 Over five years 712 273 1,572 674 The carrying amounts and market values of borrowings are as follows: 2019 2018 All figures in £ millions Effective Carrying Market Effective Carrying Market Bank loans and overdrafts n/a 3 3 n/a 43 43 1.875% euro notes 2021 2.04 % 170 170 2.04 % 233 233 3.75% US dollar notes 2022 3.94 % 89 90 3.94 % 92 91 3.25% US dollar notes 2023 3.36 % 72 72 3.36 % 74 71 1.375% euro notes 2025 1.44 % 262 263 1.44 % 273 266 Revolving credit facility 1.075 % 230 230 — — — Lease liabilities n/a 838 838 n/a 5 5 1,664 1,666 720 709 The market values stated above are based on clean market prices at the year end or, where these are not available, on the quoted market prices of comparable debt issued by other companies. The effective interest rates above relate to the underlying debt instruments. The carrying amounts of the Group’s borrowings before the effect of derivatives (see notes 16 and 19 for further information on the impact of derivatives) are denominated in the following currencies: All figures in £ millions 2019 2018 US dollar 539 188 Sterling 576 23 Euro 442 506 Other 107 3 1,664 720 The Group has $0.9bn (£0.7bn) of undrawn capacity on its committed borrowing facilities as at 31 December 2019 (2018: $1.75bn (£1.4bn) undrawn). In addition, there are a number of short-term facilities that are utilised in the normal course of business. All of the Group’s borrowings are unsecured. In respect of lease obligations, the rights to the leased asset revert to the lessor in the event of default. |
Financial risk management
Financial risk management | 12 Months Ended |
Dec. 31, 2019 | |
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Financial risk management | 19. Financial risk management The Group’s approach to the management of financial risks together with sensitivity analyses of its financial instruments is set out below. Treasury policy Pearson’s treasury policies set out the Group’s principles for addressing key financial risks including capital risk, liquidity risk, foreign exchange risk and interest rate risk, and sets out measurable targets for each. The Audit Committee receives quarterly reports incorporating compliance with measurable targets and review, and approve, any changes to treasury policies annually. The treasury function is permitted to use derivatives where their use reduces a risk or allows a transaction to be undertaken more cost effectively. Derivatives permitted include swaps, forwards and collars to manage foreign exchange and interest rate risk, with foreign exchange swap and forward contracts the most commonly executed. Speculative transactions are not permitted. Capital risk The Group’s objectives when managing capital are: • To maintain a strong balance sheet and a solid investment grade rating; • To continue to invest in the business organically and through acquisitions; • To have a sustainable and progressive dividend policy, and; • To return surplus cash to our shareholders where appropriate. The Group aimed to maintain net debt at a level less than 1.5 times adjusted EBITDA before the adoption of IFRS 16 and less than 2.2 times adjusted EBITDA after the adoption of IFRS 16. This is consistent with a solid investment-grade rating (assuming no material deterioration in trading performance) and provides comfortable headroom against covenants. At 31 December 2019 the Group was rated BBB (negative outlook) with Standard and Poor’s and Baa2 (stable outlook) with Moody’s. Net debt The Group’s net debt position is set out below: All figures in £ millions 2019 2018 Cash and cash equivalents 437 568 Derivative financial instruments 15 9 Bank loans and overdrafts (3 ) (43 ) Bonds (593 ) (672 ) Revolving credit facility (230 ) — Investment in finance lease receivable 196 — Lease liabilities (838 ) (5 ) Net debt (1,016 ) (143 ) Interest and foreign exchange rate management The Group’s principal currency exposure is to the US dollar which represents more than 60% of the Group’s sales. The Group’s long-term debt is primarily held in US dollars to provide a natural hedge of this exposure, which is achieved through issued US dollar debt or converting euro debt to US dollars using cross-currency swaps, forwards and collars. As at 31 December 2019, £1,641m of the Group’s debt is held at fixed rates (2018: £674m), with £23m held at floating rates (2018: £103m), partially offset by US dollar cash balances which attract floating rate interest. See note 16 for details of the Group’s hedging programme which addresses interest rate risk and foreign currency risk. Overseas profits are converted to sterling to satisfy sterling cash outflows such as dividends at the prevailing spot rate at the time of the transaction. To the extent the Group has sufficient sterling, US dollars may be held as dollar cash to provide a natural offset to the Group’s debt or to satisfy future US dollar cash outflows. The Group does not have significant cross-border foreign exchange transactional exposures. As at 31 December 2019, the sensitivity of the carrying value of the Group’s financial instruments to fluctuations in interest rates and exchange rates is as follows: 2019 All figures in £ millions Carrying Impact of 1% Impact of 1% Impact of 10% Impact of 10% Investments in unlisted securities 122 — — (9 ) 11 Other receivable 182 — — (17 ) 20 Cash and cash equivalents 437 — — (32 ) 39 Derivative financial instruments 15 16 (18 ) 22 (23 ) Bonds (593 ) 11 (12 ) 53 (64 ) Other borrowings (1,071 ) 2 (2 ) 46 (56 ) Other net financial assets 560 — — (43 ) 52 Total financial instruments (348 ) 29 (32 ) 20 (21 ) 2018 All figures in £ millions Carrying Impact of 1% Impact of 1% Impact of 10% Impact of 10% Investments in unlisted securities 93 — — (7 ) 9 Cash and cash equivalents 568 — — (36 ) 45 Derivative financial instruments 9 (3 ) 3 1 (1 ) Bonds (672 ) 17 (17 ) 61 (74 ) Other borrowings (48 ) — — 2 (3 ) Other net financial assets 620 — — (51 ) 62 Total financial instruments 570 14 (14 ) (30 ) 38 The table shows the sensitivities of the fair values of each class of financial instrument to an isolated change in either interest rates or foreign exchange rates. Other net financial assets comprises trade receivables less trade payables. A significant proportion of the movements shown above would impact equity rather than the income statement due to the location and functional currency of the entities in which they arise and the availability of net investment hedging. The Group’s income statement is reported at average rates for the year while the balance sheet is translated at the year-end year-end year-end Liquidity and re-financing The Group regularly reviews the level of cash and debt facilities required to fund its activities. This involves preparing a prudent cash flow forecast for the next three to five years, determining the level of debt facilities required to fund the business, planning for shareholder returns and repayments of maturing debt, and identifying an appropriate amount of headroom to provide a reserve against unexpected outflows. At 31 December 2019, the Group had cash of £0.4bn and an outstanding drawing of £230m on the US dollar denominated revolving credit facility due 2024 of $1.19bn (£0.9bn). The $1.19bn facility contains interest cover and leverage covenants which the Group has complied with for the year ended 31 December 2019. The maturity of the carrying values of the Group’s borrowings and trade payables are set out in notes 18 and 24 respectively. At the end of 2019, the currency split of the Group’s trade payables was US dollar £214m, sterling £57m and other currencies £87m (2018: US dollar £178m, sterling £57m and other currencies £98m) . Trade payables are all due within one year (2018: all due within one year). The table opposite analyses the Group’s bonds and derivative assets and liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. Short dated derivative instruments have not been included in this table. The amounts disclosed in the table are the contractual undiscounted cash flows (including interest) and as such may differ from the amounts disclosed on the balance sheet. Financial counterparty and credit risk management Financial counterparty and credit risk arises from cash and cash equivalents, favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables. Counterparty credit limits, which take published credit rating and other factors into account, are set to cover the Group’s total aggregate exposure to a single financial institution. The limits applicable to published credit rating bands are approved by the Chief Financial Officer within guidelines approved by the Board. Exposures and limits applicable to each financial institution are reviewed on a regular basis. Analysed by maturity Analysed by currency All figures in £ millions Greater than Later than but less than Five years Total USD GBP Other Total At 31 December 2019 Bonds 12 354 259 625 177 — 448 625 Rate derivatives – inflows (19 ) (223 ) (332 ) (574 ) (41 ) (172 ) (361 ) (574 ) Rate derivatives – outflows 23 237 331 591 242 344 5 591 FX forwards – inflows (186 ) (24 ) — (210 ) — (210 ) — (210 ) FX forwards – outflows 186 23 — 209 209 — — 209 Total 16 367 258 641 587 (38 ) 92 641 At 31 December 2018 Bonds 14 431 277 722 189 — 533 722 Rate derivatives – inflows (20 ) (288 ) (343 ) (651 ) (40 ) (167 ) (444 ) (651 ) Rate derivatives – outflows 23 289 341 653 254 390 9 653 FX forwards – inflows (251 ) (35 ) — (286 ) — (286 ) — (286 ) FX forwards – outflows 275 37 — 312 312 — — 312 Total 41 434 275 750 715 (63 ) 98 750 Cash deposits and derivative transactions are made with approved counterparties up to pre-agreed non-investment For trade receivables and contract assets the Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, risk associated with the industry and country in which customers operate may also influence the credit risk. The credit quality of customers is assessed by taking into account financial position, past experience and other relevant factors. Individual credit limits are set for each customer based on internal ratings. The compliance with credit limits is regularly monitored by the Group. A default on a trade receivable is when the counterparty fails to make contractual payments within the stated payment terms. Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. The carrying amounts of financial assets, trade receivables and contract assets represent the maximum credit exposure. Trade receivables and contract assets are subject to impairment using the expected credit loss model. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. See note 22 for further details about trade receivables and contract assets including movements in provisions for bad and doubtful debts. Change of accounting policy: Amendments to IFRS 9 and IFRS 7 Pearson has considered the impact of IBOR reform on Pearson’s hedge accounting. The Group has elected to early adopt the ‘Amendments to IFRS 9, and IFRS 7 Interest Rate Benchmark Reform’ issued in September 2019. In accordance with the transition provisions, the amendments have been adopted retrospectively to hedging relationships that existed at the start of the reporting period or were designated thereafter. The amendments provide temporary relief from applying specific hedge accounting requirements to hedging relationships directly affected by IBOR reform. The reliefs have the effect that IBOR reform should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness continue should be recorded in the income statement. Furthermore, the amendments set out triggers for when the reliefs will end, which include the uncertainty arising from interest rate benchmark reform no longer being present. Pearson has a limited exposure to changes in the EUR IBOR benchmark. The Group has €395m (£336m) of Interest Rate Swaps which are in fair value hedge relationships of €395m (£336m). Pearson has considered a IBOR transition plan. Pearson currently anticipates that the areas of greatest change will be amendments to the contractual terms of EUR-IBOR-referenced In summary, the reliefs provided by the amendments that apply to the Group are: • In assessing whether the hedge is expected to be highly effective on a forward-looking basis, the Group has assumed that the Euribor interest rate on which the cash flows of the interest rate swap that hedges fixed-rate Euro bonds is not altered by IBOR reform. • The Group will not discontinue hedge accounting during the period of IBOR-related uncertainty solely because the retrospective effectiveness demonstrates ineffectiveness due to IBOR reform. The Group has assessed whether the hedged Euribor risk component is a separately identifiable risk only when it first designates the hedge and not on an ongoing basis |
Intangible assets - pre-publica
Intangible assets - pre-publication | 12 Months Ended |
Dec. 31, 2019 | |
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Intangible assets - pre-publication | 20. Intangible assets – pre-publication All figures in £ millions 2019 2018 Cost At beginning of year 2,096 1,854 Exchange differences (66 ) 70 Additions 306 328 Disposals (82 ) (158 ) Transfer from property, plant and equipment 9 2 Transfer from intangible assets 12 — At end of year 2,275 2,096 Amortisation At beginning of year (1,279 ) (1,113 ) Exchange differences 53 (53 ) Charge for the year (261 ) (271 ) Disposals 82 158 At end of year (1,405 ) (1,279 ) Carrying amounts at end of year 870 817 Included in the above are pre-publication Amortisation is included in the income statement in cost of goods sold. In addition to the above, in 2019 there was a £10m charge and additions of £13m relating to assets and liabilities held for sale. In 2018 £242m of pre-publication |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
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Inventories | 21. Inventories All figures in £ millions 2019 2018 Raw materials 5 5 Work in progress 2 — Finished goods 155 149 Returns asset 7 10 169 164 The cost of inventories recognised as an expense and included in the income statement in cost of goods sold amounted to £231m (2018: £375m). In 2019, £33m (2018: £39m) of inventory provisions was charged in the income statement. None of the inventory is pledged as security. Included within the inventory balance is the estimation of the right to receive goods from contracts with customers via returns. The value of the returns asset is measured at the carrying amount of the assets at the time of sale aligned to the Group’s normal inventory valuation methodology less any expected costs to recover the asset and any expected reduction in value. Impairment charges against the inventory returns asset are £nil in 2019 (2018: £nil). The returns asset all relates to finished goods. |
Trade and other receivables
Trade and other receivables | 12 Months Ended |
Dec. 31, 2019 | |
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Trade and other receivables | 22. Trade and other receivables All figures in £ millions 2019 2018 Current Trade receivables 903 874 Royalty advances 4 5 Prepayments 138 103 Investment in finance lease receivable 25 — Deferred contract costs — 1 Accrued income 11 2 Other receivables 194 193 1,275 1,178 Non-current Trade receivables 15 30 Royalty advances — 21 Prepayments 7 13 Investment in finance lease receivable 171 — Deferred contract costs — 1 Accrued income 5 10 Other receivables 115 25 313 100 Accrued income represents contract assets which are unbilled amounts generally resulting from assessments and services revenue streams where revenue to be recognised over time has been recognised in excess of customer billings to date. Impairment charges on accrued income assets are £nil (2018: £nil). The carrying value of the Group’s trade and other receivables approximates its fair value. Trade receivables are stated net of provisions for bad and doubtful debts. The movements in the provision for bad and doubtful debts are as follows: All figures in £ millions 2019 2018 At beginning of year (96 ) (116 ) Adjustment on initial application of IFRS 9 — (12 ) Exchange differences 3 2 Income statement movements (35 ) (1 ) Utilised 36 31 At end of year (92 ) (96 ) Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers, who are internationally dispersed. The ageing of the Group’s trade receivables is as follows: All figures in £ millions 2019 2018 Within due date 654 606 Up to three months past due date 155 172 Three to six months past due date 35 72 Six to nine months past due date 9 16 Nine to 12 months past due date 14 24 More than 12 months past due date 51 14 Net trade receivables 918 904 The Group reviews its bad debt provision at least twice a year following a detailed review of receivable balances and historical payment profiles, and assessment of forward looking risk factors. Management believes all the remaining receivable balances are fully recoverable. |
Provisions for other liabilitie
Provisions for other liabilities and charges | 12 Months Ended |
Dec. 31, 2019 | |
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Provisions for other liabilities and charges | 23. Provisions for other liabilities and charges All figures in £ millions Deferred Property Disposals Legal Total At 1 January 2019 42 102 5 16 165 Adjustment on initial application of IFRS 16 (see note 1b) — (101 ) — — (101 ) Exchange differences (1 ) — — (2 ) (3 ) Charged to income statement — 10 — 67 77 Released to income statement — — (5 ) (15 ) (20 ) Utilised (5 ) (1 ) — (17 ) (23 ) Transfer from trade and other liabilities — 6 — — 6 Transfer to other liabilities (36 ) — — — (36 ) At 31 December 2019 — 16 — 49 65 Analysis of provisions: 2019 All figures in £ millions Deferred Property Disposals Legal Total Current — 9 — 43 52 Non-current — 7 — 6 13 — 16 — 49 65 2018 Current 6 2 5 7 20 Non-current 36 100 — 9 145 42 102 5 16 165 Deferred consideration primarily related to the formation of a venture in North America in 2011. This provision was reclassified to other liabilities during 2019. Property provisions in 2018 predominantly related to restructuring and onerous leases. The main provisions related to the consolidation of London properties and were expected to be utilised from 2020. Uncertainties around property provisions related to prevailing market conditions including potential sublet income, lease terms including rent free periods, void periods, lease incentives and running costs. On the initial application of IFRS 16 (see note 1b) in 2019 onerous lease provisions have been offset against the relevant right-of-use Legal and other includes legal claims, contract disputes and potential contract losses with the provisions utilised as the cases are settled. Also included in legal and other are other restructuring provisions that are generally utilised within one year. |
Trade and other liabilities
Trade and other liabilities | 12 Months Ended |
Dec. 31, 2019 | |
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Trade and other liabilities | 24. Trade and other liabilities All figures in £ millions 2019 2018 Trade payables 358 311 Sales return liability 122 173 Social security and other taxes 13 16 Accruals 295 397 Deferred income 360 387 Interest payable 28 46 Other liabilities 188 225 1,364 1,555 Less: non-current Accruals — 15 Deferred income 55 66 Other liabilities 31 74 86 155 Current portion 1,278 1,400 The carrying value of the Group’s trade and other liabilities approximates its fair value. The deferred income balance comprises contract liabilities in respect of advance payments in assessment, testing and training businesses; subscription income in school and college businesses; and obligations to deliver digital content in future periods. |
Retirement benefit and other po
Retirement benefit and other post-retirement obligations | 12 Months Ended |
Dec. 31, 2019 | |
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Retirement benefit and other post-retirement obligations | 25. Retirement benefit and other post-retirement obligations Background The Group operates a number of defined benefit and defined contribution retirement plans throughout the world. The largest plan is The Pearson Pension Plan (UK Group plan) in the UK, which is sectionalised to provide both defined benefit and defined contribution pension benefits. The defined benefit section was closed to new members from 1 November 2006. The defined contribution section, opened in 2003, is open to new and existing employees. Finally, there is a separate section within the UK Group plan set up for auto-enrolment. The defined benefit section of the UK Group plan is a final salary pension plan which provides benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits depends on the length of service and final pensionable pay. The UK Group plan is funded with benefit payments from trustee-administered funds. The UK Group plan is administered in accordance with the Trust Deed and Rules in the interests of its beneficiaries by Pearson Group Pension Trustee Limited. At 31 December 2019, the UK Group plan had approximately 26,000 members, analysed in the following table: All figures in % Active Deferred Pensioners Total Defined benefit — 20 33 53 Defined contribution 12 35 — 47 Total 12 55 33 100 The other major defined benefit plans are based in the US. These are also final salary pension plans which provide benefits to members in the form of a guaranteed pension payable for life, with the level of benefits dependent on length of service and final pensionable pay. The majority of the US plans are funded. The Group also has several post-retirement medical benefit plans (PRMBs), principally in the US. PRMBs are unfunded but are accounted for and valued similarly to defined benefit pension plans. The defined benefit schemes expose the Group to actuarial risks, such as life expectancy, inflation risks, and investment risk including asset volatility and changes in bond yields. The Group is not exposed to any unusual, entity-specific or plan-specific risks. The defined contribution section of the UK Group plan operates a Reference Scheme Test (RST) pension underpin for its members. Where a member’s fund value is insufficient to purchase the RST pension upon retirement, the UK Group plan is liable for the shortfall to cover the member’s RST pension. A liability of £33m (2018: £23m) in respect of the underpin is included in the UK Group plan’s defined benefit obligation, calculated as the present value of projected payments less the fund value. From 1 January 2018, members who have sufficient funds to purchase an RST pension are able to convert their fund value into a pension in the UK Group plan as an alternative to purchasing an annuity with an insurer. The Group does not recognise the assets and liabilities for members of the defined contribution section of the UK Group plan whose fund values are expected to be sufficient to purchase an RST pension without assistance from the UK Group plan. The defined contribution section of the UK Group plan had gross assets of £512m at 31 December 2019 (2018: £453m). Assumptions The principal assumptions used for the UK Group plan and the US PRMB are shown below. Weighted average assumptions have been shown for the other plans, which primarily relate to US pension plans. 2019 2018 All figures in % UK Group Other PRMB UK Group Other PRMB Inflation 3.0 1.7 1.5 3.3 1.6 1.5 Rate used to discount plan liabilities 2.0 3.0 3.1 2.8 4.0 4.1 Expected rate of increase in salaries 3.5 2.9 3.0 3.8 2.9 3.0 Expected rate of increase for pensions in payment and deferred pensions 1.85 to 5.05 — — 2.1 to 5.1 — — Initial rate of increase in healthcare rate — — 6.8 — — 7.0 Ultimate rate of increase in healthcare rate — — 5.0 — — 5.5 The UK discount rate is based on corporate bond yields adjusted to reflect the duration of liabilities. The US discount rate is set by reference to a US bond portfolio matching model. The inflation rate for the UK Group plan of 3% reflects the RPI rate. In line with changes to legislation in 2010, certain benefits have been calculated with reference to CPI as the inflationary measure and in these instances a rate of 2% has been used. The expected rate of increase in salaries has been set at 3.5% for 2019. For the UK Group plan, the mortality base table assumptions have been updated and are derived from the SAPS S2 for males and females, adjusted to reflect the observed experience of the plan, with CMI model improvement factors. A 1.5% long-term rate improvement on the CMI model is applied for both males and females. For the US plans, the mortality table (Pri – 2012) and 2019 improvement scale (MP – 2019) with generational projection for male and female annuitants has been adopted. Using the above tables, the remaining average life expectancy in years of a pensioner retiring at age 65 on the balance sheet date for the UK Group plan and US plans is as follows: UK US All figures in years 2019 2018 2019 2018 Male 24.0 23.8 20.6 20.7 Female 24.3 24.5 22.6 22.7 The remaining average life expectancy in years of a pensioner retiring at age 65, 20 years after the balance sheet date, for the UK and US Group plans is as follows: UK US All figures in years 2019 2018 2019 2018 Male 25.5 25.4 22.2 22.3 Female 26.1 26.3 24.1 24.2 Although the Group anticipates that plan surpluses will be utilised during the life of the plan to address member benefits, the Group recognises its pension surplus in full in respect of the UK Group plan on the basis that it is management’s judgement that there are no substantive restrictions on the return of residual plan assets in the event of a winding up of the plan after all member obligations have been met. Financial statement information The amounts recognised in the income statement are as follows: 2019 All figures in £ millions UK Defined Sub-total Defined PRMB Total Current service cost 6 3 9 57 — 66 Past service cost — — — — — — Curtailments (2 ) — (2 ) — (1 ) (3 ) Administration expenses 6 — 6 — — 6 Total operating expense 10 3 13 57 (1 ) 69 Interest on plan assets (89 ) (5 ) (94 ) — — (94 ) Interest on plan liabilities 73 6 79 — 2 81 Net finance (income)/expense (16 ) 1 (15 ) — 2 (13 ) Net income statement charge (6 ) 4 (2 ) 57 1 56 2018 All figures in £ millions UK Defined Sub-total Defined PRMB Total Current service cost 7 2 9 56 (1 ) 64 Past service cost 8 — 8 — — 8 Curtailments — — — — (11 ) (11 ) Administration expenses 6 — 6 — — 6 Total operating expense 21 2 23 56 (12 ) 67 Interest on plan assets (82 ) (5 ) (87 ) — — (87 ) Interest on plan liabilities 68 6 74 — 2 76 Net finance (income)/expense (14 ) 1 (13 ) — 2 (11 ) Net income statement charge 7 3 10 56 (10 ) 56 2017 All figures in £ millions UK Group Defined Sub-total Defined PRMB Total Current service cost 8 1 9 57 (1 ) 65 Administration expenses 9 1 10 — — 10 Total operating expense 17 2 19 57 (1 ) 75 Interest on plan assets (84 ) (5 ) (89 ) — — (89 ) Interest on plan liabilities 77 7 84 — 2 86 Net finance (income)/expense (7 ) 2 (5 ) — 2 (3 ) Net income statement charge 10 4 14 57 1 72 The amounts recognised in the balance sheet are as follows: 2019 2018 All figures in £ millions UK Other Other Total UK Other Other Total Fair value of plan assets 3,341 120 — 3,461 3,240 141 — 3,381 Present value of defined benefit obligation (2,912 ) (138 ) (19 ) (3,069 ) (2,671 ) (158 ) (19 ) (2,848 ) Net pension asset/(liability) 429 (18 ) (19 ) 392 569 (17 ) (19 ) 533 Other post-retirement medical benefit obligation (43 ) (49 ) Other pension accruals (12 ) (13 ) Net retirement benefit asset 337 471 Analysed as: Retirement benefit assets 429 571 Retirement benefit obligations (92 ) (100 ) The following gains/(losses) have been recognised in other comprehensive income: All figures in £ millions 2019 2018 2017 Amounts recognised for defined benefit plans (148 ) 16 175 Amounts recognised for post-retirement medical benefit plans 3 6 — Total recognised in year (145 ) 22 175 The fair value of plan assets comprises the following: 2019 2018 All figures in % UK Group Other Total UK Group Other Total Insurance 43 — 43 28 1 29 Equities 1 1 2 1 1 2 Bonds 5 2 7 — 2 2 Property 5 — 5 7 — 7 Pooled asset investment funds 30 — 30 44 — 44 Other 13 — 13 16 — 16 The plan assets do not include any of the Group’s own financial instruments, or any property occupied by the Group. The table below further disaggregates the plan assets into additional categories and those assets which have a quoted market price in an active market and those that do not: 2019 2018 All figures in % Quoted No quoted Quoted No quoted Insurance 43 — 29 — Non-UK — 2 — 2 Fixed-interest securities 7 — 2 — Property — 5 — 7 Pooled asset investment funds 30 — 44 — Other — 13 — 16 Total 80 20 75 25 The liquidity profile of the UK Group plan assets is as follows: All figures in % 2019 2018 Liquid – call <1 month 37 51 Less liquid – call 1–3 months — — Illiquid – call >3 months 63 49 Changes in the values of plan assets and liabilities of the retirement benefit plans are as follows: 2019 2018 All figures in £ millions UK Group Other Total UK Group Other Total Fair value of plan assets Opening fair value of plan assets 3,240 141 3,381 3,337 155 3,492 Exchange differences — (5 ) (5 ) — 4 4 Interest on plan assets 89 5 94 82 5 87 Return on plan assets excluding interest 133 13 146 (45 ) (13 ) (58 ) Contributions by employer 3 2 5 6 1 7 Benefits paid (124 ) (16 ) (140 ) (140 ) (11 ) (151 ) Other — (20 ) (20 ) — — — Closing fair value of plan assets 3,341 120 3,461 3,240 141 3,381 Present value of defined benefit obligation Opening defined benefit obligation (2,671 ) (177 ) (2,848 ) (2,792 ) (181 ) (2,973 ) Exchange differences — 5 5 — (3 ) (3 ) Current service cost (6 ) (3 ) (9 ) (7 ) (2 ) (9 ) Past service cost — — — (8 ) — (8 ) Curtailments 2 — 2 — — — Administration expenses (6 ) — (6 ) (6 ) — (6 ) Interest on plan liabilities (73 ) (6 ) (79 ) (68 ) (6 ) (74 ) Actuarial gains/(losses) – experience (6 ) (1 ) (7 ) (49 ) (2 ) (51 ) Actuarial gains/(losses) – demographic 18 1 19 (12 ) — (12 ) Actuarial gains/(losses) – financial (294 ) (12 ) (306 ) 131 6 137 Contributions by employee — — — — — — Other — 20 20 — — — Benefits paid 124 16 140 140 11 151 Closing defined benefit obligation (2,912 ) (157 ) (3,069 ) (2,671 ) (177 ) (2,848 ) The weighted average duration of the defined benefit obligation is 16 years for the UK and 8 years for the US. Changes in the value of the US PRMB are as follows: All figures in £ millions 2019 2018 Opening defined benefit obligation (49 ) (67 ) Exchange differences 1 (2 ) Current service cost — 1 Curtailments 1 11 Interest on plan liabilities (2 ) (2 ) Actuarial gains/(losses) – experience 4 4 Actuarial gains/(losses) – demographic 1 — Actuarial gains/(losses) – financial (2 ) 2 Benefits paid 3 4 Closing defined benefit obligation (43 ) (49 ) Funding The UK Group plan is self-administered with the plan’s assets being held independently of the Group in trust. The trustee of the plan is required to act in the best interest of the plan’s beneficiaries. The most recent triennial actuarial valuation for funding purposes was completed as at 1 January 2018 and this valuation revealed a technical provisions funding surplus of £163m. The plan expects to be able to provide benefits (in accordance with the plan rules) with a very low level of reliance on future funding from the Group. Assets of the plan are divided into two elements: matching assets, which are assets that produce cash flows that can be expected to match the cash flows for a proportion of the membership, and include a liability-driven investment mandate (UK bonds, interest rate/inflation swaps and other derivative instruments), pensioner buy-in In February 2019, the UK Group plan purchased a further pensioner buy-in buy-in buy-in Regular employer contributions to the plan in respect of the defined benefit sections are estimated to be £3m for 2020. Sensitivities The effect of a one percentage point increase and decrease in the discount rate on the defined benefit obligation and the total pension expense is as follows: 2019 All figures in £ millions 1% 1% Effect: (Decrease)/increase in defined benefit obligation – UK Group plan (434 ) 591 (Decrease)/increase in defined benefit obligation – US plan (11 ) 13 The effect of members living one year more or one year less on the defined benefit obligation is as follows: 2019 All figures in £ millions One year One year Effect: Increase/(decrease) in defined benefit obligation – UK Group plan 132 (126 ) Increase/(decrease) in defined benefit obligation – US plan 8 (8 ) The effect of a half percentage point increase and decrease in the inflation rate is as follows: 2019 All figures in £ millions 0.5% 0.5% Effect: Increase/(decrease) in defined benefit obligation – UK Group plan 153 (136 ) Increase/(decrease) in defined benefit obligation – US plan — — The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant, although in practice this is unlikely to occur and changes in some assumptions may be correlated. When calculating these sensitivities, the same method has been applied to calculate the defined benefit obligation as has been applied when calculating the liability recognised in the balance sheet. This methodology is the same as prior periods. |
Share-based payments
Share-based payments | 12 Months Ended |
Dec. 31, 2019 | |
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Share-based payments | 26. Share-based payments The Group recognised the following charges in the income statement in respect of its equity-settled share-based payment plans: All figures in £ millions 2019 2018 Pearson plans 25 37 The Group operates the following equity-settled employee option and share plans: Worldwide Save for Shares Plan – Save-As-You-Earn Employee Stock Purchase Plan – six-month Long-Term Incentive Plan – non-market Management Incentive Plan – non-market The number and weighted average exercise prices of share options granted under the Group’s plans are as follows: 2019 2018 Number of Weighted average Number of Weighted average Outstanding at beginning of year 2,728 5.76 2,981 6.84 Granted during the year 660 6.77 729 5.80 Exercised during the year (419 ) 6.74 (70 ) 6.57 Forfeited during the year (492 ) 6.21 (668 ) 7.58 Expired during the year (83 ) 11.15 (244 ) 8.19 Outstanding at end of year 2,394 6.06 2,728 5.76 Options exercisable at end of year 161 7.14 169 11.31 Options were exercised regularly throughout the year. The weighted average share price during the year was £8.07 (2018: £8.45). Early exercises arising from redundancy, retirement or death are treated as an acceleration of vesting and the Group therefore recognises in the income statement the amount that otherwise would have been recognised for services received over the remainder of the original vesting period. The options outstanding at the end of the year have weighted average remaining contractual lives and exercise prices as follows: 2019 2018 Range of exercise prices Number of Weighted average Number of Weighted average 5–10 2,376 1.94 2,553 2.29 >10 18 1.04 175 0.29 2,394 1.93 2,728 2.16 In 2019 and 2018, options were granted under the Worldwide Save for Shares Plan. The weighted average estimated fair value for the options granted was calculated using a Black-Scholes option pricing model. The weighted average estimated fair values and the inputs into the Black-Scholes model are as follows: 2019 2018 Fair value £ 2.31 £ 1.88 Weighted average share price £ 8.30 £ 7.49 Weighted average exercise price £ 6.77 £ 5.80 Expected volatility 32.07 % 35.78 % Expected life 3.7 years 3.7 y Risk-free rate 0.66 % 0.87 % Expected dividend yield 2.11 % 5.21 % Forfeiture rate 3.2 % 3.2 % The expected volatility is based on the historical volatility of the company’s share price over the previous three to seven years depending on the vesting term of the options. The following shares were granted under restricted share arrangements: 2019 2018 Number of Weighted average £ Number of Weighted average Long-Term Incentive Plan 2,785 8.09 2,907 7.55 Management Incentive Plan 1,435 8.49 2,035 7.45 The fair value of shares granted under the Long-Term Incentive Plan and the Management Incentive Plan that vest unconditionally is determined using the share price at the date of grant. The number of shares expected to vest is adjusted, based on historical experience, to account for potential forfeitures. Participants under the plans are entitled to dividends during the vesting period and therefore the share price is not discounted. Restricted shares with a market performance condition were valued by an independent actuary using a Monte Carlo model. Restricted shares with a non-market Non-market |
Share capital and share premium
Share capital and share premium | 12 Months Ended |
Dec. 31, 2019 | |
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Share capital and share premium | 27. Share capital and share premium Number of Share Share At 1 January 2018 802,054 200 2,602 Issue of ordinary shares – share option schemes 864 1 5 Purchase of own shares (21,840 ) (6 ) — At 31 December 2018 781,078 195 2,607 Issue of ordinary shares – share option schemes 1,021 — 7 Purchase of own shares — — — At 31 December 2019 782,099 195 2,614 The ordinary shares have a par value of 25p per share (2018: 25p per share). All issued shares are fully paid. All shares have the same rights. The £300m share buyback programme announced in October 2017 was completed on 16 February 2018. A further 22m shares were purchased under the programme in 2018. The shares bought back have been cancelled and the nominal value of these shares transferred to a capital redemption reserve. The nominal value of shares cancelled at 31 December 2019 was £11m (2018: £11m). The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt (see note 18), cash and cash equivalents (see note 17) and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group reviews its capital structure on a regular basis and will balance its overall capital structure through payments of dividends, new share issues as well as the issue of new debt or the redemption of existing debt in line with the financial risk policies outlined in note 19. |
Treasury shares
Treasury shares | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Treasury shares | 28. Treasury shares Pearson plc Number of £m At 1 January 2018 5,994 61 Purchase of treasury shares — — Release of treasury shares (2,769 ) (28 ) At 31 December 2018 3,225 33 Purchase of treasury shares 6,100 52 Release of treasury shares (6,067 ) (61 ) At 31 December 2019 3,258 24 The Group holds Pearson plc shares in trust to satisfy its obligations under its restricted share plans (see note 26). These shares, representing 0.4% (2018: 0.4%) of called-up The nominal value of Pearson plc treasury shares amounts to £0.8m (2018: £0.8m). Dividends on treasury shares are waived. At 31 December 2019, the market value of Pearson plc treasury shares was £21m (2018: £30m). |
Other comprehensive income
Other comprehensive income | 12 Months Ended |
Dec. 31, 2019 | |
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Other comprehensive income | 29. Other comprehensive income 2019 Attributable to equity holders of the company Non- Total All figures in £ millions Fair value Translation Retained Total Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations – Group — (113 ) — (113 ) — (113 ) Net exchange differences on translation of foreign operations – associates — (2 ) — (2 ) — (2 ) Currency translation adjustment disposed — 4 — 4 — 4 Attributable tax — — 5 5 — 5 Items that are not reclassified to the income statement Fair value gain on other financial assets 20 — — 20 — 20 Attributable tax — — (4 ) (4 ) — (4 ) Remeasurement of retirement benefit obligations – Group — — (145 ) (145 ) — (145 ) Remeasurement of retirement benefit obligations – associates — — (4 ) (4 ) — (4 ) Attributable tax — — 22 22 — 22 Other comprehensive (expense)/income for the year 20 (111 ) (126 ) (217 ) — (217 ) 2018 Attributable to equity holders of the company Non- Total All figures in £ millions Fair value Translation Retained Total Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations – Group — 91 — 91 — 91 Net exchange differences on translation of foreign operations – associates — (1 ) — (1 ) — (1 ) Currency translation adjustment disposed — (4 ) — (4 ) — (4 ) Attributable tax — — (4 ) (4 ) — (4 ) Items that are not reclassified to the income statement Fair value gain on other financial assets 8 — — 8 — 8 Attributable tax — — — — — — Remeasurement of retirement benefit obligations – Group — — 22 22 — 22 Remeasurement of retirement benefit obligations – associates — — 3 3 — 3 Attributable tax — — 9 9 — 9 Other comprehensive income/(expense) for the year 8 86 30 124 — 124 2017 Attributable to equity holders of the company Non- controlling Total All figures in £ millions Fair value Translation Retained Total Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations – Group — (158 ) — (158 ) — (158 ) Net exchange differences on translation of foreign operations – associates — (104 ) — (104 ) — (104 ) Currency translation adjustment disposed — (51 ) — (51 ) — (51 ) Attributable tax — — 9 9 — 9 Items that are not reclassified to the income statement Fair value gain on other financial assets 13 — — 13 — 13 Attributable tax — — (4 ) (4 ) — (4 ) Remeasurement of retirement benefit obligations – Group — — 175 175 — 175 Remeasurement of retirement benefit obligations – associates — — 7 7 — 7 Attributable tax — — (42 ) (42 ) — (42 ) Other comprehensive income/(expense) for the year 13 (313 ) 145 (155 ) — (155 ) |
Business combinations
Business combinations | 12 Months Ended |
Dec. 31, 2019 | |
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Business combinations | 30. Business combinations During the year the Group made some small acquisitions, including Lumerit Education and Smart Sparrow, for total consideration of £40m. Details of the assets acquired, and the associated consideration, are shown in the table below. all figures in £ millions 2019 Intangible assets 23 Trade and other receivables 1 Trade and other liabilities (2 ) Net assets acquired 22 Goodwill 18 Total 40 Satisfied by: Cash 40 Total consideration 40 There were no significant acquisitions in 2018. There were no material adjustments to prior year acquisitions in 2019. The net cash outflow relating to acquisitions in the year is shown below. All figures in £ millions 2019 2018 2017 Cash flow on acquisitions Cash – current year acquisitions (40 ) — — Deferred payments for prior year acquisitions and other items (5 ) (5 ) (11 ) Net cash outflow (45 ) (5 ) (11 ) During 2019, the Group’s associate, Penguin Random House raised additional capital from its owners in proportion to their equity interests with the Group’s share being £40m. |
Disposals
Disposals | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Disposals | 31. Disposals In March 2019, the Group completed the sale of its US K12 Courseware business resulting in a pre-tax profit on sale of £13m. Total gross proceeds were £200m including £180m of deferred proceeds which include the fair value of an unconditional vendor note for $225m and an entitlement to 20% of future cash flows to equity holders and 20% of net proceeds in the event of a subsequent sale (see note 14 for further details). Tax on the disposal is a benefit of £51m. Other disposal items relate to investment sales and adjustments to prior year transactions. 2019 2018 2017 All figures in £ millions Notes K12 Other Total Total Total Disposal of subsidiaries and associates Property, plant and equipment — — — (17 ) (7 ) Intangible assets (101 ) — (101 ) (17 ) (9 ) Investments in joint ventures and associates — — — (3 ) (352 ) Net deferred income tax assets (100 ) — (100 ) — (3 ) Intangible assets – pre-publication (238 ) — (238 ) (8 ) (1 ) Inventories (64 ) — (64 ) (1 ) (2 ) Trade and other receivables (70 ) — (70 ) (30 ) (16 ) Cash and cash equivalents (excluding overdrafts) (104 ) — (104 ) (119 ) (13 ) Net deferred income tax liabilities — — — 16 — Trade and other liabilities 520 — 520 172 34 Provisions for other liabilities and charges — — — 1 — Cumulative currency translation adjustment 29 (4 ) — (4 ) 4 51 Net assets disposed (161 ) — (161 ) (2 ) (323 ) Cash received 20 — 20 243 468 Deferred proceeds 180 — 180 2 — Fair value of financial asset acquired — — — 3 — Costs (26 ) 3 (23 ) (16 ) (17 ) Gain on disposal 13 3 16 230 128 All figures in £ millions 2019 2018 2017 Cash flow from disposals Cash – current year disposals 20 243 468 Cash and cash equivalents disposed (104 ) (119 ) (13 ) Costs and other disposal liabilities paid (17 ) (23 ) (25 ) Net cash (outflow)/inflow (101 ) 101 430 Analysed as: Cash (outflow)/inflow from sale of subsidiaries (101 ) 83 19 Cash inflow from sale of joint ventures and associates — 18 411 |
Held for sale
Held for sale | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Held for sale | 32. Held for sale The held for sale asset in 2019 is the 25% holding in Penguin Random House following announcement of the sale in December 2019. Held for sale assets and liabilities in 2018 related to the US K12 Courseware business prior to disposal in 2019. 2019 2018 All figures in £ millions Total Total Non-current assets Intangible assets — 168 Investments in joint ventures and associates 397 — Deferred income tax assets — 98 Trade and other receivables — 25 397 291 Current assets Intangible assets – pre-publication — 242 Inventories — 55 Trade and other receivables — 60 — 357 Assets classified as held for sale 397 648 Non-current liabilities Other liabilities — (371 ) — (371 ) Current liabilities Trade and other liabilities — (202 ) — (202 ) Liabilities classified as held for sale — (573 ) Net assets classified as held for sale 397 75 Goodwill is allocated to the held for sale businesses on a relative fair value basis where these businesses form part of a larger cash generating unit (CGU). The Group has historically presented the results of PRH separately within segment information (see note 2) to provide further information about the composition of the Group outside of the primary segments. The Group has not viewed Penguin Random House as comprising a separate major line of business since the sale of 22% of the Group’s stake in Penguin Random House to Bertelsmann in 2017. On this basis, the Group has not classified Penguin Random House as a discontinued operation. |
Cash generated from operations
Cash generated from operations | 12 Months Ended |
Dec. 31, 2019 | |
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Cash generated from operations | 33. Cash generated from operations All figures in £ millions Notes 2019 2018 2017 Profit 266 590 408 Adjustments for: Income tax (34 ) (92 ) 13 Depreciation 10 123 66 90 Amortisation and impairment of acquired intangibles and goodwill 11 151 99 138 Amortisation of software 11 115 88 85 Net finance costs 6 43 55 30 Charges relating to GMP equalisation — 8 — Share of results of joint ventures and associates 12 (54 ) (44 ) (78 ) Profit on disposal of subsidiaries, associates, investments and fixed assets (9 ) (315 ) (116 ) Net profit on disposal of right-of-use assets held under leases (4 ) — — Net foreign exchange adjustment from transactions (21 ) 28 (26 ) Investment income (2 ) — — Share-based payment costs 26 25 37 33 Pre-publication (55 ) (37 ) (35 ) Inventories (20 ) (10 ) 24 Trade and other receivables 59 (15 ) 133 Trade and other liabilities (157 ) 35 6 Retirement benefit obligations 5 (9 ) (232 ) Provisions for other liabilities and charges 49 63 (11 ) Net cash generated from operations 480 547 462 Net cash generated from operations is translated at an exchange rate approximating the rate at the date of cash flow. The difference between this rate and the average rate used to translate profit gives rise to a currency adjustment in the reconciliation between net profit and net cash generated from operations. This adjustment reflects the timing difference between recognition of profit and the related cash receipts or payments. Operating cash flow,operating free cash flow and total free cash flow are non-GAAP (non-statutory) measures and have been disclosed and reconciled in the above table as they are commonly used by investors to measure the cash performance of the Group. In the cash flow statement, proceeds from sale of property, plant and equipment comprise: All figures in £ millions 2019 2018 2017 Net book amount 3 41 12 Profit/(loss) on sale of property, plant and equipment (2 ) 87 (12 ) Proceeds from sale of property, plant and equipment 1 128 — The movements in the Group’s current and non-current All figures in £ millions 2018 IFRS 16 Transition New leases/ disposal of Transfer from Financing Foreign Fair value 2019 Financial liabilities Non-current 643 792 61 (88 ) 230 (80 ) 9 1,567 Current borrowings 25 89 — 88 (139 ) 16 — 79 Total 668 881 61 — 91 (64 ) 9 1,646 All figures in £ millions 2017 Financing Foreign Fair value 2018 Financial liabilities Non-current 1,066 (441 ) 10 8 643 Current borrowings 4 (1 ) 22 — 25 Total 1,070 (442 ) 32 8 668 2016 Financing Foreign Fair value 2017 Financial liabilities Non-current borrowings 2,517 (1,292 ) (149 ) (10 ) 1,066 Current borrowings 9 (7 ) (1 ) 3 4 Total 2,526 (1,299 ) (150 ) (7 ) 1,070 Non-current |
Contingencies and commitments
Contingencies and commitments | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Of Commitments And Contingent Liabilities [Abstract] | |
Contingencies and commitments | 34. Contingencies and commitments There are contingent Group liabilities that arise in the normal course of business in respect of indemnities, warranties and guarantees in relation to former subsidiaries and in respect of guarantees in relation to subsidiaries, joint ventures and associates. In addition, there are contingent liabilities of the Group in respect of unsettled or disputed tax liabilities, legal claims, contract disputes, royalties, copyright fees, permissions and other rights. None of these claims are expected to result in a material gain or loss to the Group. On 25 April 2019, the European Commission published the full decision that the United Kingdom controlled foreign company group financing partial exemption (FCPE) partially constitutes State Aid. The Group has lodged an appeal. The Group has benefited from the FCPE in 2018 and prior years by approximately £116m. At present the Group believes no provision is required in respect of this issue. During 2019 the Group received an assessment from the tax authorities in Brazil challenging the deduction for tax purposes of goodwill amortisation for the years 2013 to 2016. Similar assessments may be raised for other years. Potential total exposure could be up to £124m (BRL 656m) upto 31 December 2019, with additional potential exposure of £45m (BRL 239m) in relation to deductions expected to be taken in future periods. Such assessments are common in Brazil. The Group believes that the likelihood that the tax authorities will ultimately prevail is low, and that the Group’s position is strong. At present the Group believes no provision is required. At the balance sheet date there were no commitments for capital expenditure contracted for but not yet incurred. Commitments in respect of leases are shown in note 35. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Presentation of leases for lessee [abstract] | |
Leases | 35. Leases The Group’s lease portfolio consists of approximately 750 property leases, mainly offices and test centres, together with a number of vehicle and equipment leases. The Group has adopted IFRS 16 ‘Leases’ at 1 January 2019 and applied the modified retrospective approach. Comparatives for 2018 have not been restated. The Group has elected not to recognise right-of-use Disclosure required by IFRS 16: As a lessee: The amounts recognised in the income statement are as follows: All figures in £ millions Note 2019 Interest on lease liabilities 6 (45 ) Expenses relating to short-term leases (2 ) Depreciation of right-of-use 10 (64 ) Right-of-use 2019 All figures in £ millions Land and Plant and Total Balance at 1 January 2019 — — — Adjustment on initial application of IFRS 16 (see note 1b) 418 6 424 Balance at 31 December 2019 402 7 409 For additional analysis of the right-of-use Lease liabilities are included within financial liabilities – borrowings in the balance sheet, see note 18. The maturities of the Group’s lease liabilities are as follows: All figures in £ millions 2019 Less than one year 123 One to five years 420 More than five years 622 Total undiscounted lease liabilities 1,165 Lease liabilities included in the balance sheet 838 Analysed as: Current 89 Non-current 749 The amounts recognised in the cash flow statement are as follows: All figures in £ millions 2019 Total cash outflow for leases as a lessee 136 At the balance sheet date commitments for capital leases contracted for but not yet incurred were £25m. Extension and termination options and variable lease payments are not significant within the lease portfolio. Short-term leases to which the Group is committed at the balance sheet date are similar to the portfolio of short-term As a lessor: In the event that the Group has excess capacity in its leased offices and warehouses, the Group sub-leases The amounts recognised in the income statement are as follows: All figures in £ millions Note 2019 Interest on finance lease receivable 6 11 Income from sub-leasing right-of-use 17 The amounts recognised in the cash flow statement are as follows: All figures in £ millions 2019 Total cash inflow for leases as a lessor 37 During the year the investment in finance lease receivable decreased by £19m due to payments received. The following table sets out the maturity analysis of lease payments receivable for sub-leases sub-leases All figures in £ millions Operating Finance 2019 Less than one year 12 34 46 One to two years 4 40 44 Two to three years 4 33 37 Three to four years 3 30 33 Four to five years 3 31 34 More than five years 20 67 87 Total undiscounted lease payments receivable 46 235 281 Unearned finance income (39 ) Net investment in finance lease receivable 196 IAS 17 disclosure for 2018: The maturity of the Group’s finance lease obligations is as follows: All figures in £ millions 2018 Finance lease liabilities – minimum lease payments Not later than one year 3 Later than one year and not later than two years 1 Later than two years and not later than three years 1 Later than three years and not later than four years — Later than four years and not later than five years — Later than five years — Future finance charges on finance leases — Present value of finance lease liabilities 5 The present value of the Group’s finance lease obligations is as follows: All figures in £ millions 2018 Not later than one year 3 Later than one year and not later than five years 2 Later than five years — 5 The carrying amounts of the Group’s lease obligations approximate their fair value. In 2018 the Group leased various offices and warehouses under non-cancellable All figures in £ millions 2018 Not later than one year 143 Later than one year and not later than two years 130 Later than two years and not later than three years 115 Later than three years and not later than four years 101 Later than four years and not later than five years 91 Later than five years 595 1,175 In the event that the Group had excess capacity in its leased offices and warehouses, it entered into sub-lease sub-lease non-cancellable sub-leases All figures in £ millions 2018 Not later than one year 51 Later than one year and not later than two years 44 Later than two years and not later than three years 41 Later than three years and not later than four years 39 Later than four years and not later than five years 35 Later than five years 124 334 |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Related party transactions | 36. Related party transactions Joint ventures and associates Amounts advanced to joint ventures and associates during the year and at the balance sheet date are set out in note 12. Key management personnel Key management personnel are deemed to be the members of the Pearson executive. It is this Committee which had responsibility for planning, directing and controlling the activities of the Group in 2019. Key management personnel compensation is disclosed below: All figures in £ millions 2019 2018 Short-term employee benefits 5 6 Retirement benefits 1 1 Share-based payment costs 4 7 Total 10 14 There were no other material related party transactions. No guarantees have been provided to related parties. |
Post balance sheet events
Post balance sheet events | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Post balance sheet events | 37. Post balance sheet events In January 2020, the Group commenced £350m share buyback program in connection with the announcement in December 2019 of the sale of its remaining 25% interest in Penguin Random House. On 23 March 2020, in response to the uncertainty surrounding the impact of the COVID-19 pandemic, the Group announced it was pausing this share buyback program. At this date the Group had completed the buyback of £167m of shares. On 23 March 2020, the Group announced an update to its guidance for 2020 to consider the impact of the COVID-19 pandemic on Pearson’s businesses. The update outlined the impact on trading in 2020 and documented some of the uncertainties for the business. The Group does not believe that any of the impacts constitute an adjusting post balance sheet event for the purposes of the 2019 financial statements. The Group includes reference to critical accounting assumptions and judgements in note 1a. The potential impact of the COVID-19 pandemic on the business is highly uncertain and cannot be predicted with confidence but may cause the Group, in 2020, to reassess some of the areas requiring a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements. These areas include the assessment of goodwill for impairment, as set out in note 11, where the Group has noted that a number of its cash generating units (CGUs) are sensitive to reasonably possible changes in key assumptions. It is highlighted that a relatively small reduction in contribution, that could arise from longer-term disruption caused by the COVID-19, may result in an impairment charge in any of these CGUs. Other areas where assumptions and estimates are significant include the valuation of pre-publication assets, tax balances, provisions for returns and pension assets and liabilities. The assumptions and estimates relating to these areas could change as the impact of COVID-19 becomes clearer although currently they are not expected to have a material impact on the income statement. The Group has also reassessed its funding requirements considering the impact of the COVID-19 pandemic on the business. The impact has been modelled under several scenarios to ensure that the likelihood of a prolonged period of disruption has been appropriately considered in assessing the availability of funding to the Group and the ability of the Group to comply with its banking covenants. Based on this modelling and a review of historical trends in working capital requirements and forecast balance sheets for the next 12 months, the Group believes that it will comply with its banking covenants and has sufficient funds available for the Group’s present requirements. |
Accounting policies (Policies)
Accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Statement [LineItems] | |
Basis of preparation | Basis of preparation These consolidated financial statements have been prepared on the going concern basis and in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. In respect of the accounting standards applicable to the Group; there is no difference between EU-adopted These consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and liabilities (including derivative financial instruments) at fair value. These accounting policies have been consistently applied to all years presented, unless otherwise stated. 1. Interpretations and amendments to published standards effective 2019 • IFRS 16 Leases • IFRIC 23 Uncertainty over Income Tax Treatments • IFRS 9 and IFRS 7 Amendments The impact of the adoption of these new standards is set out in notes 1b, 1c and 1d. A number of other new pronouncements are also effective from 1 January 2019 but they do not have a material impact on the consolidated financial statements. Additional disclosure has been given where relevant. 2. Standards, interpretations and amendments to published standards that are not yet effective 3. Critical accounting assumptions and judgements The areas requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are discussed in the relevant accounting policies under the following headings and in the notes to the accounts where appropriate: Intangible assets: Goodwill Intangible assets: Pre-publication Taxation Revenue: Provisions for returns Employee benefits: Pensions In addition, certain assumptions have been used and judgements exercised in the valuation of the other receivable which arose on the disposal of the US K12 Courseware business (see note 14). |
Consolidation | Consolidation 1. Business combinations The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred in the operating expenses line of the income statement. Identifiable assets acquired and identifiable liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The determination of fair values often requires significant judgements and the use of estimates, and, for material acquisitions, the fair value of the acquired intangible assets is determined by an independent valuer. The excess of the consideration transferred, the amount of any non-controlling See the ‘Intangible assets’ policy for the accounting policy on goodwill. If this is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the income statement. On an acquisition-by-acquisition non-controlling non-controlling IFRS 3 ‘Business Combinations’ has not been applied retrospectively to business combinations before the date of transition to IFRS. Management exercises judgement in determining the classification of its investments in its businesses, in line with the following: 2. Subsidiaries 3. Transactions with non-controlling non-controlling non-controlling non-controlling 4. Joint ventures and associates The Group’s share of its joint ventures’ and associates’ post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. The Group’s share of its joint ventures’ and associates’ results is recognised as a component of operating profit as these operations form part of the core publishing business of the Group and are an integral part of existing wholly-owned businesses. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in a joint venture or associate equals or exceeds its interest in the joint venture or associate, the Group does not recognise further losses unless the Group has incurred obligations or made payments on behalf of the joint venture or associate. Unrealised gains and losses on transactions between the Group and its joint ventures and associates are eliminated to the extent of the Group’s interest in these entities. 5. Contribution of a subsidiary to an associate or joint venture |
Foreign currency translation | Foreign currency translation 1. Functional and presentation currency 2. Transactions and balances year-end 3. Group companies i) Assets and liabilities are translated at the closing rate at the date of the balance sheet ii) Income and expenses are translated at average exchange rates iii) All resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. The Group treats specific inter-company loan balances, which are not intended to be repaid in the foreseeable future, as part of its net investment. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. The principal overseas currency for the Group is the US dollar. The average rate for the year against sterling was $1.28 (2018: $1.34) and the year-end |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for intended use. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives as follows: Buildings (freehold): 20 – 50 years Buildings (leasehold): over the period of the lease Plant and equipment: 3 – 10 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The carrying value of an asset is written down to its recoverable amount if the carrying value of the asset is greater than its estimated recoverable amount. |
Intangible assets | Intangible assets 1. Goodwill non-controlling Goodwill is tested at least annually for impairment and carried at cost less accumulated impairment losses. An impairment loss is recognised to the extent that the carrying value of goodwill exceeds the recoverable amount. The recoverable amount is the higher of fair value less costs of disposal and value in use. These calculations require the use of estimates in respect of forecast cash flows and discount rates and significant management judgement in respect of CGU and cost allocation; impairment is a key source of estimation uncertainty and has a significant risk of resulting in a material adjustment to the carrying amount of relevant assets within the next financial year. A summary of these assets by CGU and a description of the key assumptions and sensitivities is included in note 11. Goodwill is allocated to aggregated cash-generating units for the purpose of impairment testing. The allocation is made to those aggregated cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 2. Acquired software 3. Internally developed software 4. Acquired intangible assets 5. Pre-publication Pre-publication Pre-publication Pre-publication The assessment of the useful economic life and the recoverability of pre-publication Reviews are performed regularly to estimate recoverability of pre-publication pre-publication The investment in pre-publication |
Other financial assets | Other financial assets Other financial assets are non-derivative Marketable securities and cash deposits with maturities of greater than three months are classified and subsequently measured at fair value through profit and loss. They are remeasured at each balance sheet date by using market data and the use of established valuation techniques. Any movement in the fair value is immediately recognised in finance income or finance costs in the income statement. Investments in the equity instruments of other entities are classified and subsequently measured at fair value through other comprehensive income. Changes in fair value are recorded in equity in the fair value reserve via other comprehensive income. On subsequent disposal of the asset, the net fair value gains or losses are reclassified from the fair value reserve to retained earnings. Any dividends received from equity investments classified as fair value through other comprehensive income are recognised in the income statement unless they represent a return of capital. |
Inventories | Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method or an approximation thereof, such as the first in first out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Provisions are made for slow-moving and obsolete stock. |
Royalty advances | Royalty advances Advances of royalties to authors are included within trade and other receivables when the advance is paid less any provision required to adjust the advance to its net realisable value. The realisable value of royalty advances relies on a degree of management estimation in determining the profitability of individual author contracts. If the estimated realisable value of author contracts is overstated, this will have an adverse effect on operating profits as these excess amounts will be written off. The recoverability of royalty advances is based upon an annual detailed management review of the age of the advance, the future sales projections for new authors and prior sales history of repeat authors. The royalty advance is expensed at the contracted or effective royalty rate as the related revenues are earned. Royalty advances which will be consumed within one year are held in current assets. Royalty advances which will be consumed after one year are held in non-current |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents in the cash flow statement include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included in borrowings in current liabilities in the balance sheet. Short-term deposits and marketable securities with maturities of greater than three months do not qualify as cash and cash equivalents and are reported as financial assets. Movements on these financial assets are classified as cash flows from financing activities in the cash flow statement where these amounts are used to offset the borrowings of the Group or as cash flows from investing activities where these amounts are held to generate an investment return. |
Share capital | Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, net of income taxes, is deducted from equity attributable to the company’s equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders. Ordinary shares purchased under a buyback programme are cancelled and the nominal value of the shares is transferred to a capital redemption reserve. |
Borrowings | Borrowings Borrowings are recognised initially at fair value, which is proceeds received net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value being recognised in the income statement over the period of the borrowings using the effective interest method. Accrued interest is included as part of borrowings. Where a debt instrument is in a fair value hedging relationship, an adjustment is made to its carrying value in the income statement to reflect the hedged risk. Where a debt instrument is in a net investment hedge relationship gains and losses on the effective portion of the hedge are recognised in other comprehensive income. |
Derivative financial instruments | Derivative financial instruments Derivatives are recognised at fair value and remeasured at each balance sheet date. The fair value of derivatives is determined by using market data and the use of established estimation techniques such as discounted cash flow and option valuation models. For derivatives in a hedge relationship, the currency basis spread is excluded from the designation as a hedging instrument. Changes in the fair value of derivatives are recognised immediately in finance income or costs. However, derivatives relating to borrowings and certain foreign exchange contracts are designated as part of a hedging transaction. The accounting treatment is summarised as follows: Typical reason for designation Reporting of gains and losses on Reporting of gains and Net investment hedge The derivative creates a foreign currency liability which is used to hedge changes in the value of a subsidiary which transacts in that currency. Recognised in other comprehensive income. On disposal, the accumulated value of gains and losses reported in other comprehensive income is transferred to the income statement. Fair value hedges The derivative transforms the interest profile on debt from fixed rate to floating rate. Changes in the value of the debt as a result of changes in interest rates and foreign exchange rates are offset by equal and opposite changes in the value of the derivative. When the Group’s debt is swapped to floating rates, the contracts used are designated as fair value hedges. Gains and losses on the derivative are reported in finance income or finance costs. However, an equal and opposite change is made to the carrying value of the debt (a ‘fair value adjustment’) with the benefit/cost reported in finance income or finance costs. The net result should be a zero charge on a perfectly effective hedge. If the debt and derivative are disposed of, the value of the derivative and the debt (including the fair value adjustment) are reset to zero. Any resultant gain or loss is recognised in finance income or finance costs. Non-hedge These are not designated as hedging instruments. Typically these are short-term contracts to convert debt back to fixed rates or foreign exchange contracts where a natural offset exists. No hedge accounting applies. Policy applicable from 1 January 2018: IFRS 9 The Group adopted IFRS 9 ‘Financial Instruments’ at 1 January 2018 and applied the new rules in accordance with the transitional provisions. Comparatives for 2017 have not been restated. The Group assessed the impact of adopting IFRS 9 and the only material adjustment was a £13m increase in the provision for losses against trade debtors which was reflected as an adjustment to retained earnings at 1 January 2018. The adjustment arises from adoption of the expected credit loss model for impairments under IFRS 9. Although there is a transition impact from adoption of the new model there was no material impact on profit before tax for 2018. Also under IFRS 9, the Group’s equity financial investments continue to be recognised at fair value and the Group has elected to take the option to recognise all movements in fair value in other comprehensive income (FVOCI). Gains or losses realised on the subsequent sale of these financial assets (FVOCI investments) are no longer recycled through the profit and loss account, but are instead reclassified from the FVOCI reserve to retained earnings. IFRS 9 also introduced a new, simpler hedge accounting model with a principles-based approach designed to align the accounting result with the economic hedging strategy. The Group has confirmed that its previous hedge relationships continue to qualify as hedges under IFRS 9 in 2018. |
Taxation | Taxation Current tax is recognised at the amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred income tax is provided, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided in respect of the undistributed earnings of subsidiaries, associates and joint ventures other than where it is intended that those undistributed earnings will not be remitted in the foreseeable future. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited directly to equity or other comprehensive income, in which case the tax is also recognised in equity or other comprehensive income. The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the estimates in relation to the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises tax provisions when it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are based on management’s best judgement of the application of tax legislation and best estimates of future settlement amounts (see note 7). Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Deferred tax assets and liabilities require management judgement and estimation in determining the amounts to be recognised. In particular, when assessing the extent to which deferred tax assets should be recognised, significant judgement is used when considering the timing of the recognition and estimation is used to determine the level of future taxable income together with any future tax planning strategies (see note 13). |
Employee benefits | Employee benefits 1. Pensions When the calculation results in a potential asset, the recognition of that asset is limited to the asset ceiling – that is the present value of any economic benefits available in the form of refunds from the plan or a reduction in future contributions. Management uses judgement to determine the level of refunds available from the plan in recognising an asset. The determination of the pension cost and defined benefit obligation of the Group’s defined benefit pension schemes depends on the selection of certain assumptions, which include the discount rate, inflation rate, salary growth and longevity (see note 25). Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. The service cost, representing benefits accruing over the year, is included in the income statement as an operating cost. Net interest is calculated by applying the discount rate to the net defined benefit obligation and is presented as finance costs or finance income. Obligations for contributions to defined contribution pension plans are recognised as an operating expense in the income statement as incurred. 2. Other post-retirement obligations 3. Share-based payments |
Provisions | Provisions Provisions are recognised if the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are discounted to present value where the effect is material. Prior to 1 January 2019 the Group recognised a provision for onerous lease contracts when the expected benefits to be derived from a contract were less than the unavoidable costs of meeting the obligations under the contract. The calculation of onerous lease provisions involved estimates of potential sublet income, lease terms including rent free periods, void periods, lease incentives and running costs. On the initial application of IFRS 16 on 1 January 2019, onerous lease provisions have been offset against the relevant right-of-use The provision was based on the present value of future payments for surplus leased properties under non-cancellable sub-leasing |
Revenue recognition | Revenue recognition The Group’s revenue streams are courseware, assessments and services. Courseware includes curriculum materials provided in book form and/or via access to digital content. Assessments includes test development, processing and scoring services provided to governments, educational institutions, corporations and professional bodies. Services includes the operation of schools, colleges and universities, including sistemas in Brazil, as well as the provision of online learning services in partnership with universities and other academic institutions. Revenue is recognised in order to depict the transfer of control of promised goods and services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. This process begins with the identification of our contract with a customer, which is generally through a master services agreement, customer purchase order, or a combination thereof. Within each contract, judgement is applied to determine the extent to which activities within the contract represent distinct performance obligations to be delivered and the total amount of transaction price to which we expect to be entitled. The transaction price determined is net of sales taxes, rebates and discounts, and after eliminating sales within the Group. Where a contract contains multiple performance obligations such as the provision of supplementary materials or online access with textbooks, revenue is allocated on the basis of relative standalone selling prices. Where a contract contains variable consideration significant estimation is required to determine the amount to which the Group is expected to be entitled. Revenue is recognised on contracts with customers when or as performance obligations are satisfied which is the period or the point in time where control of goods or services transfers to the customer. Judgement is applied to determine first whether control passes over time and if not, then the point in time at which control passes. Where revenue is recognised over time judgement is used to determine the method which best depicts the transfer of control. Where an input method is used significant estimation is required to determine the progress towards delivering the performance obligation. Revenue from the sale of books is recognised net of a provision for anticipated returns. This provision is based primarily on historical return rates, customer buying patterns and retailer behaviours including stock levels (see note 22). If these estimates do not reflect actual returns in future periods then revenues could be understated or overstated for a particular period. When the provision for returns is remeasured at each reporting date to reflect changes in estimates, a corresponding adjustment is also recorded to revenue. The Group may enter into contracts with another party in addition to our customer. In making the determination as to whether revenue should be recognised on a gross or net basis, the contract with the customer is analysed to understand which party controls the relevant good or service prior to transferring to the customer. This judgement is informed by facts and circumstances of the contract in determining whether the Group has promised to provide the specified good or service or whether the Group is arranging for the transfer of the specified good or service, including which party is responsible for fulfilment, has discretion to set the price to the customer and is responsible for inventory risk. On certain contracts, where the Group acts as an agent, only commissions and fees receivable for services rendered are recognised as revenue. Any third party costs incurred on behalf of the principal that are rechargeable under the contractual arrangement are not included in revenue. Income from recharges of freight and other activities which are incidental to the normal revenue-generating activities is included in other income. Additional details on the Group’s revenue streams are also included in note 3. Policy applicable from 1 January 2018: IFRS 15 The Group adopted IFRS 15 ‘Revenue from Contracts with Customers’ at 1 January 2018 and applied the modified retrospective approach. Comparatives for 2017 have not been restated and continued to be reported under IAS 18 and IAS 11. The cumulative impact of adoption has been recognised as a £108m decrease to retained earnings with a corresponding decrease in net assets at 1 January 2018. The changes were impacted by four areas: unexercised customer rights (breakage), Online Program Management (OPM) marketing, administration fees, and commissions costs. Additionally, the provision for sales returns, which was previously netted off in trade receivables, from 1 January 2018 is now shown in two parts: as a separate sales return liability within trade and other liabilities, and an inventory returns asset within inventory. The adoption of IFRS 15 increased 2018 sales and profit by £9m and £7m, respectively. Had the Group been applying IFRS 15 during 2017, it is estimated that both sales and profit before tax would have been £2m higher for the full year, with the balance sheet impact at the beginning and end of the year being similar. |
Leases | Leases Policy applicable from 1 January 2019 The Group as a lessee The Group assesses whether a contract is or contains a lease at the inception of the contract. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognises a right-of-use The right-of-use right-of-use right-of-use right-of-use Management uses judgement to determine the lease term where extension and termination options are available within the lease. The Group as a lessor: When the Group is an intermediate lessor, the head lease and sub-lease sub-lease right-of-use sub-leases Policy applicable before 1 January 2019 Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in financial liabilities – borrowings. The interest element of the finance cost is charged to the income statement over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases by the lessee. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. |
Dividends | Dividends Final dividends are recorded in the Group’s financial statements in the period in which they are approved by the company’s shareholders. Interim dividends are recorded when paid. |
Discontinued operations | Discontinued operations A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or meets the criteria to be classified as held for sale. Discontinued operations are presented in the income statement as a separate line and are shown net of tax. |
Assets and liabilities held for sale | Assets and liabilities held for sale Assets and liabilities are classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell if it is highly probable that the carrying amount will be recovered principally through a sale transaction rather than through continuing use. No depreciation is charged in respect of non-current non-current |
Trade receivables | Trade receivables Trade receivables are stated at fair value after provision for bad and doubtful debts. Provisions for bad and doubtful debts are based on the expected credit loss model. The ‘simplified approach’ is used with the expected loss allowance measured at an amount equal to the lifetime expected credit losses. Trade receivables are also stated after provision for anticipated future sales returns (also see Revenue recognition policy). |
Change of accounting policy | 1b. Change of accounting policy: IFRS 16 The Group has adopted IFRS 16 ‘Leases’ at 1 January 2019 and applied the modified retrospective approach. Comparatives for 2018 have not been restated and the cumulative impact of adoption has been recognised as a decrease to net assets with a corresponding decrease in retained earnings at 1 January 2019 as follows: All figures in £ millions 2019 Non-current Property, plant and equipment (right-of-use 424 Investment in joint ventures and associates (2 ) Deferred income tax assets 1 Trade and other receivables 185 Current assets Trade and other receivables 7 Non-current Financial liabilities – borrowings (792 ) Deferred income tax liabilities 14 Provisions for other liabilities and charges 101 Other liabilities 58 Current liabilities Financial liabilities – borrowings (89 ) Trade and other liabilities 10 Total decrease in retained earnings at 1 January 2019 (83 ) The Group’s lease portfolio consists of approximately 750 property leases together with a number of vehicle and equipment leases. The lease liability has been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate at transition. The right-of-use right-of-use On transition the Group elected not to reassess whether a contract is, or contains, a lease, instead relying on the assessment already made applying IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether and Arrangement contains a Lease’. In addition, the Group applied the available practical expedients as follows: • Relied on its assessment of whether leases are onerous immediately prior to the date of initial application. • Applied the short-term leases exemptions to leases with lease term ending within 12 months at the date of the initial application. • Excluded the initial direct costs from the measurement of the right-to-use • Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease. Adoption of the new standard has a material impact on the Group. The lease liability brought onto the balance sheet at transition was £881m with the corresponding right-of-use For leases previously classified as finance leases under IAS 17 ‘Leases’, the carrying amount of the right-of-use The impact on the income statement for 2019 was to reduce profit before tax by £9m (increasing both adjusted and statutory operating profit by £25m and increasing net finance costs by £34m). The operating lease expense recognised under the previous accounting standards is now replaced by depreciation and net finance costs. The impact on the Group’s share of joint venture and associate profit is not material. There is no overall impact on the Group’s cash and cash equivalents although there is a change to the classification of cash flows in the cash flow statement with lease payments and finance lease receipts previously categorised as net cash used in operations now being split between the principal element (categorised in financing activities for payments and investing activities for receipts) and the interest element (categorised as interest paid in operating activities or interest received in investing activities). In 2019 there were £91m of lease payments classified as financing cash flows, £26m of lease receipts classified as investing cash flows, £45m of lease interest payments and £11m of lease interest receipts. The Group has also included the lease liability and investment in finance lease as part of its net debt which impacts the calculation of the Group’s non-GAAP The lease liabilities at 1 January 2019 can be reconciled to the operating lease commitments at 31 December 2018 as follows: All figures in £ millions 1 January Operating lease commitments disclosed at 31 December 2018 (note 35) 1,175 Discounted using the lessee’s incremental borrowing rate at the date of initial application (290 ) (Less): commitments relating to short-term leases (7 ) Add: adjustments relating to the different treatment of extension and termination options 3 Additional lease liability recognised at 1 January 2019 881 Analysed at: Current lease liabilities 89 Non-current 792 In addition to the lease liabilities transitioned above, the Group had £5m of lease liabilities that were accounted for as finance leases at 31 December 2018. The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5.0%. 1c. Change of accounting policy: IFRIC 23 The Group adopted IFRIC 23 ‘Uncertainty over Income Tax Treatments’ effective 1 January 2019. The interpretation clarifies the application of the recognition and measurement requirements in IAS 12 ‘Income taxes’ where there is uncertainty over income tax treatments. The interpretation provides guidance to determine whether uncertain tax positions should be considered separately or together, and that measurement should be whether the single most likely outcome or the probability weighted sum of a range of outcomes, whichever better predicts the resolution. The reassessment of current tax liabilities resulted in a decrease in liabilities of £5m but does not have a material impact on the income statement. 1d. Change of accounting policy: Amendments to IFRS 9 and IFRS 7 The Group has considered the impact of IBOR reform on its hedge accounting. The Group has elected to early adopt amendments to IFRS 9 and IFRS 7 ‘Interest Rate Benchmark Reform’ issued in September 2019. In accordance with the transition provisions, the amendments have been adopted retrospectively to hedging relationships that existed at the start of the reporting period or were designated thereafter. The amendments provide temporary relief from applying specific hedge accounting requirements to hedging relationships directly affected by IBOR reform. The adoption of these amendments has not had a material impact on these financial statements (see note 19). |
Accounting policies (Tables)
Accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Estimated Useful Lives of Property, Plant and Equipment | Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives as follows: Buildings (freehold): 20 – 50 years Buildings (leasehold): over the period of the lease Plant and equipment: 3 – 10 years |
Disclosure of Changes in the statement of Financial Position due to IFRS sixteen | The Group has adopted IFRS 16 ‘Leases’ at 1 January 2019 and applied the modified retrospective approach. Comparatives for 2018 have not been restated and the cumulative impact of adoption has been recognised as a decrease to net assets with a corresponding decrease in retained earnings at 1 January 2019 as follows: All figures in £ millions 2019 Non-current Property, plant and equipment (right-of-use 424 Investment in joint ventures and associates (2 ) Deferred income tax assets 1 Trade and other receivables 185 Current assets Trade and other receivables 7 Non-current Financial liabilities – borrowings (792 ) Deferred income tax liabilities 14 Provisions for other liabilities and charges 101 Other liabilities 58 Current liabilities Financial liabilities – borrowings (89 ) Trade and other liabilities 10 Total decrease in retained earnings at 1 January 2019 (83 ) |
Disclosure detail of Lease Commitments Reconciled | The lease liabilities at 1 January 2019 can be reconciled to the operating lease commitments at 31 December 2018 as follows: All figures in £ millions 1 January Operating lease commitments disclosed at 31 December 2018 (note 35) 1,175 Discounted using the lessee’s incremental borrowing rate at the date of initial application (290 ) (Less): commitments relating to short-term leases (7 ) Add: adjustments relating to the different treatment of extension and termination options 3 Additional lease liability recognised at 1 January 2019 881 Analysed at: Current lease liabilities 89 Non-current 792 |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of Segment Reporting Information | For more detail on the services and products included in each business segment refer to Item 4. 2019 All figures in £ millions Notes North Core Growth Penguin Corporate Group Sales 2,534 838 497 — — 3,869 Adjusted operating profit 361 92 63 65 — 581 Cost of major restructuring (110 ) (28 ) (19 ) (2 ) — (159 ) Intangible charges (62 ) (7 ) (82 ) (12 ) — (163 ) Other net gains and losses 13 8 (5 ) — — 16 Operating profit (loss) 202 65 (43 ) 51 — 275 Finance costs 6 (84 ) Finance income 6 41 Profit before tax 232 Income tax 7 34 Profit for the year 266 Segment assets 4,316 1,957 484 — 489 7,246 Associates 12 — 7 — 397 — 404 Total assets 4,316 1,964 484 397 489 7,650 Other segment items Share of results of joint ventures and associates 12 — 3 — 51 — 54 Capital expenditure 10, 11 176 35 51 — — 262 Pre-publication investment 20 189 81 49 — — 319 Depreciation 10 75 23 25 — — 123 Amortisation 11, 20 305 85 147 — — 537 2018 All figures in £ millions Notes North Core Growth Penguin Corporate Group Sales 2,784 806 539 — — 4,129 Adjusted operating profit 362 57 59 68 — 546 Cost of major restructuring (78 ) (16 ) — (8 ) — (102 ) Intangible charges (72 ) (8 ) (19 ) (14 ) — (113 ) Other net gains and losses 4 — 226 — — 230 UK pension GMP equalisation — (8 ) — — — (8 ) Operating profit 216 25 266 46 — 553 Finance costs 6 (91 ) Finance income 6 36 Profit before tax 498 Income tax 7 92 Profit for the year 590 Segment assets 4,366 1,975 536 — 636 7,513 Associates 12 — 5 — 387 — 392 Total assets 4,366 1,980 536 387 636 7,905 Other segment items Share of results of joint ventures and associates 12 (4 ) 1 1 46 — 44 Capital expenditure 10, 11 135 25 36 — — 196 Pre-publication 20 234 90 64 — — 388 Depreciation 10 41 12 13 — — 66 Amortisation 11, 20 344 92 89 — — 525 2017 All figures in £ millions Notes North Core Growth Penguin Corporate Group Sales 2,929 815 769 — — 4,513 Adjusted operating profit 394 50 38 94 — 576 Cost of major restructuring (60 ) (11 ) (8 ) — — (79 ) Intangible charges (89 ) (12 ) (37 ) (28 ) — (166 ) Other net gains and losses (3 ) — 35 96 — 128 Impact of US tax reform — — — (8 ) — (8 ) Operating profit 242 27 28 154 — 451 Finance costs 6 (110 ) Finance income 6 80 Profit before tax 421 Income tax 7 (13 ) Profit for the year 408 Segment assets 4,116 1,914 667 — 793 7,490 Joint ventures 12 — — 3 — — 3 Associates 12 4 3 — 388 — 395 Total assets 4,120 1,917 670 388 793 7,888 Other segment items Share of results of joint ventures and associates 12 5 1 1 71 — 78 Capital expenditure 10,11 162 35 43 — — 240 Pre-publication 20 218 84 59 — — 361 Depreciation 10 56 13 21 — — 90 Amortisation 11,20 348 103 110 — — 561 |
Summary of Operating Segments in Geographic Areas | The Group operates in the following main geographic areas: Sales Non-current assets All figures in £ millions 2019 2018 2017 2019 2018 UK 385 377 384 694 900 Other European countries 244 246 262 125 143 US 2,417 2,627 2,770 2,604 2,162 Canada 105 126 126 163 250 Asia Pacific 441 455 643 149 146 Other countries 277 298 328 103 137 Total 3,869 4,129 4,513 3,838 3,738 |
Revenue from contracts with c_2
Revenue from contracts with customers (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Analysis of Group's Revenue Streams | The following tables analyse the Group’s revenue streams. Courseware includes curriculum materials provided in book form and/or via access to digital content. Assessments includes test development, processing and scoring services provided to governments, educational institutions, corporations and professional bodies. Services includes the operation of schools, colleges and universities, including sistemas in Brazil, as well as the provision of online learning services in partnership with universities and other academic institutions. 2019 All figures in £ millions North Core Growth Group Sales: Courseware School Courseware 86 169 118 373 Higher Education Courseware 975 81 44 1,100 English Courseware 14 56 107 177 1,075 306 269 1,650 Assessments School and Higher Education Assessments 309 264 26 599 Clinical Assessments 175 52 — 227 Professional and English Certification 390 168 80 638 874 484 106 1,464 Services School Services 319 2 46 367 Higher Education Services 266 45 26 337 English Services — 1 50 51 585 48 122 755 Total 2,534 838 497 3,869 2018 All figures in £ millions North Core Growth Group Sales: Courseware School Courseware 378 172 127 677 Higher Education Courseware 1,042 87 57 1,186 English Courseware 16 58 102 176 1,436 317 286 2,039 Assessments School and Higher Education Assessments 1 298 237 23 558 Clinical Assessments 1 174 55 — 229 Professional and English Certification 344 150 64 558 816 442 87 1,345 Services School Services 288 2 47 337 Higher Education Services 244 40 29 313 English Services — 5 90 95 532 47 166 745 Total 2,784 806 539 4,129 2017 All figures in £ millions North Core Growth Group Sales: Courseware School Courseware 394 171 139 704 Higher Education Courseware 1,146 93 63 1,302 English Courseware 20 60 102 182 1,560 324 304 2,188 Assessments School and Higher Education Assessments 1 318 256 23 597 Clinical Assessments 1 183 46 — 229 Professional and English Certification 341 138 60 539 842 440 83 1,365 Services School Services 274 5 54 333 Higher Education Services 253 34 32 319 English Services — 12 296 308 527 51 382 960 Total 2,929 815 769 4,513 1 The analysis of Assessments revenues in 2018 and 2017 have been re-presented |
Summary of transfer of goods and services over time and at a point in time | The Group derived revenue from the transfer of goods and services over time and at a point in time in the following major product lines: 2019 All figures in £ millions North Core Growth Total Courseware Products transferred at a point in time (sale or return) 448 291 178 917 Products transferred at a point in time (other) — — 37 37 Products and services transferred over time 627 15 54 696 1,075 306 269 1,650 Assessments Products transferred at a point in time 113 55 6 174 Products and services transferred over time 761 429 100 1,290 874 484 106 1,464 Services Products transferred at a point in time — 26 — 26 Products and services transferred over time 585 22 122 729 585 48 122 755 Total 2,534 838 497 3,869 2018 All figures in £ millions North Core Growth Total Courseware Products transferred at a point in time (sale or return) 718 313 197 1,228 Products transferred at a point in time (other) — — 35 35 Products and services transferred over time 718 4 54 776 1,436 317 286 2,039 Assessments 1 Products transferred at a point in time 106 52 — 158 Products and services transferred over time 710 390 87 1,187 816 442 87 1,345 Services Products transferred at a point in time — 26 38 64 Products and services transferred over time 532 21 128 681 532 47 166 745 Total 2,784 806 539 4,129 1 The analysis of Assessments revenues in 2018 has been re-presented |
Summary of remaining transaction price on unsatisfied or partially unsatisfied performance obligations from contracts with customers | The below table depicts the remaining transaction price on unsatisfied or partially unsatisfied performance obligations from contracts with customers. 2019 All figures in £ millions Sales Deferred Committed Total remaining 2020 2021 2022 Courseware Products transferred at a point in time (sale or return) 917 1 — 1 1 — — Products transferred at a point in time (other) 37 1 — 1 1 — — Products and services transferred over time 696 118 — 118 82 13 23 Assessments Products transferred at a point in time 174 — — — — — — Products and services transferred over time 1,290 206 375 581 433 146 2 Services Products transferred at a point in time 26 3 — 3 3 — — Products and services transferred over time – subscriptions 310 11 — 11 11 — — Products and services transferred over time – other ongoing performance obligations 419 20 106 126 125 1 — Total 3,869 360 481 841 656 160 25 2018 All figures in £ millions Sales Deferred Committed Total remaining 2019 2020 2021 Courseware Products transferred at a point in time (sale or return) 1,228 1 — 1 1 — — Products transferred at a point in time (other) 35 — — — — — — Products and services transferred over time 776 679 8 687 272 131 284 Assessments 1 Products transferred at a point in time 158 — — — — — — Products and services transferred over time 1,187 196 402 598 420 173 5 Services Products transferred at a point in time 64 — — — — — — Products and services transferred over time – subscriptions 310 17 — 17 13 3 1 Products and services transferred over time – other ongoing performance obligations 371 19 145 164 162 1 1 Total 4,129 912 555 1,467 868 308 291 1 The analysis of Assessments revenues in 2018 has been re-presented |
Operating expenses (Tables)
Operating expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Operating Expenses by Function | All figures in £ millions 2019 2018 2017 By function: Cost of goods sold 1,858 1,943 2,066 Operating expenses Distribution costs 73 88 84 Selling, marketing and product development costs 631 759 896 Administrative and other expenses 999 1,039 1,207 Restructuring costs 157 90 79 Other income (54 ) (69 ) (64 ) Total net operating expenses 1,806 1,907 2,202 Other net gains and losses (16 ) (230 ) (128 ) Total 3,648 3,620 4,140 |
Summary of Analysis of Restructuring Costs | An analysis of major restructuring costs is as follows: All figures in £ millions 2019 2018 2017 By nature: Product costs 16 12 15 Employee costs 90 56 11 Depreciation and amortisation 14 1 13 Property and facilities 12 (5 ) 24 Technology and communications 2 1 2 Professional and outsourced services 17 9 12 General and administrative costs 6 16 2 Total restructuring – operating expenses 157 90 79 Share of associate restructuring 2 12 — Total 159 102 79 |
Summary of Operating Expenses by Nature | All figures in £ millions Notes 2019 2018 2017 By nature: Royalties expensed 242 236 246 Other product costs 466 516 564 Employee benefit expense 5 1,452 1,637 1,805 Contract labour 139 161 152 Employee-related expense 94 115 127 Promotional costs 254 233 229 Depreciation of property, plant and equipment 10 123 66 90 Amortisation of intangible assets – pre-publication 20 271 338 338 Amortisation of intangible assets – software 11 115 88 85 Amortisation and impairment of intangible assets – other 11 151 99 138 Property and facilities 96 147 202 Technology and communications 196 192 218 Professional and outsourced services 480 396 322 Other general and administrative costs 104 85 140 Costs capitalised to intangible assets (465 ) (390 ) (324 ) Other net gains and losses (16 ) (230 ) (128 ) Other income (54 ) (69 ) (64 ) Total 3,648 3,620 4,140 |
Summary of Services From the Group's Auditors | During the year the Group obtained the following services from the Group’s auditors: All figures in £ millions 2019 2018 2017 The audit of parent company and consolidated financial statements 5 4 4 The audit of the company’s subsidiaries 2 2 2 Total audit fees 7 6 6 Audit-related and other assurance services — 1 1 Other non-audit — — 1 Total other services — 1 2 Total non-audit — 1 2 Total 7 7 8 |
Summary of Reconciliation Between Audit and Non-Audit Service Fees | Reconciliation between audit and non-audit All figures in £ millions 2019 2018 2017 Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act 7 6 6 Non-audit — 1 2 Total 7 7 8 |
Employee information (Tables)
Employee information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Classification of Employee Benefit | All figures in £ millions Notes 2019 2018 2017 Employee benefit expense Wages and salaries (including termination costs) 1,258 1,421 1,567 Social security costs 100 112 130 Share-based payment costs 26 25 37 33 Retirement benefits – defined contribution plans 25 57 56 57 Retirement benefits – defined benefit plans 25 13 23 19 Other post-retirement medical benefits 25 (1 ) (12 ) (1 ) Total 1,452 1,637 1,805 |
Summary of Average Number of Employees | The details of the emoluments of the Directors of Pearson plc are shown in the report on Directors’ remuneration. Average number employed 2019 2018 2017 Employee numbers North America 13,564 14,113 16,295 Core 4,951 5,192 5,291 Growth 3,693 4,521 8,268 Other 526 496 485 Total 22,734 24,322 30,339 |
Net finance costs (Tables)
Net finance costs (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of Information About Finance Income and Costs | All figures in £ millions Notes 2019 2018 2017 Interest payable on financial liabilities at amortised cost and associated derivatives (22 ) (42 ) (99 ) Interest on lease liabilities (45 ) — — Net foreign exchange losses (5 ) (36 ) — Finance costs associated with transactions — (1 ) (6 ) Derivatives not in a hedge relationship (12 ) (7 ) (5 ) Derivatives in a hedge relationship — (5 ) — Finance costs (84 ) (91 ) (110 ) Interest receivable on financial assets at amortised cost 15 18 20 Interest on lease receivables 11 — — Net finance income in respect of retirement benefits 25 13 11 3 Net foreign exchange gains — — 44 Derivatives not in a hedge relationship 2 6 12 Derivatives in a hedge relationship — 1 1 Finance income 41 36 80 Net finance costs (43 ) (55 ) (30 ) |
Income tax (Tables)
Income tax (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Components of Current Tax Expense Income and Adjustments for Current Tax of Prior Periods | All figures in £ millions Notes 2019 2018 2017 Current tax Credit/(charge) in respect of current year (51 ) 92 (121 ) Adjustments in respect of prior years 21 34 (2 ) Total current tax credit/(charge) (30 ) 126 (123 ) Deferred tax In respect of temporary differences 59 (6 ) 96 Other adjustments in respect of prior years 5 (28 ) 14 Total deferred tax (charge)/credit 13 64 (34 ) 110 Total tax credit/(charge) 34 92 (13 ) |
Summary of Profit Before Tax Differences Calculated | The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the UK tax rate as follows: All figures in £ millions 2019 2018 2017 Profit before tax 232 498 421 Tax calculated at UK rate (2019: 19%, 2018: 19%, 2017: 19.25%) (44 ) (94 ) (81 ) Effect of overseas tax rates (2 ) (28 ) 15 Joint venture and associate income reported net of tax 10 8 15 Intangible impairment not subject to tax — — — Intra-group financing benefit 11 25 26 Movement in provisions for tax uncertainties 3 111 49 Impact of US tax reform — — (1 ) Net expense not subject to tax (10 ) (29 ) (39 ) Benefit from change in US tax accounting treatment — 25 — Gains and losses on sale of businesses not subject to tax 57 77 8 Utilisation of previously unrecognised tax losses and credits — — (1 ) Unrecognised tax losses (17 ) (9 ) (16 ) Adjustments in respect of prior years 26 6 12 Total tax credit/(charge) 34 92 (13 ) UK (12 ) 37 (36 ) Overseas 46 55 23 Total tax credit/(charge) 34 92 (13 ) Tax rate reflected in earnings (14.7 )% (18.5 )% 3.1 % |
Summary of Tax Benefit/(Charge) Recognised in Other Comprehensive Income | The tax benefit/(charge) recognised in other comprehensive income is as follows: All figures in £ millions 2019 2018 2017 Net exchange differences on translation of foreign operations 5 (4 ) 9 Fair value gain on other financial assets (4 ) — (4 ) Remeasurement of retirement benefit obligations 22 9 (42 ) 23 5 (37 ) |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Earnings Per Share | All figures in £ millions Notes 2019 2018 2017 Earnings/(loss) for the year from continuing operations 266 590 408 Non-controlling (2 ) (2 ) (2 ) Earnings/(loss) attributable to equity holders of the company 264 588 406 Weighted average number of shares (millions) 777.0 778.1 813.4 Effect of dilutive share options (millions) 0.5 0.6 0.3 Weighted average number of shares (millions) for diluted earnings 777.5 778.7 813.7 Earnings/(loss) per share Basic 34.0p 75.6p 49.9p Diluted 34.0p 75.5p 49.9p |
Dividends (Tables)
Dividends (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Dividends Declared | All figures in £ millions 2019 2018 2017 Final paid in respect of prior year 13.5p (2018: 12.0p, 2017: 34.0p) 101 93 277 Interim paid in respect of current year 6.0p (2018: 5.5p, 2017: 5.0p) 46 43 41 147 136 318 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Property, plant and equipment | Right-of-use Owned assets All figures in £ millions Land and buildings Plant and equipment Land and buildings Plant and equipment Assets in course of construction Total Cost At 1 January 2018 — — 330 527 29 886 Exchange differences — — 11 14 1 26 Additions — — 32 22 12 66 Disposals — — (75 ) (97 ) — (172 ) Reclassifications — — 19 (8 ) (11 ) — Transfer to intangible assets — — — — (11 ) (11 ) Transfer to intangible assets – pre-publication — — — — (2 ) (2 ) At 31 December 2018 — — 317 458 18 793 Adjustment on initial application of IFRS 16 (see note 1b) 418 6 — — — 424 Exchange differences (9 ) — (8 ) (15 ) — (32 ) Additions 64 2 — 18 40 124 Disposals (13 ) (4 ) (13 ) (108 ) (8 ) (146 ) Reclassifications — — 4 (4 ) — — Transfer of finance leases — 19 — (19 ) — — Transfer to intangible assets — — — (3 ) (4 ) (7 ) Transfer to intangible assets – pre-publication — — — (2 ) (10 ) (12 ) At 31 December 2019 460 23 300 325 36 1,144 Right-of-use Owned assets All figures in £ millions Land and buildings Plant and equipment Land and buildings Plant and equipment Assets in course of construction Total Depreciation At 1 January 2018 — — (197 ) (408 ) — (605 ) Exchange differences — — (5 ) (11 ) — (16 ) Charge for the year — — (20 ) (46 ) — (66 ) Disposals — — 34 97 — 131 Reclassifications — — (7 ) 7 — — At 31 December 2018 — — (195 ) (361 ) — (556 ) Exchange differences 2 — 6 13 — 21 Charge for the year (60 ) (4 ) (21 ) (38 ) — (123 ) Disposals — — 10 116 — 126 Transfer of finance leases — (12 ) — 12 — — Transfer to intangible assets — — — 3 — 3 Transfer to intangible assets – pre-publication — — — 3 — 3 At 31 December 2019 (58 ) (16 ) (200 ) (252 ) — (526 ) Carrying amounts At 1 January 2018 — — 133 119 29 281 At 31 December 2018 — — 122 97 18 237 At 31 December 2019 402 7 100 73 36 618 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Intangible Assets | All figures in £ millions Goodwill Software Acquired relationships Acquired Acquired Other Total Cost At 1 January 2018 2,030 882 889 281 184 489 4,755 Exchange differences 74 32 39 (2 ) — 1 144 Additions – internal development — 124 — — — — 124 Additions – purchased — 6 — — — — 6 Disposals — (94 ) (18 ) (12 ) — (33 ) (157 ) Disposal through business disposal — (2 ) — — — — (2 ) Transfer from property, plant and equipment — 11 — — — — 11 Transfer to assets classified as held for sale 7 — — — — — 7 At 31 December 2018 2,111 959 910 267 184 457 4,888 Exchange differences (57 ) (22 ) (29 ) (10 ) (5 ) (20 ) (143 ) Additions – internal development — 137 — — — — 137 Additions – purchased — 1 — — — — 1 Disposals — (15 ) (88 ) (19 ) — (47 ) (169 ) Acquisition through business combination 18 — — — — 23 41 Transfer from property, plant and equipment — 7 — — — — 7 Transfer to intangible assets – pre-publication — (28 ) — — — — (28 ) Movement in held for sale 67 — — — — — 67 At 31 December 2019 2,139 1,039 793 238 179 413 4,801 All figures in £ millions Goodwill Software Acquired relationships Acquired Acquired Other Total Amortisation At 1 January 2018 — (493 ) (580 ) (180 ) (178 ) (360 ) (1,791 ) Exchange differences — (23 ) (26 ) 1 2 (10 ) (56 ) Charge for the year — (88 ) (59 ) (14 ) (2 ) (24 ) (187 ) Disposals — 92 18 12 — 33 155 At 31 December 2018 — (512 ) (647 ) (181 ) (178 ) (361 ) (1,879 ) Exchange differences — 16 22 7 4 19 68 Charge for the year — (115 ) (51 ) (23 ) (2 ) (75 ) (266 ) Disposals — 10 88 19 — 46 163 Transfer from property, plant and equipment — (3 ) — — — — (3 ) Transfer to intangible assets – pre-publication — 16 — — — — 16 At 31 December 2019 — (588 ) (588 ) (178 ) (176 ) (371 ) (1,901 ) Carrying amounts At 1 January 2018 2,030 389 309 101 6 129 2,964 At 31 December 2018 2,111 447 263 86 6 96 3,009 At 31 December 2019 2,139 451 205 60 3 42 2,900 |
Summary of Useful Economic Life of Intangible Assets | The range of useful economic lives for each major class of intangible asset (excluding goodwill and software) is shown below: 2019 Class of intangible asset Useful economic life Acquired customer lists, contracts and relationships 3-20 years Acquired trademarks and brands 2-20 Acquired publishing rights 5-20 Other intangibles acquired 2-20 |
Summary of Amortisation Profile of Intangible Assets | The expected amortisation profile of acquired intangible assets is shown below: 2019 All figures in £ millions One to Six to More than Total Class of intangible asset Acquired customer lists, contracts and relationships 154 49 2 205 Acquired trademarks and brands 42 14 4 60 Acquired publishing rights 3 — — 3 Other intangibles acquired 31 11 — 42 |
Summary of Carrying Value of Goodwill | Impairment reviews were conducted on these revised CGUs as summarised below: 2019 CGUs 2019 All figures in £ millions Goodwill North American Courseware — OPM 18 Virtual Schools 386 Assessments 1,035 Core 700 Growth (includes the separate CGUs of Brazil, China, India and South Africa) — Total 2,139 Goodwill is tested at least annually for impairment. The recoverable amount of each aggregated CGU is based on the higher of value in use and fair value less costs of disposal. The value in use was higher than the fair value less costs of disposal in each of the CGUs. Other than goodwill there are no intangible assets with indefinite lives. 2018 CGUs All figures in £ millions 2018 North America 930 Core 701 Growth (includes the separate CGUs of Brazil, China, India and South Africa) — Pearson VUE 480 Total 2,111 |
Summary of Detailed Information About In Carrying Value Of Goodwill | The table below shows the key assumptions for those CGUs for which the carrying value of goodwill is significant in comparison to the total carrying value of goodwill: Discount rate Perpetuity Virtual Schools 10 % 2 % Core 10 % 2 % Assessments 10 % 2 % |
Summary of Cumulative Impact of Changes in Assumptions Used in Calculating the Fair Value | Headroom at 31 December 2019 Discount rate Discount rate for zero headroom Perpetuity growth rate Perpetuity growth rate for zero headroom Contribution* reduction p.a. for zero headroom North American Courseware £ 115m 10.0 % 10.3 % 2.0 % 1.6 % £ 9m OPM £ 81m 10.0 % 10.3 % 2.0 % 0.3 % £ 7m Core £ 191m 10.0 % 10.7 % 2.0 % 1.2 % £ 15m Brazil — 16.3 % 16.3 % 4.1 % 4.1 % — |
Investments in joint ventures_2
Investments in joint ventures and associates (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Amounts Recognized in Financial Statements | The amounts recognised in the balance sheet are as follows: All figures in £ millions 2019 2018 Associates 7 392 Joint ventures — — Associates classified as held for sale 397 — Total 404 392 The amounts recognised in the income statement are as follows: All figures in £ millions 2019 2018 Associates 54 43 Joint ventures — 1 Total 54 44 |
Summary of Material Associates and Financial Information of Material Associate | The Group has the following material associates: Principal place Ownership Nature of Measurement Penguin Random House Ltd UK/Global 25 % See below Equity Penguin Random House LLC US 25 % See below Equity The summarised financial information of the material associate is detailed below: 2019 2018 All figures in £ millions Penguin Penguin Assets Non-current 1,346 1,043 Current assets 2,273 1,929 Liabilities Non-current (1,357 ) (1,104 ) Current liabilities (1,874 ) (1,546 ) Net assets 388 322 Sales 2,916 2,775 Profit for the year 205 185 Other comprehensive income/(expense) (27 ) 13 Total comprehensive income 178 198 Dividends received from associate in relation to profits 63 67 Re-capitalisation — 50 A reconciliation of the summarised financial information to the carrying value of the material associate is shown below: 2019 2018 All figures in £ millions Penguin Penguin Opening net assets 322 368 Adjustment on initial application of IFRS 16 (7 ) — Exchange differences (9 ) 18 Profit for the year 205 185 Other comprehensive income/(expense) (27 ) 13 Dividends, net of tax paid (260 ) (262 ) Capital contribution 164 — Closing net assets 388 322 Share of net assets 97 80 Goodwill 300 307 Carrying value of associate 397 387 |
Summary of Individually Immaterial Associates | Information on other individually immaterial associates is detailed below: All figures in £ millions 2019 2018 Profit/(loss) for the year 3 (3 ) Total comprehensive (expense)/income 3 (3 ) |
Summary of Individually Immaterial Joint Ventures | Information on joint ventures, all of which are individually immaterial, is detailed below: All figures in £ millions 2019 2018 Profit for the year — 1 Total comprehensive income — 1 |
Deferred income tax (Tables)
Deferred income tax (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of Deferred Income Tax | All figures in £ millions 2019 2018 Deferred income tax assets 59 60 Deferred income tax liabilities (48 ) (136 ) Net deferred income tax 11 (76 ) |
Schedule of Movement on Net Deferred Income Assets and Liabilities | The movement in deferred income tax assets and liabilities during the year is as follows: All figures in £ millions Trading Returns Retirement Deferred Goodwill and Other Total Deferred income tax assets/(liabilities) At 1 January 2018 9 34 (44 ) 42 (155 ) 64 (50 ) Exchange differences — 1 1 6 (16 ) (5 ) (13 ) Income statement (charge)/benefit 11 (4 ) (21 ) 20 (34 ) (14 ) (42 ) Disposal through business disposal — — — — — 16 16 Tax benefit in other comprehensive income — — 9 — — — 9 Tax benefit in equity — — — — — 4 4 At 31 December 2018 20 31 (55 ) 68 (205 ) 65 (76 ) Adjustment on initial application of IFRS 16 (see note 1b) — — — — — 15 15 Exchange differences (1 ) (1 ) (1 ) (3 ) 6 (5 ) (5 ) Income statement benefit/(charge) 70 (10 ) (4 ) (24 ) — 32 64 Tax benefit/(charge) in other comprehensive income — — 22 — — (4 ) 18 Tax charge in equity — — — — — (5 ) (5 ) At 31 December 2019 89 20 (38 ) 41 (199 ) 98 11 |
Classification of financial i_2
Classification of financial instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of Classification of Each Class of Financial Assets and their Carrying Values | The accounting classification of each class of the Group’s financial assets, and their carrying values, is as follows: 2019 2018 Fair value Amortised Fair value Amortised All figures in £ millions Notes FVOCI FVTPL Fair value Financial Total FVOCI FVTPL Fair value Financial Total Investments in unlisted securities 15 122 — — — 122 93 — — — 93 Cash and cash equivalents 17 — — — 437 437 — — — 568 568 Derivative financial instruments 16 — 6 48 — 54 — 4 64 — 68 Trade receivables 22 — — — 918 918 — — — 904 904 Other receivable — 182 — — 182 — — — — — Trade receivables – within assets classified as held for sale — — — — — — — — 49 49 Total financial assets 122 188 48 1,355 1,713 93 4 64 1,521 1,682 |
Schedule of Accounting Classification of Class of Financial Liabilities, Together with their Carrying Values and Market Values | The accounting classification of each class of the Group’s financial liabilities, together with their carrying values and market values, is as follows: 2019 2018 Fair value Amortised Fair value Amortised All figures in £ millions Notes FVTPL Fair value Other Total Total FVTPL Fair value Other Total Total Derivative financial instruments 16 (7 ) (32 ) — (39 ) (39 ) — (59 ) — (59 ) (59 ) Trade payables 24 — — (358 ) (358 ) (358 ) — — (311 ) (311 ) (311 ) Trade payables – within liabilities classified as held for sale — — — — — — — (22 ) (22 ) (22 ) Bank loans and overdrafts 18 — — (3 ) (3 ) (3 ) — — (43 ) (43 ) (43 ) Other borrowings due within one year 18 — — (89 ) (89 ) (89 ) — — (3 ) (3 ) (3 ) Borrowings due after more than one year 18 — — (1,572 ) (1,572 ) (1,574 ) — — (674 ) (674 ) (663 ) Total financial liabilities (7 ) (32 ) (2,022 ) (2,061 ) (2,063 ) — (59 ) (1,053 ) (1,112 ) (1,101 ) |
Schedule of Analysis of the Movements in Level 3 Fair Value Remeasurements | The following table analyses the movements in level 3 fair value remeasurements: 2019 2018 All figures in £ millions Other receivable Investments in unlisted securities Total Investments in unlisted securities At beginning of year — 93 93 77 Exchange differences 1 (3 ) (2 ) 4 Acquisition of investments and other receivable 181 12 193 13 Fair value movements — 20 20 7 Disposal of investments — — — (8 ) At end of year 182 122 304 93 |
Other financial assets (Tables)
Other financial assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Other Financial Assets | All figures in £ millions 2019 2018 At beginning of year 93 77 Exchange differences (3 ) 4 Acquisition of investments 12 13 Fair value movements 20 7 Disposal of investments — (8 ) At end of year 122 93 |
Derivative financial instrume_2
Derivative financial instruments and hedge accounting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Outstanding Derivative Financial Instruments | The Group’s approach to the management of financial risks is set out in note 19. The Group’s outstanding derivative financial instruments are as follows: 2019 2018 All figures in £ millions Gross notional Assets Liabilities Gross notional Assets Liabilities Interest rate derivatives – in a fair value hedge relationship 336 13 — 404 13 — Interest rate derivatives – not in a hedge relationship 557 2 (6 ) 362 3 — Cross-currency rate derivatives – in a hedge relationship 502 29 (31 ) 577 51 (35 ) FX derivatives – in a hedge relationship 555 6 (1 ) 434 — (24 ) FX derivatives – not in a hedge relationship 386 4 (1 ) 473 1 — Total 2,336 54 (39 ) 2,250 68 (59 ) Analysed as expiring: In less than one year 1,167 25 (15 ) 771 1 (23 ) Later than one year and not later than five years 694 13 (6 ) 795 22 (1 ) Later than five years 475 16 (18 ) 684 45 (35 ) Total 2,336 54 (39 ) 2,250 68 (59 ) |
Summary of Instruments to Hedge Exposures to Changes in Interest Rates and Foreign Currency Risk Associated with Borrowings | The Group held the following instruments to hedge exposures to changes in interest rates and foreign currency risk associated with borrowings: 2019 All figures in £ millions Carrying amount of Change in fair value of Nominal amounts of Derivative financial instruments for interest rate risk 13 — 336 Derivative financial instruments for currency risk 25 (21 ) 336 2018 All figures in £ millions Carrying amount of Change in fair value of Nominal amounts of Derivative financial instruments for interest rate risk 13 (7 ) 404 Derivative financial instruments for currency risk 51 3 404 |
Summary of Amounts at the Reporting Rate Relating to Items Designated as Hedge Items | The amounts at the reporting date relating to items designated as hedge items were as follows: 2019 All figures in £ millions Carrying amount Accumulated amount Change in fair value of Hedge Line item in profit or Interest rate risk Financial liabilities – borrowings (347 ) (9 ) — — n/a Currency risk Financial liabilities – borrowings (347 ) n/a 21 — n/a 2018 All figures in £ millions Carrying amount Accumulated amount Change in fair value of Hedge Line item in profit or Interest rate risk Financial liabilities – borrowings (416 ) (9 ) 7 — n/a Currency risk Financial liabilities – borrowings (416 ) n/a (3 ) — n/a |
Summary of Amounts Related to Items Designated as Hedging Instruments | The amounts related to items designated as hedging instruments were as follows: 2019 All figures in £ millions Carrying Change in value of Nominal Hedging Hedge Derivative financial instruments (21 ) 13 (722 ) 13 — Financial liabilities – borrowings (246 ) 10 (246 ) 10 — 2018 All figures in £ millions Carrying Change in value of Nominal Hedging Hedge Derivative financial instruments (59 ) (22 ) (607 ) (22 ) — Financial liabilities – borrowings (256 ) (10 ) (256 ) (10 ) — |
Disclosure of Derivative Financial Assets and Liabilities Subject to Offsetting Arrangements | Derivative financial assets and liabilities subject to offsetting arrangements are as follows: 2019 2018 All figures in £ millions Gross Gross Net derivative Gross Gross Net Counterparties in an asset position 52 (34 ) 18 67 (44 ) 23 Counterparties in a liability position 2 (5 ) (3 ) 1 (15 ) (14 ) Total as presented in the balance sheet 54 (39 ) 15 68 (59 ) 9 |
Cash and cash equivalents (ex_2
Cash and cash equivalents (excluding overdrafts) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Cash and Cash Equivalents | All figures in £ millions 2019 2018 Cash at bank and in hand 401 533 Short-term bank deposits 36 35 437 568 |
Summary of Cash and Cash Equivalents for Purpose of CashFlow Statement | All figures in £ millions 2019 2018 Cash and cash equivalents 437 568 Bank overdrafts (3 ) (43 ) 434 525 |
Financial liabilities - borro_2
Financial liabilities - borrowings (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Current and Non - Current Borrowings | The Group’s current and non-current All figures in £ millions 2019 2018 Non-current 1.875% euro notes 2021 (nominal amount €195m; 2018 nominal amount €250m) 170 233 3.75% US dollar notes 2022 (nominal amount $117m) 89 92 3.25% US dollar notes 2023 (nominal amount $94m) 72 74 1.375% euro notes 2025 (nominal amount €300m) 262 273 Revolving credit facility 230 — Lease liabilities (see note 35) 749 2 1,572 674 Current Due within one year or on demand: Bank loans and overdrafts 3 43 Lease liabilities (see note 35) 89 3 92 46 Total borrowings 1,664 720 |
Summary of Maturities of the Group's Non-Current Borrowings | The maturities of the Group’s non-current All figures in £ millions 2019 2018 Between one and two years 251 1 Between two and five years 609 400 Over five years 712 273 1,572 674 |
Summary of Carrying Amounts and Market Value of Borrowings | The carrying amounts and market values of borrowings are as follows: 2019 2018 All figures in £ millions Effective Carrying Market Effective Carrying Market Bank loans and overdrafts n/a 3 3 n/a 43 43 1.875% euro notes 2021 2.04 % 170 170 2.04 % 233 233 3.75% US dollar notes 2022 3.94 % 89 90 3.94 % 92 91 3.25% US dollar notes 2023 3.36 % 72 72 3.36 % 74 71 1.375% euro notes 2025 1.44 % 262 263 1.44 % 273 266 Revolving credit facility 1.075 % 230 230 — — — Lease liabilities n/a 838 838 n/a 5 5 1,664 1,666 720 709 |
Summary of Carrying Amounts of Borrowings which Denominated in Currencies | The carrying amounts of the Group’s borrowings before the effect of derivatives (see notes 16 and 19 for further information on the impact of derivatives) are denominated in the following currencies: All figures in £ millions 2019 2018 US dollar 539 188 Sterling 576 23 Euro 442 506 Other 107 3 1,664 720 |
Financial risk management (Tabl
Financial risk management (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Net Debt Position | The Group’s net debt position is set out below: All figures in £ millions 2019 2018 Cash and cash equivalents 437 568 Derivative financial instruments 15 9 Bank loans and overdrafts (3 ) (43 ) Bonds (593 ) (672 ) Revolving credit facility (230 ) — Investment in finance lease receivable 196 — Lease liabilities (838 ) (5 ) Net debt (1,016 ) (143 ) |
Summary of Sensitivity of The Carrying Value of Financial Instruments to Fluctuations in Interest Rates and Exchange Rates | As at 31 December 2019, the sensitivity of the carrying value of the Group’s financial instruments to fluctuations in interest rates and exchange rates is as follows: 2019 All figures in £ millions Carrying Impact of 1% Impact of 1% Impact of 10% Impact of 10% Investments in unlisted securities 122 — — (9 ) 11 Other receivable 182 — — (17 ) 20 Cash and cash equivalents 437 — — (32 ) 39 Derivative financial instruments 15 16 (18 ) 22 (23 ) Bonds (593 ) 11 (12 ) 53 (64 ) Other borrowings (1,071 ) 2 (2 ) 46 (56 ) Other net financial assets 560 — — (43 ) 52 Total financial instruments (348 ) 29 (32 ) 20 (21 ) 2018 All figures in £ millions Carrying Impact of 1% Impact of 1% Impact of 10% Impact of 10% Investments in unlisted securities 93 — — (7 ) 9 Cash and cash equivalents 568 — — (36 ) 45 Derivative financial instruments 9 (3 ) 3 1 (1 ) Bonds (672 ) 17 (17 ) 61 (74 ) Other borrowings (48 ) — — 2 (3 ) Other net financial assets 620 — — (51 ) 62 Total financial instruments 570 14 (14 ) (30 ) 38 |
Schedule of Contractual Undiscounted Cash Flows Analysed by Maturity and Currency | Analysed by maturity Analysed by currency All figures in £ millions Greater than Later than but less than Five years Total USD GBP Other Total At 31 December 2019 Bonds 12 354 259 625 177 — 448 625 Rate derivatives – inflows (19 ) (223 ) (332 ) (574 ) (41 ) (172 ) (361 ) (574 ) Rate derivatives – outflows 23 237 331 591 242 344 5 591 FX forwards – inflows (186 ) (24 ) — (210 ) — (210 ) — (210 ) FX forwards – outflows 186 23 — 209 209 — — 209 Total 16 367 258 641 587 (38 ) 92 641 At 31 December 2018 Bonds 14 431 277 722 189 — 533 722 Rate derivatives – inflows (20 ) (288 ) (343 ) (651 ) (40 ) (167 ) (444 ) (651 ) Rate derivatives – outflows 23 289 341 653 254 390 9 653 FX forwards – inflows (251 ) (35 ) — (286 ) — (286 ) — (286 ) FX forwards – outflows 275 37 — 312 312 — — 312 Total 41 434 275 750 715 (63 ) 98 750 |
Intangible assets - pre-publi_2
Intangible assets - pre-publication (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Intangible Assets Pre-publication | All figures in £ millions 2019 2018 Cost At beginning of year 2,096 1,854 Exchange differences (66 ) 70 Additions 306 328 Disposals (82 ) (158 ) Transfer from property, plant and equipment 9 2 Transfer from intangible assets 12 — At end of year 2,275 2,096 Amortisation At beginning of year (1,279 ) (1,113 ) Exchange differences 53 (53 ) Charge for the year (261 ) (271 ) Disposals 82 158 At end of year (1,405 ) (1,279 ) Carrying amounts at end of year 870 817 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Current Inventories | All figures in £ millions 2019 2018 Raw materials 5 5 Work in progress 2 — Finished goods 155 149 Returns asset 7 10 169 164 |
Trade and other receivables (Ta
Trade and other receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Trade and Other Receivables | All figures in £ millions 2019 2018 Current Trade receivables 903 874 Royalty advances 4 5 Prepayments 138 103 Investment in finance lease receivable 25 — Deferred contract costs — 1 Accrued income 11 2 Other receivables 194 193 1,275 1,178 Non-current Trade receivables 15 30 Royalty advances — 21 Prepayments 7 13 Investment in finance lease receivable 171 — Deferred contract costs — 1 Accrued income 5 10 Other receivables 115 25 313 100 |
Summary of Movements on Provision for Bad and Doubtful Debts | The movements in the provision for bad and doubtful debts are as follows: All figures in £ millions 2019 2018 At beginning of year (96 ) (116 ) Adjustment on initial application of IFRS 9 — (12 ) Exchange differences 3 2 Income statement movements (35 ) (1 ) Utilised 36 31 At end of year (92 ) (96 ) |
Summary of Ageing of Group's Trade Receivables | The ageing of the Group’s trade receivables is as follows: All figures in £ millions 2019 2018 Within due date 654 606 Up to three months past due date 155 172 Three to six months past due date 35 72 Six to nine months past due date 9 16 Nine to 12 months past due date 14 24 More than 12 months past due date 51 14 Net trade receivables 918 904 |
Provisions for other liabilit_2
Provisions for other liabilities and charges (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Provisions for Other Liabilities and Charges | All figures in £ millions Deferred Property Disposals Legal Total At 1 January 2019 42 102 5 16 165 Adjustment on initial application of IFRS 16 (see note 1b) — (101 ) — — (101 ) Exchange differences (1 ) — — (2 ) (3 ) Charged to income statement — 10 — 67 77 Released to income statement — — (5 ) (15 ) (20 ) Utilised (5 ) (1 ) — (17 ) (23 ) Transfer from trade and other liabilities — 6 — — 6 Transfer to other liabilities (36 ) — — — (36 ) At 31 December 2019 — 16 — 49 65 |
Summary of Analysis of Provisions | Analysis of provisions: 2019 All figures in £ millions Deferred Property Disposals Legal Total Current — 9 — 43 52 Non-current — 7 — 6 13 — 16 — 49 65 2018 Current 6 2 5 7 20 Non-current 36 100 — 9 145 42 102 5 16 165 |
Trade and other liabilities (Ta
Trade and other liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Trade and Other Liabilities | All figures in £ millions 2019 2018 Trade payables 358 311 Sales return liability 122 173 Social security and other taxes 13 16 Accruals 295 397 Deferred income 360 387 Interest payable 28 46 Other liabilities 188 225 1,364 1,555 Less: non-current Accruals — 15 Deferred income 55 66 Other liabilities 31 74 86 155 Current portion 1,278 1,400 |
Retirement benefit and other _2
Retirement benefit and other post-retirement obligations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Defined Plan Analysis | At 31 December 2019, the UK Group plan had approximately 26,000 members, analysed in the following table: All figures in % Active Deferred Pensioners Total Defined benefit — 20 33 53 Defined contribution 12 35 — 47 Total 12 55 33 100 |
Summary of Principal Assumptions Used for UK Group Plan and US PRMB | The principal assumptions used for the UK Group plan and the US PRMB are shown below. Weighted average assumptions have been shown for the other plans, which primarily relate to US pension plans. 2019 2018 All figures in % UK Group Other PRMB UK Group Other PRMB Inflation 3.0 1.7 1.5 3.3 1.6 1.5 Rate used to discount plan liabilities 2.0 3.0 3.1 2.8 4.0 4.1 Expected rate of increase in salaries 3.5 2.9 3.0 3.8 2.9 3.0 Expected rate of increase for pensions in payment and deferred pensions 1.85 to 5.05 — — 2.1 to 5.1 — — Initial rate of increase in healthcare rate — — 6.8 — — 7.0 Ultimate rate of increase in healthcare rate — — 5.0 — — 5.5 |
Summary of Remaining Average Life Expectancy in Years of Pensioner Retiring at Age 65 | Using the above tables, the remaining average life expectancy in years of a pensioner retiring at age 65 on the balance sheet date for the UK Group plan and US plans is as follows: UK US All figures in years 2019 2018 2019 2018 Male 24.0 23.8 20.6 20.7 Female 24.3 24.5 22.6 22.7 The remaining average life expectancy in years of a pensioner retiring at age 65, 20 years after the balance sheet date, for the UK and US Group plans is as follows: UK US All figures in years 2019 2018 2019 2018 Male 25.5 25.4 22.2 22.3 Female 26.1 26.3 24.1 24.2 |
Summary of Amounts Recognised in Income Statement | The amounts recognised in the income statement are as follows: 2019 All figures in £ millions UK Defined Sub-total Defined PRMB Total Current service cost 6 3 9 57 — 66 Past service cost — — — — — — Curtailments (2 ) — (2 ) — (1 ) (3 ) Administration expenses 6 — 6 — — 6 Total operating expense 10 3 13 57 (1 ) 69 Interest on plan assets (89 ) (5 ) (94 ) — — (94 ) Interest on plan liabilities 73 6 79 — 2 81 Net finance (income)/expense (16 ) 1 (15 ) — 2 (13 ) Net income statement charge (6 ) 4 (2 ) 57 1 56 2018 All figures in £ millions UK Defined Sub-total Defined PRMB Total Current service cost 7 2 9 56 (1 ) 64 Past service cost 8 — 8 — — 8 Curtailments — — — — (11 ) (11 ) Administration expenses 6 — 6 — — 6 Total operating expense 21 2 23 56 (12 ) 67 Interest on plan assets (82 ) (5 ) (87 ) — — (87 ) Interest on plan liabilities 68 6 74 — 2 76 Net finance (income)/expense (14 ) 1 (13 ) — 2 (11 ) Net income statement charge 7 3 10 56 (10 ) 56 2017 All figures in £ millions UK Group Defined Sub-total Defined PRMB Total Current service cost 8 1 9 57 (1 ) 65 Administration expenses 9 1 10 — — 10 Total operating expense 17 2 19 57 (1 ) 75 Interest on plan assets (84 ) (5 ) (89 ) — — (89 ) Interest on plan liabilities 77 7 84 — 2 86 Net finance (income)/expense (7 ) 2 (5 ) — 2 (3 ) Net income statement charge 10 4 14 57 1 72 |
Summary of Amounts Recognised in Balance Sheet | The amounts recognised in the balance sheet are as follows: 2019 2018 All figures in £ millions UK Other Other Total UK Other Other Total Fair value of plan assets 3,341 120 — 3,461 3,240 141 — 3,381 Present value of defined benefit obligation (2,912 ) (138 ) (19 ) (3,069 ) (2,671 ) (158 ) (19 ) (2,848 ) Net pension asset/(liability) 429 (18 ) (19 ) 392 569 (17 ) (19 ) 533 Other post-retirement medical benefit obligation (43 ) (49 ) Other pension accruals (12 ) (13 ) Net retirement benefit asset 337 471 Analysed as: Retirement benefit assets 429 571 Retirement benefit obligations (92 ) (100 ) |
Summary of Gains (Losses) Recognised in Other Comprehensive Income | The following gains/(losses) have been recognised in other comprehensive income: All figures in £ millions 2019 2018 2017 Amounts recognised for defined benefit plans (148 ) 16 175 Amounts recognised for post-retirement medical benefit plans 3 6 — Total recognised in year (145 ) 22 175 |
Summary of Fair Value of Plan Assets | The fair value of plan assets comprises the following: 2019 2018 All figures in % UK Group Other Total UK Group Other Total Insurance 43 — 43 28 1 29 Equities 1 1 2 1 1 2 Bonds 5 2 7 — 2 2 Property 5 — 5 7 — 7 Pooled asset investment funds 30 — 30 44 — 44 Other 13 — 13 16 — 16 |
Summary of of Quoted and Non Quoted Market Price | The table below further disaggregates the plan assets into additional categories and those assets which have a quoted market price in an active market and those that do not: 2019 2018 All figures in % Quoted No quoted Quoted No quoted Insurance 43 — 29 — Non-UK — 2 — 2 Fixed-interest securities 7 — 2 — Property — 5 — 7 Pooled asset investment funds 30 — 44 — Other — 13 — 16 Total 80 20 75 25 |
Summary of Liquidity Profile of UK Group Plan Assets | The liquidity profile of the UK Group plan assets is as follows: All figures in % 2019 2018 Liquid – call <1 month 37 51 Less liquid – call 1–3 months — — Illiquid – call >3 months 63 49 |
Summary of Changes in Values of Plan Assets and Liabilities | Changes in the values of plan assets and liabilities of the retirement benefit plans are as follows: 2019 2018 All figures in £ millions UK Group Other Total UK Group Other Total Fair value of plan assets Opening fair value of plan assets 3,240 141 3,381 3,337 155 3,492 Exchange differences — (5 ) (5 ) — 4 4 Interest on plan assets 89 5 94 82 5 87 Return on plan assets excluding interest 133 13 146 (45 ) (13 ) (58 ) Contributions by employer 3 2 5 6 1 7 Benefits paid (124 ) (16 ) (140 ) (140 ) (11 ) (151 ) Other — (20 ) (20 ) — — — Closing fair value of plan assets 3,341 120 3,461 3,240 141 3,381 Present value of defined benefit obligation Opening defined benefit obligation (2,671 ) (177 ) (2,848 ) (2,792 ) (181 ) (2,973 ) Exchange differences — 5 5 — (3 ) (3 ) Current service cost (6 ) (3 ) (9 ) (7 ) (2 ) (9 ) Past service cost — — — (8 ) — (8 ) Curtailments 2 — 2 — — — Administration expenses (6 ) — (6 ) (6 ) — (6 ) Interest on plan liabilities (73 ) (6 ) (79 ) (68 ) (6 ) (74 ) Actuarial gains/(losses) – experience (6 ) (1 ) (7 ) (49 ) (2 ) (51 ) Actuarial gains/(losses) – demographic 18 1 19 (12 ) — (12 ) Actuarial gains/(losses) – financial (294 ) (12 ) (306 ) 131 6 137 Contributions by employee — — — — — — Other — 20 20 — — — Benefits paid 124 16 140 140 11 151 Closing defined benefit obligation (2,912 ) (157 ) (3,069 ) (2,671 ) (177 ) (2,848 ) |
Summary of Changes in Value of US PRMB | Changes in the value of the US PRMB are as follows: All figures in £ millions 2019 2018 Opening defined benefit obligation (49 ) (67 ) Exchange differences 1 (2 ) Current service cost — 1 Curtailments 1 11 Interest on plan liabilities (2 ) (2 ) Actuarial gains/(losses) – experience 4 4 Actuarial gains/(losses) – demographic 1 — Actuarial gains/(losses) – financial (2 ) 2 Benefits paid 3 4 Closing defined benefit obligation (43 ) (49 ) |
Summary of Effect Percentage of Discount Rate Increase (Decrease) on Defined Benefit Obligation and Total Pension Expense | The effect of a one percentage point increase and decrease in the discount rate on the defined benefit obligation and the total pension expense is as follows: 2019 All figures in £ millions 1% 1% Effect: (Decrease)/increase in defined benefit obligation – UK Group plan (434 ) 591 (Decrease)/increase in defined benefit obligation – US plan (11 ) 13 The effect of members living one year more or one year less on the defined benefit obligation is as follows: 2019 All figures in £ millions One year One year Effect: Increase/(decrease) in defined benefit obligation – UK Group plan 132 (126 ) Increase/(decrease) in defined benefit obligation – US plan 8 (8 ) The effect of a half percentage point increase and decrease in the inflation rate is as follows: 2019 All figures in £ millions 0.5% 0.5% Effect: Increase/(decrease) in defined benefit obligation – UK Group plan 153 (136 ) Increase/(decrease) in defined benefit obligation – US plan — — |
Share-based payments (Tables)
Share-based payments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Charges in Income Statement in Respect of Equity-settled Share-based Payment Plans | The Group recognised the following charges in the income statement in respect of its equity-settled share-based payment plans: All figures in £ millions 2019 2018 Pearson plans 25 37 |
Summary of Number and Weighted Average Exercise Prices of Share Options Granted under Group's Plans | The number and weighted average exercise prices of share options granted under the Group’s plans are as follows: 2019 2018 Number of Weighted average Number of Weighted average Outstanding at beginning of year 2,728 5.76 2,981 6.84 Granted during the year 660 6.77 729 5.80 Exercised during the year (419 ) 6.74 (70 ) 6.57 Forfeited during the year (492 ) 6.21 (668 ) 7.58 Expired during the year (83 ) 11.15 (244 ) 8.19 Outstanding at end of year 2,394 6.06 2,728 5.76 Options exercisable at end of year 161 7.14 169 11.31 |
Summary of Weighted Average Remaining Contractual Lives and Exercise Prices of Options Outstanding | 2019 2018 Range of exercise prices Number of Weighted average Number of Weighted average 5–10 2,376 1.94 2,553 2.29 >10 18 1.04 175 0.29 2,394 1.93 2,728 2.16 |
Summary of Weighted Average Estimated Fair Values and Inputs into Black-Scholes Model | The weighted average estimated fair values and the inputs into the Black-Scholes model are as follows: 2019 2018 Fair value £ 2.31 £ 1.88 Weighted average share price £ 8.30 £ 7.49 Weighted average exercise price £ 6.77 £ 5.80 Expected volatility 32.07 % 35.78 % Expected life 3.7 years 3.7 y Risk-free rate 0.66 % 0.87 % Expected dividend yield 2.11 % 5.21 % Forfeiture rate 3.2 % 3.2 % |
Summary of Weighted Average Estimated Fair Values and Inputs into Black-Scholes Model | The following shares were granted under restricted share arrangements: 2019 2018 Number of Weighted average £ Number of Weighted average Long-Term Incentive Plan 2,785 8.09 2,907 7.55 Management Incentive Plan 1,435 8.49 2,035 7.45 |
Share capital and share premi_2
Share capital and share premium (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Summary of Share Capital and Share Premium | Number of Share Share At 1 January 2018 802,054 200 2,602 Issue of ordinary shares – share option schemes 864 1 5 Purchase of own shares (21,840 ) (6 ) — At 31 December 2018 781,078 195 2,607 Issue of ordinary shares – share option schemes 1,021 — 7 Purchase of own shares — — — At 31 December 2019 782,099 195 2,614 |
Treasury shares (Tables)
Treasury shares (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of Treasury Shares | Pearson plc Number of £m At 1 January 2018 5,994 61 Purchase of treasury shares — — Release of treasury shares (2,769 ) (28 ) At 31 December 2018 3,225 33 Purchase of treasury shares 6,100 52 Release of treasury shares (6,067 ) (61 ) At 31 December 2019 3,258 24 |
Other comprehensive income (Tab
Other comprehensive income (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of Other Comprehensive Income | 2019 Attributable to equity holders of the company Non- Total All figures in £ millions Fair value Translation Retained Total Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations – Group — (113 ) — (113 ) — (113 ) Net exchange differences on translation of foreign operations – associates — (2 ) — (2 ) — (2 ) Currency translation adjustment disposed — 4 — 4 — 4 Attributable tax — — 5 5 — 5 Items that are not reclassified to the income statement Fair value gain on other financial assets 20 — — 20 — 20 Attributable tax — — (4 ) (4 ) — (4 ) Remeasurement of retirement benefit obligations – Group — — (145 ) (145 ) — (145 ) Remeasurement of retirement benefit obligations – associates — — (4 ) (4 ) — (4 ) Attributable tax — — 22 22 — 22 Other comprehensive (expense)/income for the year 20 (111 ) (126 ) (217 ) — (217 ) 2018 Attributable to equity holders of the company Non- Total All figures in £ millions Fair value Translation Retained Total Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations – Group — 91 — 91 — 91 Net exchange differences on translation of foreign operations – associates — (1 ) — (1 ) — (1 ) Currency translation adjustment disposed — (4 ) — (4 ) — (4 ) Attributable tax — — (4 ) (4 ) — (4 ) Items that are not reclassified to the income statement Fair value gain on other financial assets 8 — — 8 — 8 Attributable tax — — — — — — Remeasurement of retirement benefit obligations – Group — — 22 22 — 22 Remeasurement of retirement benefit obligations – associates — — 3 3 — 3 Attributable tax — — 9 9 — 9 Other comprehensive income/(expense) for the year 8 86 30 124 — 124 2017 Attributable to equity holders of the company Non- controlling Total All figures in £ millions Fair value Translation Retained Total Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations – Group — (158 ) — (158 ) — (158 ) Net exchange differences on translation of foreign operations – associates — (104 ) — (104 ) — (104 ) Currency translation adjustment disposed — (51 ) — (51 ) — (51 ) Attributable tax — — 9 9 — 9 Items that are not reclassified to the income statement Fair value gain on other financial assets 13 — — 13 — 13 Attributable tax — — (4 ) (4 ) — (4 ) Remeasurement of retirement benefit obligations – Group — — 175 175 — 175 Remeasurement of retirement benefit obligations – associates — — 7 7 — 7 Attributable tax — — (42 ) (42 ) — (42 ) Other comprehensive income/(expense) for the year 13 (313 ) 145 (155 ) — (155 ) |
Business combinations (Tables)
Business combinations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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Schedule of the Assets Acquired, and the Associated Consideration | Details of the assets acquired, and the associated consideration, are shown in the table below. all figures in £ millions 2019 Intangible assets 23 Trade and other receivables 1 Trade and other liabilities (2 ) Net assets acquired 22 Goodwill 18 Total 40 Satisfied by: Cash 40 Total consideration 40 |
Schedule of Cash Flow on Acquisitions | All figures in £ millions 2019 2018 2017 Cash flow on acquisitions Cash – current year acquisitions (40 ) — — Deferred payments for prior year acquisitions and other items (5 ) (5 ) (11 ) Net cash outflow (45 ) (5 ) (11 ) |
Disposals (Tables)
Disposals (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Schedule of Disposals Including Business Closures | 2019 2018 2017 All figures in £ millions Notes K12 Other Total Total Total Disposal of subsidiaries and associates Property, plant and equipment — — — (17 ) (7 ) Intangible assets (101 ) — (101 ) (17 ) (9 ) Investments in joint ventures and associates — — — (3 ) (352 ) Net deferred income tax assets (100 ) — (100 ) — (3 ) Intangible assets – pre-publication (238 ) — (238 ) (8 ) (1 ) Inventories (64 ) — (64 ) (1 ) (2 ) Trade and other receivables (70 ) — (70 ) (30 ) (16 ) Cash and cash equivalents (excluding overdrafts) (104 ) — (104 ) (119 ) (13 ) Net deferred income tax liabilities — — — 16 — Trade and other liabilities 520 — 520 172 34 Provisions for other liabilities and charges — — — 1 — Cumulative currency translation adjustment 29 (4 ) — (4 ) 4 51 Net assets disposed (161 ) — (161 ) (2 ) (323 ) Cash received 20 — 20 243 468 Deferred proceeds 180 — 180 2 — Fair value of financial asset acquired — — — 3 — Costs (26 ) 3 (23 ) (16 ) (17 ) Gain on disposal 13 3 16 230 128 All figures in £ millions 2019 2018 2017 Cash flow from disposals Cash – current year disposals 20 243 468 Cash and cash equivalents disposed (104 ) (119 ) (13 ) Costs and other disposal liabilities paid (17 ) (23 ) (25 ) Net cash (outflow)/inflow (101 ) 101 430 Analysed as: Cash (outflow)/inflow from sale of subsidiaries (101 ) 83 19 Cash inflow from sale of joint ventures and associates — 18 411 |
Held for sale (Tables)
Held for sale (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Summary of Assets and Liabilities | The held for sale asset in 2019 is the 25% holding in Penguin Random House following announcement of the sale in December 2019. Held for sale assets and liabilities in 2018 related to the US K12 Courseware business prior to disposal in 2019. 2019 2018 All figures in £ millions Total Total Non-current assets Intangible assets — 168 Investments in joint ventures and associates 397 — Deferred income tax assets — 98 Trade and other receivables — 25 397 291 Current assets Intangible assets – pre-publication — 242 Inventories — 55 Trade and other receivables — 60 — 357 Assets classified as held for sale 397 648 Non-current liabilities Other liabilities — (371 ) — (371 ) Current liabilities Trade and other liabilities — (202 ) — (202 ) Liabilities classified as held for sale — (573 ) Net assets classified as held for sale 397 75 |
Cash generated from operations
Cash generated from operations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Summary of Cash Generated from Operations | All figures in £ millions Notes 2019 2018 2017 Profit 266 590 408 Adjustments for: Income tax (34 ) (92 ) 13 Depreciation 10 123 66 90 Amortisation and impairment of acquired intangibles and goodwill 11 151 99 138 Amortisation of software 11 115 88 85 Net finance costs 6 43 55 30 Charges relating to GMP equalisation — 8 — Share of results of joint ventures and associates 12 (54 ) (44 ) (78 ) Profit on disposal of subsidiaries, associates, investments and fixed assets (9 ) (315 ) (116 ) Net profit on disposal of right-of-use assets held under leases (4 ) — — Net foreign exchange adjustment from transactions (21 ) 28 (26 ) Investment income (2 ) — — Share-based payment costs 26 25 37 33 Pre-publication (55 ) (37 ) (35 ) Inventories (20 ) (10 ) 24 Trade and other receivables 59 (15 ) 133 Trade and other liabilities (157 ) 35 6 Retirement benefit obligations 5 (9 ) (232 ) Provisions for other liabilities and charges 49 63 (11 ) Net cash generated from operations 480 547 462 |
Summary of Proceeds from Sale of Property, Plant and Equipment | In the cash flow statement, proceeds from sale of property, plant and equipment comprise: All figures in £ millions 2019 2018 2017 Net book amount 3 41 12 Profit/(loss) on sale of property, plant and equipment (2 ) 87 (12 ) Proceeds from sale of property, plant and equipment 1 128 — |
Summary of Current and Non-current Borrowings | The movements in the Group’s current and non-current All figures in £ millions 2018 IFRS 16 Transition New leases/ disposal of Transfer from Financing Foreign Fair value 2019 Financial liabilities Non-current 643 792 61 (88 ) 230 (80 ) 9 1,567 Current borrowings 25 89 — 88 (139 ) 16 — 79 Total 668 881 61 — 91 (64 ) 9 1,646 All figures in £ millions 2017 Financing Foreign Fair value 2018 Financial liabilities Non-current 1,066 (441 ) 10 8 643 Current borrowings 4 (1 ) 22 — 25 Total 1,070 (442 ) 32 8 668 2016 Financing Foreign Fair value 2017 Financial liabilities Non-current borrowings 2,517 (1,292 ) (149 ) (10 ) 1,066 Current borrowings 9 (7 ) (1 ) 3 4 Total 2,526 (1,299 ) (150 ) (7 ) 1,070 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Presentation of leases for lessee [abstract] | |
Summary of information about leases in income statement | The amounts recognised in the income statement are as follows: All figures in £ millions Note 2019 Interest on lease liabilities 6 (45 ) Expenses relating to short-term leases (2 ) Depreciation of right-of-use 10 (64 ) |
Summary of information about right to use asset as follows | Right-of-use 2019 All figures in £ millions Land and Plant and Total Balance at 1 January 2019 — — — Adjustment on initial application of IFRS 16 (see note 1b) 418 6 424 Balance at 31 December 2019 402 7 409 |
Summary of maturities of operating lease payments | Lease liabilities are included within financial liabilities – borrowings in the balance sheet, see note 18. The maturities of the Group’s lease liabilities are as follows: All figures in £ millions 2019 Less than one year 123 One to five years 420 More than five years 622 Total undiscounted lease liabilities 1,165 Lease liabilities included in the balance sheet 838 Analysed as: Current 89 Non-current 749 |
Summary of information about leases in cash flow statement | The amounts recognised in the cash flow statement are as follows: All figures in £ millions 2019 Total cash outflow for leases as a lessee 136 |
Summary of information about leases of lessor in income statement | The amounts recognised in the income statement are as follows: All figures in £ millions Note 2019 Interest on finance lease receivable 6 11 Income from sub-leasing right-of-use 17 |
Summary of information about leases of lessor in cash flow statement | The amounts recognised in the cash flow statement are as follows: All figures in £ millions 2019 Total cash inflow for leases as a lessor 37 |
Summary of detailed information about undiscounted lease payments to be received after the reporting date | The following table sets out the maturity analysis of lease payments receivable for sub-leases sub-leases All figures in £ millions Operating Finance 2019 Less than one year 12 34 46 One to two years 4 40 44 Two to three years 4 33 37 Three to four years 3 30 33 Four to five years 3 31 34 More than five years 20 67 87 Total undiscounted lease payments receivable 46 235 281 Unearned finance income (39 ) Net investment in finance lease receivable 196 |
Summmary of maturity of the Group's finance lease obligations is as follows | The maturity of the Group’s finance lease obligations is as follows: All figures in £ millions 2018 Finance lease liabilities – minimum lease payments Not later than one year 3 Later than one year and not later than two years 1 Later than two years and not later than three years 1 Later than three years and not later than four years — Later than four years and not later than five years — Later than five years — Future finance charges on finance leases — Present value of finance lease liabilities 5 |
Summary of the present value of the group's finance lease obligations is as follows | The present value of the Group’s finance lease obligations is as follows: All figures in £ millions 2018 Not later than one year 3 Later than one year and not later than five years 2 Later than five years — 5 |
Summary of future aggregate minimum lease payments in respect of operating leases | The future aggregate minimum lease payments in respect of operating leases were as follows: All figures in £ millions 2018 Not later than one year 143 Later than one year and not later than two years 130 Later than two years and not later than three years 115 Later than three years and not later than four years 101 Later than four years and not later than five years 91 Later than five years 595 1,175 |
Summary of future aggregate minimum sub-lease payments expected to received under non-cancellable sub-leases | warehouses, it entered into sub-lease sub-lease non-cancellable sub-leases All figures in £ millions 2018 Not later than one year 51 Later than one year and not later than two years 44 Later than two years and not later than three years 41 Later than three years and not later than four years 39 Later than four years and not later than five years 35 Later than five years 124 334 |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Text block [abstract] | |
Summary of Key Management Personnel Compensation | Key management personnel are deemed to be the members of the Pearson executive. It is this Committee which had responsibility for planning, directing and controlling the activities of the Group in 2019. Key management personnel compensation is disclosed below: All figures in £ millions 2019 2018 Short-term employee benefits 5 6 Retirement benefits 1 1 Share-based payment costs 4 7 Total 10 14 |
Accounting Policies - Additiona
Accounting Policies - Additional Information (Detail) £ in Millions | Jan. 01, 2019GBP (£) | Jan. 01, 2018GBP (£) | Dec. 31, 2019GBP (£)Properties | Dec. 31, 2018GBP (£) | Dec. 31, 2017GBP (£) |
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Number of property leases | Properties | 750 | ||||
Lease liabilities | £ 881 | £ 838 | £ 5 | ||
Profit before tax | 232 | 498 | £ 421 | ||
Adjusted and statutory operating profit | 275 | 553 | 451 | ||
Finance costs | 84 | 91 | 110 | ||
Payment of lease liabilities | 91 | 4 | 5 | ||
Lease receipts | 26 | ||||
Interest on lease receivables | 17 | 20 | 20 | ||
Finance lease liabilities | 838 | 5 | |||
Weighted avaerage incremental borrowing rate | 5.00% | ||||
Current income tax liabilities | 55 | 72 | |||
Sales increase by adoption of IFRS 15 | 3,869 | 4,129 | 4,513 | ||
Profit increase by adoption of IFRS 15 | £ 266 | 590 | 408 | ||
Increase (decrease) due to application of IFRS 9 [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Provision for losses against trade debtors | £ 13 | ||||
Increase (decrease) due to application of IFRS 15 [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Decrease In Value Of Net Assets | £ 108 | ||||
In period adjustment [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Sales increase by adoption of IFRS 15 | 9 | ||||
Profit increase by adoption of IFRS 15 | 7 | ||||
IFRS 16 [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Decrease In Value Of Net Assets | £ 83 | ||||
Lease liabilities | 881 | ||||
Increase decrease in right of use assets revaluation surplus | 424 | ||||
Lease receivables | 215 | ||||
Finance lease liabilities | £ 5 | ||||
IFRS 23 [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Current income tax liabilities | £ 5 | ||||
Sterling [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Average foreign exchange rate | 1.28 | 1.34 | |||
Year end foreign exchange rate | 1.32 | 1.27 | |||
Right-of-use assets [member] | IFRS 16 [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Profit before tax | £ 9 | ||||
Adjusted and statutory operating profit | 25 | ||||
Finance costs | 34 | ||||
Payment of lease liabilities | 91 | ||||
Lease receipts | 26 | ||||
Interest paid on lease liabilities | 45 | ||||
Interest on lease receivables | £ 11 | ||||
Bottom of range [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Percentage of voting rights held in associate | 20.00% | ||||
Bottom of range [member] | Software [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 3 years | ||||
Bottom of range [member] | Internally developed software [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 3 years | ||||
Bottom of range [member] | Acquired intangible assets [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 2 years | ||||
Bottom of range [member] | Pre-publication assets [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 5 years | ||||
Top of range [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Percentage of voting rights held in associate | 50.00% | ||||
Top of range [member] | Software [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 8 years | ||||
Top of range [member] | Internally developed software [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 10 years | ||||
Top of range [member] | Acquired intangible assets [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 20 years | ||||
Top of range [member] | Pre-publication assets [member] | |||||
Disclosure of Summary of Significant Accounting Policies [Line items] | |||||
Useful lives of intangible assets | 10 years |
Accounting Policies - Estimated
Accounting Policies - Estimated Useful Lives of Property, Plant and Equipment (Detail) | 12 Months Ended |
Dec. 31, 2019 | |
Buildings (freehold) [member] | Bottom of range [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives | 20 years |
Buildings (freehold) [member] | Top of range [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives | 50 years |
Buildings (leasehold) [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives | over the period of the lease |
Plant and equipment [member] | Bottom of range [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives | 3 years |
Plant and equipment [member] | Top of range [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Estimated useful lives | 10 years |
Accounting Policies - Schedule
Accounting Policies - Schedule of Impact of IFRS 16 Adoption Recognised as a Decrease to Retained Earnings with Correspond Decrease in Net Assets (Detail) - GBP (£) £ in Millions | Jan. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Non-current assets | |||
Investment in joint ventures and associates | £ 7 | £ 392 | |
Deferred income tax assets | 59 | 60 | |
Trade and other receivables | 313 | 100 | |
Current assets | |||
Trade and other receivables | 1,275 | 1,178 | |
Non-current liabilities | |||
Financial liabilities – borrowings | 1,572 | 674 | |
Deferred income tax liabilities | 48 | 136 | |
Provisions for other liabilities and charges | 13 | 145 | |
Other liabilities | 86 | 155 | |
Current liabilities | |||
Financial liabilities – borrowings | 92 | 46 | |
Trade and other liabilities | £ 1,278 | £ 1,400 | |
IFRS 16 [member] | Increase (decrease) due to changes in accounting policy [member] | |||
Non-current assets | |||
Property, plant and equipment (right-of-use assets) | £ 424 | ||
Investment in joint ventures and associates | (2) | ||
Deferred income tax assets | 1 | ||
Trade and other receivables | 185 | ||
Current assets | |||
Trade and other receivables | 7 | ||
Non-current liabilities | |||
Financial liabilities – borrowings | (792) | ||
Deferred income tax liabilities | 14 | ||
Provisions for other liabilities and charges | 101 | ||
Other liabilities | 58 | ||
Current liabilities | |||
Financial liabilities – borrowings | (89) | ||
Trade and other liabilities | 10 | ||
Total decrease in retained earnings at 1 January 2019 | £ (83) |
Accounting Policies - Schedul_2
Accounting Policies - Schedule of Lease liabilities reconciled to the Operating Lease Commitments (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Disclosure of quantitative information about leases for lessee [abstract] | |||
Operating lease commitments disclosed at 31 December 2018 (note 35) | £ 1,175 | ||
Discounted using the lessee's incremental borrowing rate at the date of initial application | (290) | ||
(Less): commitments relating to short-term leases | (7) | ||
Add: adjustments relating to the different treatment of extension and termination options | 3 | ||
Additional lease liability recognised at 1 January 2019 | £ 838 | 881 | £ 5 |
Current lease liabilities | 89 | 89 | |
Non-current lease liabilities | £ 749 | £ 792 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of operating segments [line items] | |||
Sales | £ 3,869 | £ 4,129 | £ 4,513 |
Adjusted operating profit | 581 | 546 | 576 |
Cost of major restructuring | (159) | (102) | (79) |
Intangible charges | (163) | (113) | (166) |
Other net gains and losses | 16 | 230 | 128 |
UK pension GMP equalisation | (8) | ||
Impact of US tax reform | (8) | ||
Operating profit | 275 | 553 | 451 |
Finance costs | (84) | (91) | (110) |
Finance income | 41 | 36 | 80 |
Profit before tax | 232 | 498 | 421 |
Income tax | 34 | 92 | (13) |
Profit for the year | 266 | 590 | 408 |
Assets | 7,650 | 7,905 | 7,888 |
Share of results of joint ventures and associates | 54 | 44 | 78 |
Capital expenditure | 262 | 196 | 240 |
Pre-publication investment | 319 | 388 | 361 |
Depreciation | 123 | 66 | 90 |
Amortisation | 537 | 525 | 561 |
Continuing operation [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 3,869 | 4,129 | 4,513 |
Continuing operation [member] | Corporate [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 489 | 636 | 793 |
Continuing operation [member] | Penguin Random House [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Adjusted operating profit | 65 | 68 | 94 |
Cost of major restructuring | (2) | (8) | |
Intangible charges | (12) | (14) | (28) |
Other net gains and losses | 96 | ||
Impact of US tax reform | (8) | ||
Operating profit | 51 | 46 | 154 |
Assets | 397 | 387 | 388 |
Share of results of joint ventures and associates | 51 | 46 | 71 |
North America [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 2,534 | 2,784 | 2,929 |
North America [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 2,534 | 2,784 | 2,929 |
Adjusted operating profit | 361 | 362 | 394 |
Cost of major restructuring | (110) | (78) | (60) |
Intangible charges | (62) | (72) | (89) |
Other net gains and losses | 13 | 4 | (3) |
Operating profit | 202 | 216 | 242 |
Assets | 4,316 | 4,366 | 4,120 |
Share of results of joint ventures and associates | (4) | 5 | |
Capital expenditure | 176 | 135 | 162 |
Pre-publication investment | 189 | 234 | 218 |
Depreciation | 75 | 41 | 56 |
Amortisation | 305 | 344 | 348 |
Core [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 838 | 806 | 815 |
Core [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 838 | 806 | 815 |
Adjusted operating profit | 92 | 57 | 50 |
Cost of major restructuring | (28) | (16) | (11) |
Intangible charges | (7) | (8) | (12) |
Other net gains and losses | 8 | ||
UK pension GMP equalisation | (8) | ||
Operating profit | 65 | 25 | 27 |
Assets | 1,964 | 1,980 | 1,917 |
Share of results of joint ventures and associates | 3 | 1 | 1 |
Capital expenditure | 35 | 25 | 35 |
Pre-publication investment | 81 | 90 | 84 |
Depreciation | 23 | 12 | 13 |
Amortisation | 85 | 92 | 103 |
Growth [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 497 | 539 | 769 |
Growth [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 497 | 539 | 769 |
Adjusted operating profit | 63 | 59 | 38 |
Cost of major restructuring | (8) | ||
Intangible charges | (82) | (19) | (37) |
Other net gains and losses | (5) | 226 | 35 |
Operating profit | (43) | 266 | 28 |
Assets | 484 | 536 | 670 |
Share of results of joint ventures and associates | 1 | 1 | |
Capital expenditure | 51 | 36 | 43 |
Pre-publication investment | 49 | 64 | 59 |
Depreciation | 25 | 13 | 21 |
Amortisation | 147 | 89 | 110 |
Segment assets [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 7,246 | 7,513 | 7,490 |
Segment assets [member] | Continuing operation [member] | Corporate [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 489 | 636 | 793 |
Segment assets [member] | North America [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 4,316 | 4,366 | 4,116 |
Segment assets [member] | Core [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 1,957 | 1,975 | 1,914 |
Segment assets [member] | Growth [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 484 | 536 | 667 |
Joint ventures [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 3 | ||
Joint ventures [member] | Growth [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 3 | ||
Associates [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 404 | 392 | 395 |
Associates [member] | Penguin Random House [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 2,916 | 2,775 | |
Associates [member] | Continuing operation [member] | Penguin Random House [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 397 | 387 | 388 |
Associates [member] | North America [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | 4 | ||
Associates [member] | Core [member] | Continuing operation [member] | Operating segments [member] | |||
Disclosure of operating segments [line items] | |||
Assets | £ 7 | £ 5 | £ 3 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of operating segments [line items] | |||
Pre-publication investment | £ 319 | £ 388 | £ 361 |
Amortisation | 537 | 525 | 561 |
Sales | 3,869 | 4,129 | 4,513 |
Cost of major restructuring incurred | 159 | 102 | 79 |
Intangible amortisation charges | 163 | 113 | 166 |
Other gains and losses | 16 | 230 | 128 |
Profit on sale of test preparation business | 44 | ||
Other gains and losses | 12 | 96 | |
Share of profit from associates adversely impacted | 8 | ||
Property, plant and equipment and intangible assets acquired through business combination | 23 | 0 | 0 |
Brazil [member] | |||
Disclosure of operating segments [line items] | |||
Other gains and losses | 16 | ||
Impairment charges | 65 | ||
North America [member] | |||
Disclosure of operating segments [line items] | |||
Sales | 2,534 | 2,784 | 2,929 |
Pre-publication investment [member] | North America [member] | |||
Disclosure of operating segments [line items] | |||
Pre-publication investment | 60 | ||
Amortisation [member] | North America [member] | |||
Disclosure of operating segments [line items] | |||
Amortisation | 67 | ||
WSE [member] | |||
Disclosure of operating segments [line items] | |||
Other gains and losses | 207 | ||
UTEL [member] | |||
Disclosure of operating segments [line items] | |||
Other gains and losses | 19 | ||
Other smaller disposal items [member] | |||
Disclosure of operating segments [line items] | |||
Other gains and losses | 4 | ||
Inter-segment amounts [member] | |||
Disclosure of operating segments [line items] | |||
Sales | £ 0 | £ 0 | £ 0 |
Segment Information - Summary o
Segment Information - Summary of Operating Segments in Geographic Areas (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of geographical areas [line items] | |||
Sales | £ 3,869 | £ 4,129 | £ 4,513 |
Continuing operation [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 3,869 | 4,129 | 4,513 |
Non-current assets | 3,838 | 3,738 | |
Continuing operation [member] | UK [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 385 | 377 | 384 |
Non-current assets | 694 | 900 | |
Continuing operation [member] | Other European countries [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 244 | 246 | 262 |
Non-current assets | 125 | 143 | |
Continuing operation [member] | United States [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 2,417 | 2,627 | 2,770 |
Non-current assets | 2,604 | 2,162 | |
Continuing operation [member] | Canada [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 105 | 126 | 126 |
Non-current assets | 163 | 250 | |
Continuing operation [member] | Asia Pacific [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 441 | 455 | 643 |
Non-current assets | 149 | 146 | |
Continuing operation [member] | Other countries [member] | |||
Disclosure of geographical areas [line items] | |||
Sales | 277 | 298 | £ 328 |
Non-current assets | £ 103 | £ 137 |
Revenue From Contracts With C_3
Revenue From Contracts With Customers - Analysis of Group's Revenue Streams (Detail) - GBP (£) £ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | £ 3,869 | £ 4,129 | £ 4,513 | |
Courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 1,650 | 2,039 | 2,188 | |
Courseware [member] | School courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 373 | 677 | 704 | |
Courseware [member] | Higher education courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 1,100 | 1,186 | 1,302 | |
Courseware [member] | English courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 177 | 176 | 182 | |
Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 1,464 | 1,345 | 1,365 | |
Assessments [member] | School and higher education assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 599 | 558 | 597 | [1] |
Assessments [member] | Clinical Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 227 | 229 | 229 | |
Assessments [member] | Professional and English Certification [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 638 | 558 | 539 | |
Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 755 | 745 | 960 | |
Services [member] | School Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 367 | 337 | 333 | |
Services [member] | Higher Education Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 337 | 313 | 319 | |
Services [member] | English Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 51 | 95 | 308 | |
North America [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 2,534 | 2,784 | 2,929 | |
North America [member] | Courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 1,075 | 1,436 | 1,560 | |
North America [member] | Courseware [member] | School courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 86 | 378 | 394 | |
North America [member] | Courseware [member] | Higher education courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 975 | 1,042 | 1,146 | |
North America [member] | Courseware [member] | English courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 14 | 16 | 20 | |
North America [member] | Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 874 | 816 | 842 | |
North America [member] | Assessments [member] | School and higher education assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 309 | 298 | 318 | [1] |
North America [member] | Assessments [member] | Clinical Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 175 | 174 | 183 | |
North America [member] | Assessments [member] | Professional and English Certification [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 390 | 344 | 341 | |
North America [member] | Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 585 | 532 | 527 | |
North America [member] | Services [member] | School Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 319 | 288 | 274 | |
North America [member] | Services [member] | Higher Education Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 266 | 244 | 253 | |
Core [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 838 | 806 | 815 | |
Core [member] | Courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 306 | 317 | 324 | |
Core [member] | Courseware [member] | School courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 169 | 172 | 171 | |
Core [member] | Courseware [member] | Higher education courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 81 | 87 | 93 | |
Core [member] | Courseware [member] | English courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 56 | 58 | 60 | |
Core [member] | Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 484 | 442 | 440 | |
Core [member] | Assessments [member] | School and higher education assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 264 | 237 | 256 | [1] |
Core [member] | Assessments [member] | Clinical Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 52 | 55 | 46 | |
Core [member] | Assessments [member] | Professional and English Certification [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 168 | 150 | 138 | |
Core [member] | Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 48 | 47 | 51 | |
Core [member] | Services [member] | School Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 2 | 2 | 5 | |
Core [member] | Services [member] | Higher Education Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 45 | 40 | 34 | |
Core [member] | Services [member] | English Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 1 | 5 | 12 | |
Growth [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 497 | 539 | 769 | |
Growth [member] | Courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 269 | 286 | 304 | |
Growth [member] | Courseware [member] | School courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 118 | 127 | 139 | |
Growth [member] | Courseware [member] | Higher education courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 44 | 57 | 63 | |
Growth [member] | Courseware [member] | English courseware [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 107 | 102 | 102 | |
Growth [member] | Assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 106 | 87 | 83 | |
Growth [member] | Assessments [member] | School and higher education assessments [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 26 | 23 | 23 | [1] |
Growth [member] | Assessments [member] | Professional and English Certification [Member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 80 | 64 | 60 | |
Growth [member] | Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 122 | 166 | 382 | |
Growth [member] | Services [member] | School Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 46 | 47 | 54 | |
Growth [member] | Services [member] | Higher Education Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | 26 | 29 | 32 | |
Growth [member] | Services [member] | English Services [member] | ||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | ||||
Revenue | £ 50 | £ 90 | £ 296 | |
[1] | The analysis of Assessments revenues in 2018 and 2017 have been re-presented to reflect the transfer of a product from School to Clinical. |
Revenue From Contracts With C_4
Revenue From Contracts With Customers - Summary of transfer of goods and services over time and at a point in time (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | £ 3,869 | £ 4,129 | £ 4,513 |
Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 1,650 | 2,039 | 2,188 |
Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 1,464 | 1,345 | 1,365 |
Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 755 | 745 | 960 |
Goods or services transferred at point in time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 174 | 158 | |
Goods or services transferred at point in time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 26 | 64 | |
Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 696 | 776 | |
Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 1,290 | 1,187 | |
Goods or services transferred over time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 729 | 681 | |
sale or return [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 917 | 1,228 | |
sale or return [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 917 | ||
Other [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 37 | 35 | |
Other [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 37 | ||
North America [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 2,534 | 2,784 | 2,929 |
North America [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 1,075 | 1,436 | 1,560 |
North America [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 874 | 816 | 842 |
North America [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 585 | 532 | 527 |
North America [member] | Goods or services transferred at point in time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 113 | 106 | |
North America [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 627 | 718 | |
North America [member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 761 | 710 | |
North America [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 585 | 532 | |
North America [member] | sale or return [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 448 | 718 | |
Core [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 838 | 806 | 815 |
Core [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 306 | 317 | 324 |
Core [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 484 | 442 | 440 |
Core [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 48 | 47 | 51 |
Core [member] | Goods or services transferred at point in time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 55 | 52 | |
Core [member] | Goods or services transferred at point in time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 26 | 26 | |
Core [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 15 | 4 | |
Core [member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 429 | 390 | |
Core [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 22 | 21 | |
Core [member] | sale or return [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 291 | 313 | |
Growth [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 497 | 539 | 769 |
Growth [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 269 | 286 | 304 |
Growth [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 106 | 87 | 83 |
Growth [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 122 | 166 | £ 382 |
Growth [member] | Goods or services transferred at point in time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 6 | 0 | |
Growth [member] | Goods or services transferred at point in time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 38 | ||
Growth [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 54 | 54 | |
Growth [member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 100 | 87 | |
Growth [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 122 | 128 | |
Growth [member] | sale or return [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | 178 | 197 | |
Growth [member] | Other [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||
Revenue | £ 37 | £ 35 |
Revenue From Contracts With C_5
Revenue From Contracts With Customers - Summary of remaining transaction price on unsatisfied or partially unsatisfied performance obligations from contracts with customers (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | £ 3,869 | £ 4,129 | £ 4,513 |
Deferred income | 360 | 912 | |
Committed Sales | 481 | 555 | |
Remaining transaction price | 841 | 1,467 | |
Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 1,650 | 2,039 | 2,188 |
Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 1,464 | 1,345 | 1,365 |
Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 755 | 745 | £ 960 |
Goods or services transferred at point in time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 174 | 158 | |
Goods or services transferred at point in time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 26 | 64 | |
Deferred income | 3 | ||
Remaining transaction price | 3 | ||
Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 696 | 776 | |
Deferred income | 118 | 679 | |
Committed Sales | 8 | ||
Remaining transaction price | 118 | 687 | |
Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 1,290 | 1,187 | |
Deferred income | 206 | 196 | |
Committed Sales | 375 | 402 | |
Remaining transaction price | 581 | 598 | |
Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 729 | 681 | |
sale or return [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 917 | 1,228 | |
Deferred income | 1 | ||
Remaining transaction price | 1 | ||
sale or return [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 917 | ||
Deferred income | 1 | ||
Remaining transaction price | 1 | ||
Other [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 37 | 35 | |
Other [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 37 | ||
Deferred income | 1 | ||
Remaining transaction price | 1 | ||
Subscriptions [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 310 | 310 | |
Deferred income | 11 | 17 | |
Remaining transaction price | 11 | 17 | |
Other ongoing performance obligations [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Revenue | 419 | 371 | |
Deferred income | 20 | 19 | |
Committed Sales | 106 | 145 | |
Remaining transaction price | 126 | 164 | |
2019 [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 868 | ||
2019 [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 272 | ||
2019 [member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 420 | ||
2019 [member] | sale or return [member] | Goods or services transferred at point in time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 1 | ||
2019 [member] | Subscriptions [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 13 | ||
2019 [member] | Other ongoing performance obligations [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 162 | ||
2020 [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 656 | 308 | |
2020 [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 82 | 131 | |
2020 [member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 433 | 173 | |
2020 [member] | sale or return [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 1 | ||
2020 [member] | Other [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 1 | ||
2020 [member] | Subscriptions [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 11 | 3 | |
2020 [member] | Other ongoing performance obligations [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 125 | 1 | |
2021 and later [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 291 | ||
2021 and later [member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 284 | ||
2021 and later [member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 5 | ||
2021 and later [member] | Subscriptions [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 1 | ||
2021 and later [member] | Other ongoing performance obligations [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | £ 1 | ||
2021 | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 160 | ||
2021 | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 13 | ||
2021 | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 146 | ||
2021 | Other ongoing performance obligations [member] | Goods or services transferred over time [member] | Services [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 1 | ||
2022 and Later [Member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 25 | ||
2022 and Later [Member] | Goods or services transferred over time [member] | Courseware [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | 23 | ||
2022 and Later [Member] | Goods or services transferred over time [member] | Assessments [member] | |||
Disclosure of transaction price allocated to remaining performance obligations [line items] | |||
Remaining transaction price | £ 2 |
Revenue From Contracts With C_6
Revenue From Contracts With Customers - Additional Information (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Statement [line items] | |
Liability for sales return | £ 122 |
Sales Return [Member] | |
Statement [line items] | |
Percentage of entities sales | 3.00% |
Operating Expenses - Summary of
Operating Expenses - Summary of Operating Expenses by Function (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Expenses 1 [abstract] | |||
Cost of goods sold | £ 1,858 | £ 1,943 | £ 2,066 |
Distribution costs | 73 | 88 | 84 |
Selling, marketing and product development costs | 631 | 759 | 896 |
Administrative and other expenses | 999 | 1,039 | 1,207 |
Restructuring costs | 157 | 90 | 79 |
Other income | (54) | (69) | (64) |
Total net operating expenses | 1,806 | 1,907 | 2,202 |
Other net gains and losses | (16) | (230) | (128) |
Total | £ 3,648 | £ 3,620 | £ 4,140 |
Operating Expenses - Additional
Operating Expenses - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating expense [line items] | |||
Research and efficacy costs | £ 14 | £ 14 | |
Restructuring costs | £ 157 | 90 | 79 |
Penguin Random House [member] | |||
Operating expense [line items] | |||
Service fee income | 4 | 3 | 3 |
Research and efficacy costs | 13 | ||
Restructuring costs | £ 2 | £ 12 | £ 0 |
Operating expenses - Summary _2
Operating expenses - Summary of Analysis of Restructuring Costs (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of restructuring costs [line items] | |||
Property and facilities | £ 96 | £ 147 | £ 202 |
Technology and communications | 196 | 192 | 218 |
Professional and outsourced services | 480 | 396 | 322 |
Total restructuring - operating expenses | 157 | 90 | 79 |
Total | 159 | 102 | 79 |
Restructuring Costs [member] | |||
Disclosure of restructuring costs [line items] | |||
Product costs | 16 | 12 | 15 |
Employee costs | 90 | 56 | 11 |
Depreciation and amortisation | 14 | 1 | 13 |
Property and facilities | 12 | (5) | 24 |
Technology and communications | 2 | 1 | 2 |
Professional and outsourced services | 17 | 9 | 12 |
General and administrative costs | 6 | 16 | 2 |
Total restructuring - operating expenses | 157 | 90 | 79 |
Share of associate restructuring | 2 | 12 | |
Total | £ 159 | £ 102 | £ 79 |
Operating Expenses - Summary _3
Operating Expenses - Summary of Operating Expenses by Nature (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Expense by nature [line items] | |||
Royalties expensed | £ 242 | £ 236 | £ 246 |
Other product costs | 466 | 516 | 564 |
Employee benefit expense | 1,452 | 1,637 | 1,805 |
Contract labour | 139 | 161 | 152 |
Employee-related expense | 94 | 115 | 127 |
Promotional costs | 254 | 233 | 229 |
Depreciation of property, plant and equipment | 123 | 66 | 90 |
Property and facilities | 96 | 147 | 202 |
Technology and communications | 196 | 192 | 218 |
Professional and outsourced services | 480 | 396 | 322 |
Other general and administrative costs | 104 | 85 | 140 |
Costs capitalised to intangible assets | (465) | (390) | (324) |
Other net gains and losses | (16) | (230) | (128) |
Other income | (54) | (69) | (64) |
Total | 3,648 | 3,620 | 4,140 |
Pre-publication assets [member] | |||
Expense by nature [line items] | |||
Amortisation of intangible assets | 271 | 338 | 338 |
Software [member] | |||
Expense by nature [line items] | |||
Amortisation of intangible assets | 115 | 88 | 85 |
Other acquired intangibles [member] | |||
Expense by nature [line items] | |||
Amortisation and impairment of intangible assets – other | £ 151 | £ 99 | £ 138 |
Operating Expenses - Summary _4
Operating Expenses - Summary of Services From the Group's Auditors (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Auditors Remuneration [line items] | |||
Total audit fees | £ 7 | £ 6 | £ 6 |
Audit-related and other assurance services | 1 | 1 | |
Other non-audit services | 1 | ||
Total other services | 1 | 2 | |
Total non-audit services | 1 | 2 | |
Total | 7 | 7 | 8 |
Parent [member] | |||
Auditors Remuneration [line items] | |||
Total audit fees | 5 | 4 | 4 |
Subsidiaries [member] | |||
Auditors Remuneration [line items] | |||
Total audit fees | £ 2 | £ 2 | £ 2 |
Operating Expenses - Summary _5
Operating Expenses - Summary of Reconciliation Between Audit and Non-Audit Service Fees (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Auditor's remuneration [abstract] | |||
Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act | £ 7 | £ 6 | £ 6 |
Non-audit fees | 1 | 2 | |
Total | £ 7 | £ 7 | £ 8 |
Employee Information - Summary
Employee Information - Summary of Classification of Employee Benefit (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee benefit expense | |||
Wages and salaries (including termination costs) | £ 1,258 | £ 1,421 | £ 1,567 |
Social security costs | 100 | 112 | 130 |
Share-based payment costs | 25 | 37 | 33 |
Retirement benefits - defined contribution plans | 57 | 56 | 57 |
Retirement benefits - defined benefit plans | 13 | 23 | 19 |
Other post-retirement medical benefits | (1) | (12) | (1) |
Total | £ 1,452 | £ 1,637 | £ 1,805 |
Employee Information - Summar_2
Employee Information - Summary of Average Number of Employees (Detail) - Continuing operation [member] - Employee | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of number of employees [line items] | |||
Average number of employees | 22,734 | 24,322 | 30,339 |
North America 1 [Member] | |||
Disclosure of number of employees [line items] | |||
Average number of employees | 13,564 | 14,113 | 16,295 |
Core [member] | |||
Disclosure of number of employees [line items] | |||
Average number of employees | 4,951 | 5,192 | 5,291 |
Growth [member] | |||
Disclosure of number of employees [line items] | |||
Average number of employees | 3,693 | 4,521 | 8,268 |
Other Segment [member] | |||
Disclosure of number of employees [line items] | |||
Average number of employees | 526 | 496 | 485 |
Net Finance Costs - Schedule of
Net Finance Costs - Schedule of Information About Finance Income and Costs (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of finance income and costs [line items] | |||
Interest payable on financial liabilities at amortised cost and associated derivatives | £ (22) | £ (42) | £ (99) |
Interest on lease liabilities | (45) | ||
Net foreign exchange losses | (5) | (36) | |
Finance costs associated with transactions | (1) | (6) | |
Finance costs | (84) | (91) | (110) |
Interest receivable on financial assets at amortised cost | 15 | 18 | 20 |
Interest on lease receivables | 11 | ||
Net finance income in respect of retirement benefits | 13 | 11 | 3 |
Net foreign exchange gains | 44 | ||
Finance income | 41 | 36 | 80 |
Net finance costs | (43) | (55) | (30) |
Not designated in hedging relationship [member] | |||
Disclosure of finance income and costs [line items] | |||
Finance costs | (12) | (7) | (5) |
Finance income | £ 2 | 6 | 12 |
Designated in hedging relationship [member] | |||
Disclosure of finance income and costs [line items] | |||
Finance costs | (5) | ||
Finance income | £ 1 | £ 1 |
Net Finance Costs - Additional
Net Finance Costs - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of finance income and costs [line items] | |||
Interest receivable | £ 1 | £ 1 | |
Related parties [member] | |||
Disclosure of finance income and costs [line items] | |||
Interest receivable | £ 1 | £ 1 | £ 1 |
Income Tax - Summary of Compone
Income Tax - Summary of Components of Current Tax Expense Income and Adjustments for Current Tax of Prior Periods (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Major components of tax expense (income) [abstract] | |||
Credit/(charge) in respect of current year | £ (51) | £ 92 | £ (121) |
Adjustments in respect of prior years | 21 | 34 | (2) |
Total current tax credit/(charge) | (30) | 126 | (123) |
Deferred tax | |||
In respect of temporary differences | 59 | (6) | 96 |
Other adjustments in respect of prior years | 5 | (28) | 14 |
Total deferred tax (charge)/credit | 64 | (34) | 110 |
Total tax credit/(charge) | £ 34 | £ 92 | £ (13) |
Income Tax - Summary of Profit
Income Tax - Summary of Profit Before Tax Differences Calculated (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Effective Tax Rate [Line Items] | |||
Profit before tax | £ 232 | £ 498 | £ 421 |
Tax calculated at UK rate (2019: 19%, 2018: 19%, 2017: 19.25%) | (44) | (94) | (81) |
Effect of overseas tax rates | (2) | (28) | 15 |
Joint venture and associate income reported net of tax | 10 | 8 | 15 |
Intangible impairment not subject to tax | |||
Intra-group financing benefit | 11 | 25 | 26 |
Movement in provisions for tax uncertainties | 3 | 111 | 49 |
Impact of US tax reform | (1) | ||
Net expense not subject to tax | (10) | (29) | (39) |
Benefit from change in US tax accounting treatment | 25 | ||
Gains and losses on sale of businesses not subject to tax | 57 | 77 | 8 |
Utilisation of previously unrecognised tax losses and credits | (1) | ||
Unrecognised tax losses | (17) | (9) | (16) |
Adjustments in respect of prior years | 26 | 6 | 12 |
Total tax credit/(charge) | £ 34 | £ 92 | £ (13) |
Tax rate reflected in earnings | 14.70% | 18.50% | 3.10% |
UK [member] | |||
Reconciliation of Effective Tax Rate [Line Items] | |||
Total tax credit/(charge) | £ (12) | £ 37 | £ (36) |
Overseas [member] | |||
Reconciliation of Effective Tax Rate [Line Items] | |||
Total tax credit/(charge) | £ 46 | £ 55 | £ 23 |
Income Tax - Summary of Profi_2
Income Tax - Summary of Profit Before Tax Differences Calculated (Parenthetical) (Detail) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
UK [member] | |||
Reconciliation of Effective Tax Rate [Line Items] | |||
Applicable tax rate | 19.00% | 19.00% | 19.25% |
Income Tax - Additional Informa
Income Tax - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income tax [line items] | |||||
Current tax liability | £ 55 | £ 72 | |||
Provisions for tax uncertainties | 152 | 181 | |||
Tax charges relating to share based payments | (5) | 4 | |||
2014 and earlier tax year [member] | |||||
Income tax [line items] | |||||
Provisions for tax uncertainties | 88 | £ 152 | |||
2015 tax year [member] | |||||
Income tax [line items] | |||||
Provisions for tax uncertainties | £ 18 | ||||
2016 tax year [member] | |||||
Income tax [line items] | |||||
Provisions for tax uncertainties | £ 30 | ||||
2017 tax year [member] | |||||
Income tax [line items] | |||||
Provisions for tax uncertainties | 4 | ||||
2018 tax year [member] | |||||
Income tax [line items] | |||||
Provisions for tax uncertainties | £ 12 | ||||
Amount of liabilities increase | 25 | ||||
2019 tax year [member] | |||||
Income tax [line items] | |||||
Amount of Liabilities decrease | £ 3 |
Income Tax - Summary of Tax Ben
Income Tax - Summary of Tax Benefit/(Charge) Recognised in Other Comprehensive Income (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income tax relating to components of other comprehensive income [abstract] | |||
Net exchange differences on translation of foreign operations | £ 5 | £ (4) | £ 9 |
Fair value gain on other financial assets | (4) | (4) | |
Remeasurement of retirement benefit obligations | 22 | 9 | (42) |
Tax benefit/(charge) recognised in other comprehensive income | £ 23 | £ 5 | £ (37) |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Earnings Per Share (Detail) - GBP (£) £ / shares in Units, £ in Millions, shares in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings per share [abstract] | |||
Profit for the year | £ 266 | £ 590 | £ 408 |
Non-controlling interest | (2) | (2) | (2) |
Earnings/(loss) attributable to equity holders of the company | £ 264 | £ 588 | £ 406 |
Weighted average number of shares (millions) | 777 | 778.1 | 813.4 |
Effect of dilutive share options (millions) | 0.5 | 0.6 | 0.3 |
Weighted average number of shares (millions) for diluted earnings | 777.5 | 778.7 | 813.7 |
Earnings/(loss) per share | |||
Basic | £ 34 | £ 75.6 | £ 49.9 |
Diluted | £ 34 | £ 75.5 | £ 49.9 |
Dividends - Summary of Dividend
Dividends - Summary of Dividends Declared (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of dividends [line items] | |||
Dividends paid | £ 147 | £ 136 | £ 318 |
Final dividend [member] | |||
Disclosure of dividends [line items] | |||
Dividends paid | 101 | 93 | 277 |
Interim dividend [member] | |||
Disclosure of dividends [line items] | |||
Dividends paid | £ 46 | £ 43 | £ 41 |
Dividends - Summary of Divide_2
Dividends - Summary of Dividends Declared (Parenthetical) (Detail) - £ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Final dividend [member] | |||
Disclosure of dividends [line items] | |||
Dividends paid per share | £ 13.5 | £ 12 | £ 34 |
Interim dividend [member] | |||
Disclosure of dividends [line items] | |||
Dividends paid per share | £ 6 | £ 5.5 | £ 5 |
Dividends - Additional Informat
Dividends - Additional Information (Detail) £ / shares in Units, £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£)£ / shares | |
Disclosure of Dividends [abstract] | |
Dividends proposed per share | £ / shares | £ 13.5 |
Dividends proposed estimated effect on shareholders' funds | £ | £ 106 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of Property, plant and equipment (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | £ 237 | £ 281 | |
Charge for the year | (123) | (66) | £ (90) |
Disposals | (3) | (41) | (12) |
Transfer to intangible assets | 12 | ||
Ending Balance | 618 | 237 | 281 |
Cost [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 793 | 886 | |
Exchange differences | (32) | 26 | |
Additions | 124 | 66 | |
Disposals | (146) | (172) | |
Transfer to intangible assets | (7) | (11) | |
Transfer to intangible assets - pre-publication | (12) | (2) | |
Ending Balance | 1,144 | 793 | 886 |
Increase decrease through in right of use assets in IFRS 16 | 424 | ||
Depreciation [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | (556) | (605) | |
Exchange differences | 21 | (16) | |
Charge for the year | (123) | (66) | |
Disposals | 126 | 131 | |
Transfer to intangible assets | 3 | ||
Transfer to intangible assets - pre-publication | 3 | ||
Ending Balance | (526) | (556) | (605) |
Land and buildings [member] | Right-of-use assets [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Ending Balance | 402 | ||
Land and buildings [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 122 | 133 | |
Ending Balance | 100 | 122 | 133 |
Land and buildings [member] | Cost [member] | Right-of-use assets [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Exchange differences | (9) | ||
Additions | 64 | ||
Disposals | (13) | ||
Ending Balance | 460 | ||
Increase decrease through in right of use assets in IFRS 16 | 418 | ||
Land and buildings [member] | Cost [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 317 | 330 | |
Exchange differences | (8) | 11 | |
Additions | 32 | ||
Disposals | (13) | (75) | |
Reclassifications | 4 | 19 | |
Ending Balance | 300 | 317 | 330 |
Land and buildings [member] | Depreciation [member] | Right-of-use assets [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Exchange differences | 2 | ||
Charge for the year | (60) | ||
Ending Balance | (58) | ||
Land and buildings [member] | Depreciation [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | (195) | (197) | |
Exchange differences | 6 | (5) | |
Charge for the year | (21) | (20) | |
Disposals | 10 | 34 | |
Reclassifications | (7) | ||
Ending Balance | (200) | (195) | (197) |
Plant and equipment [member] | Right-of-use assets [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Ending Balance | 7 | ||
Plant and equipment [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 97 | 119 | |
Ending Balance | 73 | 97 | 119 |
Plant and equipment [member] | Cost [member] | Right-of-use assets [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Additions | 2 | ||
Disposals | (4) | ||
Transfer of finance leases | 19 | ||
Ending Balance | 23 | ||
Increase decrease through in right of use assets in IFRS 16 | 6 | ||
Plant and equipment [member] | Cost [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 458 | 527 | |
Exchange differences | (15) | 14 | |
Additions | 18 | 22 | |
Disposals | (108) | (97) | |
Reclassifications | (4) | (8) | |
Transfer of finance leases | (19) | ||
Transfer to intangible assets | (3) | ||
Transfer to intangible assets - pre-publication | (2) | ||
Ending Balance | 325 | 458 | 527 |
Plant and equipment [member] | Depreciation [member] | Right-of-use assets [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Charge for the year | (4) | ||
Transfer of finance leases | (12) | ||
Ending Balance | (16) | ||
Plant and equipment [member] | Depreciation [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | (361) | (408) | |
Exchange differences | 13 | (11) | |
Charge for the year | (38) | (46) | |
Disposals | 116 | 97 | |
Reclassifications | 7 | ||
Transfer of finance leases | 12 | ||
Transfer to intangible assets | 3 | ||
Transfer to intangible assets - pre-publication | 3 | ||
Ending Balance | (252) | (361) | (408) |
Assets in course of construction [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 18 | 29 | |
Ending Balance | 36 | 18 | 29 |
Assets in course of construction [member] | Cost [member] | Owned assets | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Beginning Balance | 18 | 29 | |
Exchange differences | 1 | ||
Additions | 40 | 12 | |
Disposals | (8) | ||
Reclassifications | (11) | ||
Transfer to intangible assets | (4) | (11) | |
Transfer to intangible assets - pre-publication | (10) | (2) | |
Ending Balance | £ 36 | £ 18 | £ 29 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about property, plant and equipment [line items] | |||
Depreciation expense | £ 123 | £ 66 | £ 90 |
Property, plant and equipment [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Net carrying amount of leased plant and equipment included within PPE | 7 | ||
Cost of goods sold [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Depreciation expense | 42 | 18 | |
Operating expense [member] | |||
Disclosure of detailed information about property, plant and equipment [line items] | |||
Depreciation expense | £ 81 | £ 48 |
Intangible Assets - Summary of
Intangible Assets - Summary of Intangible Assets (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | £ 3,009 | £ 2,964 |
Acquisition through business combination | 53 | |
Ending balance | 2,900 | 3,009 |
Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 4,888 | 4,755 |
Exchange differences | (143) | 144 |
Disposals | (169) | (157) |
Acquisition through business combination | 41 | |
Disposal through business disposal | (2) | |
Transfer from property, plant and equipment | 7 | 11 |
Transfer to assets classified as held for sale | 7 | |
Transfer to intangible assets – pre-publication | (28) | |
Movement in held for sale | 67 | |
Ending balance | 4,801 | 4,888 |
Cost [member] | Internally generated [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Additions | 137 | 124 |
Cost [member] | Not internally generated [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Additions | 1 | 6 |
Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | (1,879) | (1,791) |
Exchange differences | 68 | (56) |
Charge for the year | (266) | (187) |
Disposals | 163 | 155 |
Transfer from property, plant and equipment | (3) | |
Transfer to intangible assets – pre-publication | 16 | |
Ending balance | (1,901) | (1,879) |
Goodwill [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 2,111 | 2,030 |
Ending balance | 2,139 | 2,111 |
Goodwill [member] | Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 2,111 | 2,030 |
Exchange differences | (57) | 74 |
Acquisition through business combination | 18 | |
Transfer to assets classified as held for sale | 7 | |
Movement in held for sale | 67 | |
Ending balance | 2,139 | 2,111 |
Software [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 447 | 389 |
Ending balance | 451 | 447 |
Software [member] | Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 959 | 882 |
Exchange differences | (22) | 32 |
Disposals | (15) | (94) |
Disposal through business disposal | (2) | |
Transfer from property, plant and equipment | 7 | 11 |
Transfer to intangible assets – pre-publication | (28) | |
Ending balance | 1,039 | 959 |
Software [member] | Cost [member] | Internally generated [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Additions | 137 | 124 |
Software [member] | Cost [member] | Not internally generated [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Additions | 1 | 6 |
Software [member] | Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | (512) | (493) |
Exchange differences | 16 | (23) |
Charge for the year | (115) | (88) |
Disposals | 10 | 92 |
Transfer from property, plant and equipment | (3) | |
Transfer to intangible assets – pre-publication | 16 | |
Ending balance | (588) | (512) |
Acquired customer lists, contracts and relationships [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 263 | 309 |
Ending balance | 205 | 263 |
Acquired customer lists, contracts and relationships [member] | Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 910 | 889 |
Exchange differences | (29) | 39 |
Disposals | (88) | (18) |
Ending balance | 793 | 910 |
Acquired customer lists, contracts and relationships [member] | Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | (647) | (580) |
Exchange differences | 22 | (26) |
Charge for the year | (51) | (59) |
Disposals | 88 | 18 |
Ending balance | (588) | (647) |
Acquired trademarks and brands [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 86 | 101 |
Ending balance | 60 | 86 |
Acquired trademarks and brands [member] | Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 267 | 281 |
Exchange differences | (10) | (2) |
Disposals | (19) | (12) |
Transfer to assets classified as held for sale | 0 | |
Ending balance | 238 | 267 |
Acquired trademarks and brands [member] | Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | (181) | (180) |
Exchange differences | 7 | 1 |
Charge for the year | (23) | (14) |
Disposals | 19 | 12 |
Ending balance | (178) | (181) |
Acquired publishing rights [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 6 | 6 |
Ending balance | 3 | 6 |
Acquired publishing rights [member] | Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 184 | 184 |
Exchange differences | (5) | |
Ending balance | 179 | 184 |
Acquired publishing rights [member] | Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | (178) | (178) |
Exchange differences | 4 | 2 |
Charge for the year | (2) | (2) |
Ending balance | (176) | (178) |
Other intangibles acquired [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 96 | 129 |
Ending balance | 42 | 96 |
Other intangibles acquired [member] | Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | 457 | 489 |
Exchange differences | (20) | 1 |
Disposals | (47) | (33) |
Acquisition through business combination | 23 | |
Ending balance | 413 | 457 |
Other intangibles acquired [member] | Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Beginning balance | (361) | (360) |
Exchange differences | 19 | (10) |
Charge for the year | (75) | (24) |
Disposals | 46 | 33 |
Ending balance | £ (371) | £ (361) |
Intangible assets - Additional
Intangible assets - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about intangible assets [line items] | |||
Carrying value of goodwill | £ 2,139 | £ 2,111 | |
Description of valuation techniques used to measure fair value less costs of disposal | Goodwill is tested at least annually for impairment. The recoverable amount of each aggregated CGU is based on the higher of value in use and fair value less costs of disposal. The value in use was higher than the fair value less costs of disposal in each of the CGUs. | ||
Description of key assumptions | For the purpose of estimating the value in use of the CGUs, management has used an income approach based on present value techniques. The calculations use cash flow projections based on financial budgets approved by management covering a three-year period, whilst a projection to 2030 was available and used for the OPM CGU, as the three-year projection reflected the investment phase and not the longer-term return of this business, and because the long-term nature of OPM’s contracts allows for reliable forecasts to be prepared beyond three years. OPM relies on contracts with key customers and the forecast to 2030 assumes these are renewed or replaced. | ||
Perpetuity growth rate | 2.00% | 2.00% | |
Description of management's approach to determining values assigned to key assumptions | Forecast sales growth rates are based on past experience adjusted for the strategic direction and near-term investment priorities within each CGU. Key assumptions include growth in Online Program Management, Virtual Schools and Professional Certification, stabilisation in UK Qualifications and US Assessments, and ongoing pressures in the US Higher Education Courseware market. The sales forecasts use average nominal growth rates between (5%) and 11% (2018: 2% and 3%) for mature markets and between 5% and 11% (2018: (1)% and 12%) for emerging markets with high inflation. | ||
Impairment | £ 65 | £ 0 | |
Other Intangibles Acquired | 53 | ||
Goodwill balance | 2,900 | £ 3,009 | £ 2,964 |
Brazil [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Impairment of intangible assets | 65 | ||
Goodwill balance | 27 | ||
Pretax discount rate | 16.30% | ||
Impairment Loss On Headroom | £ 20 | ||
Cost of goods sold [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Amortisation expense | 19 | 18 | |
Operating expense [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Amortisation expense | £ 182 | 169 | |
Goodwill [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Description of accounting of goodwill prior to adoption of IFRS | For acquisitions completed between 1 January 1998 and 31 December 2002, no value was ascribed to intangibles other than goodwill which was amortised over a period of up to 20 years. On adoption of IFRS on 1 January 2003, the Group chose not to restate the goodwill balance and at that date the balance was frozen (i.e. amortisation ceased). | ||
Goodwill balance | £ 2,139 | £ 2,111 | £ 2,030 |
Trademark And Brands [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Other Intangibles Acquired | £ 12 | ||
Bottom of range [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Post tax discount rate used in calculating fair value | 9.50% | 7.90% | |
CGU growth rate | 3.20% | 3.00% | |
Average nominal growth rate used in sales forecast for mature markets | 5.00% | 2.00% | |
Average nominal growth rate used in sales forecast for emerging markets | 5.00% | (1.00%) | |
Top of range [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Post tax discount rate used in calculating fair value | 17.00% | 15.80% | |
CGU growth rate | 6.50% | 6.50% | |
Average nominal growth rate used in sales forecast for mature markets | 11.00% | 3.00% | |
Average nominal growth rate used in sales forecast for emerging markets | 11.00% | 12.00% |
Intangible Assets - Summary o_2
Intangible Assets - Summary of Amortisation Profile of Intangible Assets (Detail) £ in Millions | Dec. 31, 2019GBP (£) |
Acquired customer lists, contracts and relationships [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | £ 205 |
Acquired trademarks and brands [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 60 |
Acquired publishing rights [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 3 |
Other acquired intangibles [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 42 |
One to five years [member] | Acquired customer lists, contracts and relationships [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 154 |
One to five years [member] | Acquired trademarks and brands [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 42 |
One to five years [member] | Acquired publishing rights [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 3 |
One to five years [member] | Other acquired intangibles [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 31 |
Six to ten years [member] | Acquired customer lists, contracts and relationships [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 49 |
Six to ten years [member] | Acquired trademarks and brands [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 14 |
Six to ten years [member] | Acquired publishing rights [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 0 |
Six to ten years [member] | Other acquired intangibles [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 11 |
More than ten years [member] | Acquired customer lists, contracts and relationships [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | 2 |
More than ten years [member] | Acquired trademarks and brands [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Acquired intangible assets are included within non-current Intangible assets | £ 4 |
Intangible Assets - Summary o_3
Intangible Assets - Summary of Useful Economic Life of Intangible Assets (Detail) | 12 Months Ended |
Dec. 31, 2019 | |
Bottom of range [member] | Acquired customer lists, contracts and relationships [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 3 years |
Bottom of range [member] | Acquired trademarks and brands [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 2 years |
Bottom of range [member] | Acquired publishing rights [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 5 years |
Bottom of range [member] | Other acquired intangibles [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 2 years |
Top of range [member] | Acquired customer lists, contracts and relationships [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 20 years |
Top of range [member] | Acquired trademarks and brands [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 20 years |
Top of range [member] | Acquired publishing rights [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 20 years |
Top of range [member] | Other acquired intangibles [member] | |
Disclosure of detailed information about intangible assets [line items] | |
Useful life of intangible assets | 20 years |
Intangible Assets - Summary o_4
Intangible Assets - Summary of Carrying Value of Goodwill (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | £ 2,139 | £ 2,111 |
North America [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 930 | |
OPM [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 18 | |
Virtual Schools [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 386 | |
Assessments [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 1,035 | |
Core [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | £ 700 | 701 |
Pearson VUE [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | £ 480 |
Intangible assets - Summary o_5
Intangible assets - Summary of Detailed Information About In Carrying Value Of Goodwill (Detail) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of Detailed Information About In Carrying Value Of Goodwill [Line Items] | ||
Perpetuity growth rate | 2.00% | 2.00% |
Virtual Schools [member] | ||
Disclosure of Detailed Information About In Carrying Value Of Goodwill [Line Items] | ||
Discount rate | 10.00% | |
Perpetuity growth rate | 2.00% | |
Core [member] | ||
Disclosure of Detailed Information About In Carrying Value Of Goodwill [Line Items] | ||
Discount rate | 10.00% | |
Perpetuity growth rate | 2.00% | |
Assessments [member] | ||
Disclosure of Detailed Information About In Carrying Value Of Goodwill [Line Items] | ||
Discount rate | 10.00% | |
Perpetuity growth rate | 2.00% |
Intangible Assets - Summary o_6
Intangible Assets - Summary of Cumulative Impact of Changes in Assumptions Used in Calculating the Fair Value (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
North America [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Headroom at 31 December 2019 | £ 115 |
Discount rate | 10.00% |
Discount rate for zero headroom | 10.30% |
Perpetuity growth rate | 2.00% |
Perpetuity growth rate for zero headroom | 1.60% |
Contribution reduction p.a. for zero headroom | £ 9 |
Core [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Headroom at 31 December 2019 | £ 191 |
Discount rate | 10.00% |
Discount rate for zero headroom | 10.70% |
Perpetuity growth rate | 2.00% |
Perpetuity growth rate for zero headroom | 1.20% |
Contribution reduction p.a. for zero headroom | £ 15 |
Brazil [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Discount rate | 16.30% |
Discount rate for zero headroom | 16.30% |
Perpetuity growth rate | 4.10% |
Perpetuity growth rate for zero headroom | 4.10% |
OPM [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Headroom at 31 December 2019 | £ 81 |
Discount rate | 10.00% |
Discount rate for zero headroom | 10.30% |
Perpetuity growth rate | 2.00% |
Perpetuity growth rate for zero headroom | 0.30% |
Contribution reduction p.a. for zero headroom | £ 7 |
Investments in Joint Ventures_3
Investments in Joint Ventures and Associates - Summary of Financial Statements (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investments in subsidiaries, joint ventures and associates [abstract] | |||
Associates | £ 7 | £ 392 | |
Joint ventures | 0 | ||
Associates classified as held for sale | 397 | ||
Total | 404 | 392 | |
Associates | 54 | 43 | |
Joint ventures | 1 | ||
Total | £ 54 | £ 44 | £ 78 |
Investments in Joint Ventures_4
Investments in Joint Ventures and Associates - Summary of Materials (Detail) | 12 Months Ended |
Dec. 31, 2019 | |
Penguin Random House Ltd [member] | |
Disclosure of associates [line items] | |
Name of Associates | Penguin Random House Ltd |
Principal place of business | UK/Global |
Ownership interest | 25.00% |
Measurement method | Equity |
Penguin Random House LLC [member] | |
Disclosure of associates [line items] | |
Name of Associates | Penguin Random House LLC |
Principal place of business | US |
Ownership interest | 25.00% |
Measurement method | Equity |
Investments in Joint Ventures_5
Investments in Joint Ventures and Associates - Additional Information (Detail) - GBP (£) £ in Millions | Oct. 05, 2017 | Jul. 01, 2013 | Dec. 31, 2019 | Dec. 31, 2018 |
Investments in associates and joint ventures [line items] | ||||
Interest received | £ 1 | £ 1 | ||
Random House [member] | ||||
Investments in associates and joint ventures [line items] | ||||
Proportion of voting power held in associate | 53.00% | |||
Penguin [member] | ||||
Investments in associates and joint ventures [line items] | ||||
Proportion of voting power held in associate | 47.00% | |||
Penguin Random House [member] | ||||
Investments in associates and joint ventures [line items] | ||||
Proportion of sales of voting power held in associate | 22.00% | |||
Proportion of voting power held in associate | 25.00% | 25.00% | ||
Loans to associates | £ 49 | 0 | ||
Current assets receivables | 16 | 17 | ||
Current liability payable | £ 0 | £ 3 |
Investments in Joint Ventures_6
Investments in Joint Ventures and Associates - Summary of Financial Information of Material Associate (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Assets | |||
Non-current assets | £ 4,477 | £ 4,529 | |
Liabilities | |||
Non-current liabilities | (1,835) | (1,246) | |
Sales | 3,869 | 4,129 | £ 4,513 |
Profit for the year | 266 | 590 | 408 |
Other comprehensive income/(expense) | (217) | 124 | (155) |
Total comprehensive income | 49 | 714 | 253 |
Opening net assets | 4,525 | ||
Profit for the year | 266 | 590 | 408 |
Other comprehensive income/(expense) | (217) | 124 | (155) |
Dividends, net of tax paid | (148) | (137) | (318) |
Closing net assets | 4,323 | 4,525 | |
Goodwill | 2,139 | 2,111 | |
Penguin Random House [member] | Associates [member] | |||
Assets | |||
Non-current assets | 1,346 | 1,043 | |
Current assets | 2,273 | 1,929 | |
Liabilities | |||
Non-current liabilities | (1,357) | (1,104) | |
Current liabilities | (1,874) | (1,546) | |
Sales | 2,916 | 2,775 | |
Profit for the year | 205 | 185 | |
Other comprehensive income/(expense) | (27) | 13 | |
Total comprehensive income | 178 | 198 | |
Dividends received from associate in relation to profits | 63 | 67 | |
Re-capitalisation dividends received from associate | 0 | 50 | |
Opening net assets | 322 | 368 | |
Exchange differences | (9) | 18 | |
Profit for the year | 205 | 185 | |
Other comprehensive income/(expense) | (27) | 13 | |
Dividends, net of tax paid | (260) | (262) | |
Closing net assets | 388 | 322 | £ 368 |
Goodwill | 300 | 307 | |
Carrying value of associate | 397 | 387 | |
Penguin Random House [member] | Associates [member] | Share of net assets [member] | |||
Liabilities | |||
Opening net assets | 80 | ||
Closing net assets | £ 97 | £ 80 |
Investments in Joint Ventures_7
Investments in Joint Ventures and Associates - Summary of Individually Immaterial Associates (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of associates [line items] | |||
Profit for the year | £ 266 | £ 590 | £ 408 |
Total comprehensive (expense)/income | 49 | 714 | £ 253 |
Aggregated individually immaterial associates [member] | |||
Disclosure of associates [line items] | |||
Profit for the year | 3 | (3) | |
Total comprehensive (expense)/income | £ 3 | £ (3) |
Investments in Joint Ventures_8
Investments in Joint Ventures and Associates - Summary of Individually Immaterial Joint Ventures (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of associates [line items] | |||
Profit for the year | £ 266 | £ 590 | £ 408 |
Total comprehensive income | 49 | 714 | £ 253 |
Aggregated individually immaterial joint ventures [member] | |||
Disclosure of associates [line items] | |||
Profit for the year | 0 | 1 | |
Total comprehensive income | £ 0 | £ 1 |
Deferred Income Tax - Schedule
Deferred Income Tax - Schedule of Deferred Income Tax (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets and liabilities [abstract] | ||
Deferred income tax assets | £ 59 | £ 60 |
Deferred income tax liabilities | (48) | (136) |
Net deferred income tax | £ 11 | £ (76) |
Deferred Income Tax - Additiona
Deferred Income Tax - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Other deferred tax assets not recognised | £ 25 | £ 12 |
Deferred income tax assets | 59 | 60 |
Assets and liabilities classified as held for sale [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Deferred income tax assets | 0 | 98 |
Expenses related to asset held for sale | 8 | |
UK [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Unrecognised deferred income tax assets | 28 | 31 |
United States [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Unrecognised deferred income tax assets | 20 | 28 |
All other countries [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Unrecognised deferred income tax assets | 100 | 90 |
Trading losses [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Deferred income tax assets | £ 41 | £ 43 |
Top of range [member] | United States [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Expiry periods | 5 years | |
Bottom of range [member] | United States [member] | ||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | ||
Expiry periods | 20 years |
Deferred Income Tax - Schedul_2
Deferred Income Tax - Schedule of Movement on Net Deferred Income Tax Account (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | £ (76) | ||
Tax benefit/charge in other comprehensive income | 23 | £ 5 | £ (37) |
Ending balance | 11 | (76) | |
Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | (76) | (50) | |
Adjustment on initial application of IFRS 16 (see note 1b) | 15 | ||
Exchange differences | (5) | (13) | |
Income statement (charge) benefit | 64 | (42) | |
Disposal through business disposal | 16 | ||
Tax benefit/charge in other comprehensive income | 18 | 9 | |
Tax charge in equity | (5) | 4 | |
Ending balance | 11 | (76) | (50) |
Trading losses [member] | Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | 20 | 9 | |
Exchange differences | (1) | ||
Income statement (charge) benefit | 70 | 11 | |
Ending balance | 89 | 20 | 9 |
Returns provisions [member] | Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | 31 | 34 | |
Exchange differences | (1) | 1 | |
Income statement (charge) benefit | (10) | (4) | |
Ending balance | 20 | 31 | 34 |
Retirement benefit obligations [member] | Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | (55) | (44) | |
Exchange differences | (1) | 1 | |
Income statement (charge) benefit | (4) | (21) | |
Tax benefit/charge in other comprehensive income | 22 | 9 | |
Ending balance | (38) | (55) | (44) |
Deferred revenue [member] | Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | 68 | 42 | |
Exchange differences | (3) | 6 | |
Income statement (charge) benefit | (24) | 20 | |
Ending balance | 41 | 68 | 42 |
Goodwill and intangible [member] | Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | (205) | (155) | |
Exchange differences | 6 | (16) | |
Income statement (charge) benefit | (34) | ||
Ending balance | (199) | (205) | (155) |
Other [member] | Deferred tax assets [member] | |||
Disclosure of temporary difference, unused tax losses and unused tax credits [line items] | |||
Beginning balance | 65 | 64 | |
Adjustment on initial application of IFRS 16 (see note 1b) | 15 | ||
Exchange differences | (5) | (5) | |
Income statement (charge) benefit | 32 | (14) | |
Disposal through business disposal | 16 | ||
Tax benefit/charge in other comprehensive income | (4) | ||
Tax charge in equity | (5) | 4 | |
Ending balance | £ 98 | £ 65 | £ 64 |
Classification of Financial I_3
Classification of Financial Instruments - Schedule of Classification of Each Class of Financial Assets and their Carrying Values (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of financial assets [line items] | ||
Financial assets | £ 1,713 | £ 1,682 |
Investments in unlisted securities [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 122 | 93 |
Cash and cash equivalents [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 437 | 568 |
Derivative financial instruments [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 54 | 68 |
Trade receivables [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 918 | 904 |
Trade receivables - within assets classified as held for sale [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 49 | |
Other receivable [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 182 | |
Financial assets at fair value [member] | FVOCI [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 122 | 93 |
Financial assets at fair value [member] | FVOCI [member] | Investments in unlisted securities [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 122 | 93 |
Financial assets at fair value [member] | FVTPL [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 188 | 4 |
Financial assets at fair value [member] | FVTPL [member] | Derivative financial instruments [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 6 | 4 |
Financial assets at fair value [member] | FVTPL [member] | Other receivable [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 182 | |
Financial assets at fair value [member] | Fair value - hedging instrument [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 48 | 64 |
Financial assets at fair value [member] | Fair value - hedging instrument [member] | Derivative financial instruments [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 48 | 64 |
Financial assets at amortised cost [member] | Financial assets, class [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 1,355 | 1,521 |
Financial assets at amortised cost [member] | Financial assets, class [member] | Cash and cash equivalents [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | 437 | 568 |
Financial assets at amortised cost [member] | Financial assets, class [member] | Trade receivables [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | £ 918 | 904 |
Financial assets at amortised cost [member] | Financial assets, class [member] | Trade receivables - within assets classified as held for sale [member] | ||
Disclosure of financial assets [line items] | ||
Financial assets | £ 49 |
Classification of Financial I_4
Classification of Financial Instruments - Schedule of Accounting Classification of Class of Financial Liabilities, Together with their Carrying Values and Market Values (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of financial liabilities [line items] | ||
Financial liabilities | £ (2,061) | £ (1,112) |
Total market value | (2,063) | (1,101) |
Derivative financial instruments [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (39) | (59) |
Total market value | (39) | (59) |
Trade payables [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (358) | (311) |
Total market value | (358) | (311) |
Trade payables - within liabilities classified as held for sale [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (22) | |
Total market value | (22) | |
Bank loans and overdrafts [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (3) | (43) |
Total market value | (3) | (43) |
Borrowings [member] | In less than one year [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (89) | (3) |
Total market value | (89) | (3) |
Borrowings [member] | More than 12 months past due date [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (1,572) | (674) |
Total market value | (1,574) | (663) |
Financial liabilities derivatives in hedging relationship [member] | Financial liabilities at fair value [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (32) | (59) |
Financial liabilities derivatives in hedging relationship [member] | Derivative financial instruments [member] | Financial liabilities at fair value [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (32) | (59) |
Other Financial Liability [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (2,022) | |
Other Financial Liability [member] | Financial liabilities at amortised cost [member] | In less than one year [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (89) | |
Other Financial Liability [member] | Financial liabilities at amortised cost [member] | More than 12 months past due date [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (1,572) | |
Other Financial Liability [member] | Trade payables [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (358) | |
Other Financial Liability [member] | Bank loans and overdrafts [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (3) | |
Financial liabilities other [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (1,053) | |
Financial liabilities other [member] | Trade payables [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (311) | |
Financial liabilities other [member] | Trade payables - within liabilities classified as held for sale [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (22) | |
Financial liabilities other [member] | Bank loans and overdrafts [member] | Financial liabilities at amortised cost [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (43) | |
Financial liabilities other [member] | Borrowings [member] | Financial liabilities at amortised cost [member] | In less than one year [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (3) | |
Financial liabilities other [member] | Borrowings [member] | Financial liabilities at amortised cost [member] | More than 12 months past due date [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | £ (674) | |
FVTPL [member] | Financial liabilities at fair value [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | (7) | |
FVTPL [member] | Derivative financial instruments [member] | Financial liabilities at fair value [member] | ||
Disclosure of financial liabilities [line items] | ||
Financial liabilities | £ (7) |
Classification of financial i_5
Classification of financial instruments - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of financial liabilities [line items] | |||
Derivative assets | £ 54 | £ 68 | |
Derivative liabilities | 39 | 59 | |
Financial assets | 1,713 | 1,682 | |
Other financial assets | £ 122 | 93 | £ 77 |
Bottom of range [member] | |||
Disclosure of financial liabilities [line items] | |||
Discount rate | 3.25% | ||
Top of range [member] | |||
Disclosure of financial liabilities [line items] | |||
Discount rate | 1.00% | ||
Forecast Sales [Member] | |||
Disclosure of financial liabilities [line items] | |||
Percentage of Sale Increase | 5.00% | ||
Increase Decrease Through In Other Receivables | £ 20 | ||
Investments in unlisted securities [member] | |||
Disclosure of financial liabilities [line items] | |||
Financial assets | 122 | 93 | |
USK12 Business [Member] | |||
Disclosure of financial liabilities [line items] | |||
Increase Decrease Through In Other Receivables | 5 | ||
Level 2 of fair value hierarchy [member] | |||
Disclosure of financial liabilities [line items] | |||
Derivative assets | 54 | 68 | |
Derivative liabilities | 39 | 59 | |
Level 3 of fair value hierarchy [member] | |||
Disclosure of financial liabilities [line items] | |||
Financial assets | 182 | 0 | |
Other financial assets | 304 | 93 | |
Level 3 of fair value hierarchy [member] | Investments in unlisted securities [member] | |||
Disclosure of financial liabilities [line items] | |||
Other financial assets | 122 | 93 | £ 77 |
Level 1 of fair value hierarchy [member] | |||
Disclosure of financial liabilities [line items] | |||
Derivative assets | £ 661 | ||
Group Bonds | £ 595 |
Classification of Financial I_6
Classification of Financial Instruments - Schedule of Analysis of the Movements in Level 3 Fair Value Remeasurements (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of financial assets [line items] | ||
At beginning of year | £ 93 | £ 77 |
Exchange differences | (3) | 4 |
Acquisition of investments | 12 | 13 |
Fair value movements | 20 | 7 |
Disposal of investments | (8) | |
At end of year | 122 | 93 |
Level 3 of fair value hierarchy [member] | ||
Disclosure of financial assets [line items] | ||
At beginning of year | 93 | |
Exchange differences | (2) | |
Acquisition of investments | 193 | |
Fair value movements | 20 | |
At end of year | 304 | 93 |
Level 3 of fair value hierarchy [member] | Investments in unlisted securities [member] | ||
Disclosure of financial assets [line items] | ||
At beginning of year | 93 | 77 |
Exchange differences | (3) | 4 |
Acquisition of investments | 12 | 13 |
Fair value movements | 20 | 7 |
Disposal of investments | (8) | |
At end of year | 122 | £ 93 |
Level 3 of fair value hierarchy [member] | Other receivable [member] | ||
Disclosure of financial assets [line items] | ||
Exchange differences | 1 | |
Acquisition of investments | 181 | |
At end of year | £ 182 |
Other Financial Assets - Summar
Other Financial Assets - Summary of Other Financial Assets (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of financial assets [abstract] | ||
At beginning of year | £ 93 | £ 77 |
Exchange differences | (3) | 4 |
Acquisition of investments | 12 | 13 |
Fair value movements | 20 | 7 |
Disposal of investments | (8) | |
At end of year | £ 122 | £ 93 |
Other financial assets - Additi
Other financial assets - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of financial assets [line items] | |||
Other financial assets | £ 122 | £ 93 | £ 77 |
Fair value of equity securities disposed | 8 | ||
Cumulative gain on disposal financial statements | 0 | 2 | |
Investments in unlisted securities [member] | |||
Disclosure of financial assets [line items] | |||
Other financial assets | £ 122 | £ 93 |
Derivative Financial Instrume_3
Derivative Financial Instruments and Hedge Accounting - Summary of Outstanding Derivative Financial Instruments (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | £ 2,336 | £ 2,250 |
Assets | 54 | 68 |
Liabilities | (39) | (59) |
In less than one year [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 1,167 | 771 |
Assets | 25 | 1 |
Liabilities | (15) | (23) |
One to five years [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 694 | 795 |
Assets | 13 | 22 |
Liabilities | (6) | (1) |
Later than five years [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 475 | 684 |
Assets | 16 | 45 |
Liabilities | (18) | (35) |
Interest rate derivatives [member] | Fair value hedges [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 336 | 404 |
Assets | 13 | 13 |
Interest rate derivatives [member] | Not designated in hedging relationship [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 557 | 362 |
Assets | 2 | 3 |
Liabilities | (6) | |
Cross currency rate derivatives [member] | Fair value hedges [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 502 | 577 |
Assets | 29 | 51 |
Liabilities | (31) | (35) |
FX derivatives [member] | Fair value hedges [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 555 | 434 |
Assets | 6 | |
Liabilities | (1) | (24) |
FX derivatives [member] | Not designated in hedging relationship [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Gross notional amounts | 386 | 473 |
Assets | 4 | £ 1 |
Liabilities | £ (1) |
Derivative Financial Instrume_4
Derivative Financial Instruments and Hedge Accounting - Additional Information (Detail) £ in Millions | 12 Months Ended | |
Dec. 31, 2019GBP (£)bonds | Dec. 31, 2018GBP (£)bonds | |
Disclosure of detailed information about financial instruments [line items] | ||
Interest rate swap contracts to fix debt amount | £ 557 | |
Interest rate swap contracts to fix debt outstanding amount | 246 | |
Contracts to fix debt amount, net | £ 803 | |
Outstanding contracts rate | 1.34 | |
Outstanding contracts average rate | 0.79 | |
Mark-to-market value of rate derivatives | £ 8 | |
Hedging gains/(losses) recognised in OCI | £ 3 | |
Cost of hedging reserve | £ 2 | |
Hedges of net investment in foreign operations [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Weighted average rate Bonds | bonds | 1.59 | 0.86 |
US Dollars [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Mark-to-market value of rate derivatives | £ (167) | £ (185) |
Sterling [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Mark-to-market value of rate derivatives | (166) | (215) |
Euro [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Mark-to-market value of rate derivatives | £ 336 | £ 432 |
Euro 2025 senior notes [member] | Libor [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Marginal interest rate on reference rate | 0.81% | |
Euro 2021 senior notes [member] | Libor [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Marginal interest rate on reference rate | 1.36% | |
Bottom of range [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Borrowings interest rate | 2.20% | |
Bottom of range [member] | Floating interest rate [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Borrowings interest rate | 0.83% | |
Bottom of range [member] | Euro 2025 senior notes [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Borrowings interest rate | 1.375% | |
Top of range [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Borrowings interest rate | 3.60% | |
Top of range [member] | Floating interest rate [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Borrowings interest rate | 2.10% | |
Top of range [member] | Euro 2021 senior notes [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Borrowings interest rate | 1.875% |
Derivative Financial Instrume_5
Derivative Financial Instruments and Hedge Accounting - Summary of Instruments to Hedge Exposures to Changes in Interest Rates and Foreign Currency Risk Associated with Borrowings (Detail) - Financial assets - derivative financial instruments [member] - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative financial instruments for interest rate risk [member] | ||
Disclosure of detailed information about hedging instruments [line items] | ||
Carrying amount of hedging instruments | £ 13 | £ 13 |
Change in fair value of hedging instrument used to determine hedge ineffectiveness | (7) | |
Nominal amounts of hedging instruments | 336 | 404 |
Derivative financial instruments for currency risk [member] | ||
Disclosure of detailed information about hedging instruments [line items] | ||
Carrying amount of hedging instruments | 25 | 51 |
Change in fair value of hedging instrument used to determine hedge ineffectiveness | (21) | 3 |
Nominal amounts of hedging instruments | £ 336 | £ 404 |
Derivative Financial Instrume_6
Derivative Financial Instruments and Hedge Accounting - Summary of Amounts at the Reporting Rate Relating to Items Designated as Hedge Items (Detail) - Financial liabilities - borrowings [member] - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of detailed information about hedged items [line items] | ||
Carrying amount of hedged items | £ (246) | £ (256) |
Hedge ineffectiveness | 0 | 0 |
Interest rate risk [member] | ||
Disclosure of detailed information about hedged items [line items] | ||
Carrying amount of hedged items | (347) | (416) |
Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount | (9) | (9) |
Change in fair value of hedged item used to determine hedge ineffectiveness | 0 | 7 |
Hedge ineffectiveness | £ 0 | £ 0 |
Line item in profit or loss that includes hedge ineffectiveness | n/a | n/a |
Currency risk [member] | ||
Disclosure of detailed information about hedged items [line items] | ||
Carrying amount of hedged items | £ (347) | £ (416) |
Change in fair value of hedged item used to determine hedge ineffectiveness | 21 | (3) |
Hedge ineffectiveness | £ 0 | £ 0 |
Line item in profit or loss that includes hedge ineffectiveness | n/a | n/a |
Derivative Financial Instrume_7
Derivative Financial Instruments and Hedge Accounting - Summary of Amounts Related to Items Designated as Hedging Instruments (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of detailed information about hedges [line items] | ||
Hedging gains/(losses) recognised in OCI | £ 3 | |
Financial liabilities - derivative financial instruments [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Carrying amount of hedged instruments | (21) | £ (59) |
Change in value of hedging instrument used to determine hedge ineffectiveness | 13 | (22) |
Nominal amounts of hedging instruments | (722) | (607) |
Hedging gains/(losses) recognised in OCI | 13 | (22) |
Hedge ineffectiveness recognised in profit or loss | 0 | 0 |
Financial liabilities - borrowings [member] | ||
Disclosure of detailed information about hedges [line items] | ||
Carrying amount of hedged instruments | (246) | (256) |
Change in value of hedging instrument used to determine hedge ineffectiveness | 10 | (10) |
Nominal amounts of hedging instruments | (246) | (256) |
Hedging gains/(losses) recognised in OCI | 10 | (10) |
Hedge ineffectiveness recognised in profit or loss | £ 0 | £ 0 |
Derivative Financial Instrume_8
Derivative Financial Instruments and Hedge Accounting - Disclosure of Derivative Financial Assets and Liabilities Subject to Offsetting Arrangements (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of derivative financial asset and liabilities offsetting arrangements [line items] | ||
Gross derivative assets | £ 54 | £ 68 |
Gross derivative liabilities | (39) | (59) |
Net derivative assets/ liabilities | 15 | 9 |
Asset position [member] | ||
Disclosure of derivative financial asset and liabilities offsetting arrangements [line items] | ||
Gross Derivative assets | 52 | 67 |
Gross derivative liabilities | (34) | (44) |
Net derivative assets/ liabilities | 18 | 23 |
Counterparties in a liability position [member] | ||
Disclosure of derivative financial asset and liabilities offsetting arrangements [line items] | ||
Gross derivative assets | 2 | 1 |
Gross derivative liabilities | (5) | (15) |
Net derivative assets/ liabilities | £ (3) | £ (14) |
Cash and Cash Equivalents (Ex_3
Cash and Cash Equivalents (Excluding Overdrafts) - Summary of Cash and Cash Equivalents (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Cash and cash equivalents [line items] | ||
Cash at bank and in hand | £ 401 | £ 533 |
Short-term bank deposits | 36 | 35 |
Total | £ 437 | £ 568 |
Cash and Cash Equivalents (Ex_4
Cash and Cash Equivalents (Excluding Overdrafts) - Additional Information (Detail) | Dec. 31, 2019 | Dec. 31, 2018 |
US Dollars [member] | ||
Cash and cash equivalents [line items] | ||
Cash and cash equivalents currency split | 30.00% | 18.00% |
Sterling [member] | ||
Cash and cash equivalents [line items] | ||
Cash and cash equivalents currency split | 12.00% | 30.00% |
Other currency [member] | ||
Cash and cash equivalents [line items] | ||
Cash and cash equivalents currency split | 58.00% | 52.00% |
Cash and Cash Equivalents (Ex_5
Cash and Cash Equivalents (Excluding Overdrafts) - Summary of Cash and Cash Equivalents for Purpose of Cash Flow Statement (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash and cash equivalents [line items] | ||||
Cash and cash equivalents | £ 437 | £ 568 | ||
Bank overdrafts | (3) | (43) | ||
Total cash and cash equivalents | £ 434 | £ 525 | £ 630 | £ 1,424 |
Financial Liabilities - Borro_3
Financial Liabilities - Borrowings - Summary of Current and Non - Current Borrowings (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about borrowings [line items] | ||
Finance lease liabilities | £ 749 | £ 2 |
Non-current borrowings | 1,572 | 674 |
Finance lease liabilities | 89 | 3 |
Current borrowings | 92 | 46 |
Borrowings | 1,664 | 720 |
Revolving credit facility | 230 | |
1.875% Euro notes 2021 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | 170 | 233 |
3.75% US dollar notes 2022 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | 89 | 92 |
3.25% US dollar notes 2023 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | 72 | 74 |
1.375% Euro notes 2025 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | 262 | 273 |
Bank loans and overdrafts [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Current borrowings | £ 3 | £ 43 |
Financial Liabilities - Borro_4
Financial Liabilities - Borrowings - Summary of Current and Non - Current Borrowings (Parenthetical) (Detail) € in Millions, £ in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2019GBP (£) | Dec. 31, 2018GBP (£) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2018EUR (€) | |
Disclosure of detailed information about borrowings [line items] | ||||||
Nominal amount | £ | £ 2,336 | £ 2,250 | ||||
1.875% Euro notes 2021 [member] | ||||||
Disclosure of detailed information about borrowings [line items] | ||||||
Borrowings, interest rate | 1.875% | 1.875% | 1.875% | 1.875% | 1.875% | 1.875% |
Borrowings, maturity year | 2021 | 2021 | ||||
Nominal amount | € | € 195 | € 250 | ||||
3.75% US dollar notes 2022 [member] | ||||||
Disclosure of detailed information about borrowings [line items] | ||||||
Borrowings, interest rate | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% |
Borrowings, maturity year | 2022 | 2022 | ||||
Nominal amount | $ | $ 117 | $ 117 | ||||
3.25% US dollar notes 2023 [member] | ||||||
Disclosure of detailed information about borrowings [line items] | ||||||
Borrowings, interest rate | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
Borrowings, maturity year | 2023 | 2023 | ||||
Nominal amount | $ | $ 94 | $ 94 | ||||
1.375% Euro notes 2025 [member] | ||||||
Disclosure of detailed information about borrowings [line items] | ||||||
Borrowings, interest rate | 1.375% | 1.375% | 1.375% | 1.375% | 1.375% | 1.375% |
Borrowings, maturity year | 2025 | 2025 | ||||
Nominal amount | € | € 300 | € 300 |
Financial Liabilities - Borro_5
Financial Liabilities - Borrowings - Additional Information (Detail) $ in Millions | Dec. 31, 2019GBP (£) | Dec. 31, 2019USD ($) | Dec. 31, 2018GBP (£) | Dec. 31, 2018USD ($) |
Disclosure of detailed information about borrowings [line items] | ||||
Accrued interest included in non-current borrowings | £ 5,000,000 | £ 6,000,000 | ||
Accrued interest included in current borrowings | 0 | |||
Undrawn borrowing capacity on revolving credit facility | 230,000,000 | |||
Undrawn borrowing capacity [Member] | ||||
Disclosure of detailed information about borrowings [line items] | ||||
Undrawn borrowing capacity on revolving credit facility | £ 700,000,000 | $ 900 | £ 1,400,000,000 | $ 1,750 |
Financial Liabilities - Borro_6
Financial Liabilities - Borrowings - Summary of Maturities of the Group's Non-Current Borrowings (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 1,572 | £ 674 |
Later than one year and not later than two years [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | 251 | 1 |
Between two and five years [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | 609 | 400 |
Later than five years [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 712 | £ 273 |
Financial Liabilities - Borro_7
Financial Liabilities - Borrowings - Summary of Carrying Amounts and Market Value of Borrowings (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about borrowings [line items] | ||
Current borrowings | £ 92 | £ 46 |
Non-current borrowings | 1,572 | 674 |
Finance lease liabilities | 838 | 5 |
Borrowings | 1,664 | 720 |
Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Finance lease liabilities | 838 | 5 |
Borrowings | 1,666 | 709 |
Bank loans and overdrafts [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Current borrowings | 3 | 43 |
Bank loans and overdrafts [member] | Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Current borrowings | 3 | 43 |
1.875% Euro notes 2021 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 170 | £ 233 |
Effective interest rate | 2.04% | 2.04% |
1.875% Euro notes 2021 [member] | Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 170 | £ 233 |
3.75% US dollar notes 2022 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 89 | £ 92 |
Effective interest rate | 3.94% | 3.94% |
3.75% US dollar notes 2022 [member] | Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 90 | £ 91 |
3.25% US dollar notes 2023 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 72 | £ 74 |
Effective interest rate | 3.36% | 3.36% |
3.25% US dollar notes 2023 [member] | Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 72 | £ 71 |
1.375% Euro notes 2025 [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 262 | £ 273 |
Effective interest rate | 1.44% | 1.44% |
1.375% Euro notes 2025 [member] | Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 263 | £ 266 |
Revolving credit facility [Member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 230 | |
Effective interest rate | 1.075% | |
Revolving credit facility [Member] | Market value [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Non-current borrowings | £ 230 |
Financial Liabilities - Borro_8
Financial Liabilities - Borrowings - Summary of Carrying Amounts of Borrowings which Denominated in Currencies (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 1,664 | £ 720 |
US Dollars [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 539 | 188 |
Sterling [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 576 | 23 |
Euro [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | 442 | 506 |
Other currency [member] | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings | £ 107 | £ 3 |
Financial Risk Management - Add
Financial Risk Management - Additional Information (Detail) € in Millions, £ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2019GBP (£) | Dec. 31, 2019EUR (€) | Dec. 31, 2018GBP (£) | Dec. 31, 2019USD ($) | |
Disclosure of net debt [line items] | ||||
Target ratio of net debt to EBITDA | 1.5 | 1.5 | ||
Target ratio of net debt to EBITDA post IFRS 16 | 2.2 | 2.2 | ||
Borrowings | £ 1,664 | £ 720 | ||
Adjusted operating profit | 581 | |||
Adjusted operating profit translated at year end closing rates | 559 | |||
(Increase) decrease in EBITDA translated at year end closing rates | 26 | |||
EBITDA | 804 | |||
EBITDA translated at year end closing rates | 778 | |||
Cash and cash equivalents (excluding overdrafts) | 437 | £ 568 | ||
Undrawn borrowing capacity on revolving credit facility | 230 | |||
(Increase) decrease in adjusted operating profit translated at year end closing rates | 22 | |||
Interest rate swap contract [member] | ||||
Disclosure of net debt [line items] | ||||
Interest rate swaps | 336 | € 395 | ||
Fair value hedges [member] | ||||
Disclosure of net debt [line items] | ||||
Interest rate swaps | £ 336 | € 395 | ||
Investment grade bank counterparties [member] | ||||
Disclosure of net debt [line items] | ||||
Percentage of cash and cash equivalents held with counter parties | 84.00% | 84.00% | ||
AAA money market fund counterparties [member] | ||||
Disclosure of net debt [line items] | ||||
Percentage of cash and cash equivalents held with counter parties | 12.00% | 12.00% | ||
Non-investment grade bank counterparties [member] | ||||
Disclosure of net debt [line items] | ||||
Percentage of cash and cash equivalents held with counter parties | 4.00% | 4.00% | ||
US Dollars [member] | ||||
Disclosure of net debt [line items] | ||||
Percentage of currency exposure to sales | 60.00% | |||
Borrowings | £ 539 | £ 188 | ||
Trade payables | 214 | 178 | ||
Sterling [member] | ||||
Disclosure of net debt [line items] | ||||
Borrowings | 576 | 23 | ||
Trade payables | 57 | 57 | ||
Other currency [member] | ||||
Disclosure of net debt [line items] | ||||
Borrowings | 107 | 3 | ||
Trade payables | 87 | 98 | ||
Due in 2024 [member] | ||||
Disclosure of net debt [line items] | ||||
Undrawn borrowing capacity on revolving credit facility | 900 | $ 1,190 | ||
Fixed interest rate [member] | ||||
Disclosure of net debt [line items] | ||||
Borrowings | 1,641 | 674 | ||
Floating interest rate [member] | ||||
Disclosure of net debt [line items] | ||||
Borrowings | £ 23 | £ 103 |
Financial Risk Management - Sum
Financial Risk Management - Summary of Net Debt Position (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Disclosure of net debt [line items] | |||
Cash and cash equivalents | £ 437 | £ 568 | |
Derivative financial instruments | 15 | 9 | |
Financial liabilities | (2,061) | (1,112) | |
Revolving credit facility | (230) | ||
Investment in finance lease receivable | 196 | ||
Lease liabilities | (838) | £ (881) | (5) |
Net debt | (1,016) | (143) | |
Bank loans and overdrafts [member] | |||
Disclosure of net debt [line items] | |||
Financial liabilities | (3) | (43) | |
Bonds [member] | |||
Disclosure of net debt [line items] | |||
Financial liabilities | £ (593) | £ (672) |
Financial Risk Management - S_2
Financial Risk Management - Summary of Sensitivity of Carrying Value of Financial Instruments to Fluctuations in Interest Rates and Exchange Rates (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of financial instruments carrying value [line items] | ||
Financial assets | £ 1,713 | £ 1,682 |
Cash and cash equivalents | 437 | 568 |
Derivative financial instruments | 15 | 9 |
Financial liabilities | (2,061) | (1,112) |
Other borrowings | (1,071) | (48) |
Other net financial assets | 560 | 620 |
Total financial instruments | (348) | 570 |
Impact of 1% increase in interest rates | 29 | 14 |
Impact of 1% decrease in interest rates | (32) | (14) |
Impact of 10% strengthening in exchange rates | (17) | |
Impact of 10% weakening in exchange rates | 20 | |
Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | 20 | (30) |
Impact of 10% weakening in exchange rates | (21) | 38 |
Investments in unlisted securities [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Financial assets | 122 | 93 |
Investments in unlisted securities [member] | Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | (9) | (7) |
Impact of 10% weakening in exchange rates | 11 | 9 |
Other receivable [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Financial assets | 182 | |
Cash and cash equivalents [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Financial assets | 437 | 568 |
Cash and cash equivalents | 437 | 568 |
Cash and cash equivalents [member] | Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | (32) | (36) |
Impact of 10% weakening in exchange rates | 39 | 45 |
Derivative financial instruments [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Financial assets | 54 | 68 |
Derivative financial instruments | 15 | 9 |
Impact of 1% increase in interest rates | 16 | (3) |
Impact of 1% decrease in interest rates | (18) | 3 |
Derivative financial instruments [member] | Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | 22 | 1 |
Impact of 10% weakening in exchange rates | (23) | (1) |
Bonds [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Financial liabilities | (593) | (672) |
Impact of 1% increase in interest rates | 11 | 17 |
Impact of 1% decrease in interest rates | (12) | (17) |
Bonds [member] | Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | 53 | 61 |
Impact of 10% weakening in exchange rates | (64) | (74) |
Other borrowings [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 1% increase in interest rates | 2 | |
Impact of 1% decrease in interest rates | (2) | |
Other borrowings [member] | Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | 46 | 2 |
Impact of 10% weakening in exchange rates | (56) | (3) |
Other net financial assets [member] | Sterling [member] | ||
Disclosure of financial instruments carrying value [line items] | ||
Impact of 10% strengthening in exchange rates | (43) | (51) |
Impact of 10% weakening in exchange rates | £ 52 | £ 62 |
Financial Risk Management - Sch
Financial Risk Management - Schedule of Contractual Undiscounted Cash Flows Analysed by Maturity and Currency (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Bonds | £ 625 | £ 722 |
Rate derivatives - inflows | (574) | (651) |
Rate derivatives - outflows | 591 | 653 |
FX forwards - inflows | (210) | (286) |
FX forwards - outflows | 209 | 312 |
Total | 641 | 750 |
US Dollars [member] | ||
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Bonds | 177 | 189 |
Rate derivatives - inflows | (41) | (40) |
Rate derivatives - outflows | 242 | 254 |
FX forwards - outflows | 209 | 312 |
Total | 587 | 715 |
Sterling [member] | ||
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Rate derivatives - inflows | (172) | (167) |
Rate derivatives - outflows | 344 | 390 |
FX forwards - inflows | (210) | (286) |
Total | (38) | (63) |
Other currency [member] | ||
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Bonds | 448 | 533 |
Rate derivatives - inflows | (361) | (444) |
Rate derivatives - outflows | 5 | 9 |
Total | 92 | 98 |
In less than one year [member] | ||
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Bonds | 12 | 14 |
Rate derivatives - inflows | (19) | (20) |
Rate derivatives - outflows | 23 | 23 |
FX forwards - inflows | (186) | (251) |
FX forwards - outflows | 186 | 275 |
Total | 16 | 41 |
One to five years [member] | ||
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Bonds | 354 | 431 |
Rate derivatives - inflows | (223) | (288) |
Rate derivatives - outflows | 237 | 289 |
FX forwards - inflows | (24) | (35) |
FX forwards - outflows | 23 | 37 |
Total | 367 | 434 |
Later than five years [member] | ||
Disclosure of undiscounted cash flows financial assets liabilities [line items] | ||
Bonds | 259 | 277 |
Rate derivatives - inflows | (332) | (343) |
Rate derivatives - outflows | 331 | 341 |
Total | £ 258 | £ 275 |
Intangible Assets - Pre-publi_3
Intangible Assets - Pre-publication - Summary of Intangible Assets (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
At beginning of year | £ 817 | |
Transfer from intangible assets | 12 | |
At end of year | 870 | £ 817 |
Cost [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
At beginning of year | 2,096 | 1,854 |
Exchange differences | (66) | 70 |
Additions | 306 | 328 |
Disposals | (82) | (158) |
Transfer from property, plant and equipment | 9 | 2 |
Transfer from intangible assets | (7) | (11) |
At end of year | 2,275 | 2,096 |
Depreciation [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
At beginning of year | (1,279) | (1,113) |
Exchange differences | 53 | (53) |
Charge for the year | (266) | (187) |
Disposals | 82 | 158 |
Transfer from intangible assets | 3 | |
At end of year | £ (1,405) | £ (1,279) |
Intangible Assets - Pre-publi_4
Intangible Assets - Pre-publication - Additional Information (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Intangible assets - pre-publication | £ 870 | £ 817 |
Assets and liabilities classified as held for sale [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Intangible assets - pre-publication | 242 | |
Charge on pre-publication assets held for sale | 10 | 67 |
Additions of pre-publication assets held for sale | 13 | 60 |
More than 12 months past due date [member] | ||
Disclosure of reconciliation of changes in intangible assets and goodwill [line items] | ||
Intangible assets - pre-publication | £ 585 | £ 577 |
Inventories - Summary of Curren
Inventories - Summary of Current Inventories (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Classes of current inventories [abstract] | ||
Raw materials | £ 5 | £ 5 |
Work in progress | 2 | |
Finished goods | 155 | 149 |
Returns asset | 7 | 10 |
Inventories | £ 169 | £ 164 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) - GBP (£) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Classes of current inventories [abstract] | ||
Cost of inventories relating to continuing operations recognised as expense | £ 231,000,000 | £ 375,000,000 |
Inventory provisions charged in income statement | 33,000,000 | 39,000,000 |
Inventories pledged as security | 0 | |
Impairment charges against the inventory returns asset | £ 0 | £ 0 |
Trade and Other Receivables - S
Trade and Other Receivables - Summary of Trade and Other Receivables (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current | ||
Trade receivables | £ 903 | £ 874 |
Royalty advances | 4 | 5 |
Prepayments | 138 | 103 |
Investment in finance lease receivable | 25 | |
Deferred contract costs | 1 | |
Accrued income | 11 | 2 |
Other receivables | 194 | 193 |
Trade and other current receivables | 1,275 | 1,178 |
Non-current | ||
Trade receivables | 15 | 30 |
Royalty advances | 0 | 21 |
Prepayments | 7 | 13 |
Investment in finance lease receivable | 171 | |
Deferred contract costs | 1 | |
Accrued income | 5 | 10 |
Other receivables | 115 | 25 |
Trade and other non current receivables | £ 313 | £ 100 |
Trade and Other Receivables - A
Trade and Other Receivables - Additional Information (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2018GBP (£) | |
Disclosure of other provisions [abstract] | |
Impairment charges on accrued income assets | £ 0 |
Trade and Other Receivables -_2
Trade and Other Receivables - Summary of Movements on Provision for Bad and Doubtful Debts (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of other provisions [abstract] | ||
At beginning of year | £ (96) | £ (116) |
Adjustment on initial application of IFRS 9 | (12) | |
Exchange differences | 3 | 2 |
Income statement movements | (35) | (1) |
Utilised | 36 | 31 |
At end of year | £ (92) | £ (96) |
Trade and Other Receivables -_3
Trade and Other Receivables - Summary of Ageing of Group's Trade Receivables (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Trade and other receivables [line items] | ||
Net trade receivables | £ 918 | £ 904 |
Cost [member] | In less than one year [member] | ||
Trade and other receivables [line items] | ||
Trade receivables | 654 | 606 |
Cost [member] | Up to three months past due date [member] | ||
Trade and other receivables [line items] | ||
Trade receivables | 155 | 172 |
Cost [member] | Three to six months past due date [member] | ||
Trade and other receivables [line items] | ||
Trade receivables | 35 | 72 |
Cost [member] | Six to nine months past due date [member] | ||
Trade and other receivables [line items] | ||
Trade receivables | 9 | 16 |
Cost [member] | Nine to 12 months past due date [member] | ||
Trade and other receivables [line items] | ||
Trade receivables | 14 | 24 |
Cost [member] | More than 12 months past due date [member] | ||
Trade and other receivables [line items] | ||
Trade receivables | £ 51 | £ 14 |
Provisions for Other Liabilit_3
Provisions for Other Liabilities and Charges - Summary of Provisions for Other Liabilities and Charges (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Disclosure of other provisions [line items] | |
Beginning balance | £ 165 |
Adjustment on initial application of IFRS 16 (see note 1b) | (101) |
Exchange differences | (3) |
Charged to income statement | 77 |
Released to income statement | (20) |
Utilised | (23) |
Transfer from trade and other liabilities | 6 |
Transfer to other liabilities | (36) |
Ending balance | 65 |
Deferred consideration [member] | |
Disclosure of other provisions [line items] | |
Beginning balance | 42 |
Exchange differences | (1) |
Utilised | (5) |
Transfer to other liabilities | (36) |
Property [member] | |
Disclosure of other provisions [line items] | |
Beginning balance | 102 |
Adjustment on initial application of IFRS 16 (see note 1b) | (101) |
Charged to income statement | 10 |
Utilised | (1) |
Transfer from trade and other liabilities | 6 |
Ending balance | 16 |
Disposals and closures [member] | |
Disclosure of other provisions [line items] | |
Beginning balance | 5 |
Released to income statement | (5) |
Legal and other [member] | |
Disclosure of other provisions [line items] | |
Beginning balance | 16 |
Exchange differences | (2) |
Charged to income statement | 67 |
Released to income statement | (15) |
Utilised | (17) |
Ending balance | £ 49 |
Provisions for Other Liabilit_4
Provisions for Other Liabilities and Charges - Summary of Analysis of Provisions (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of other provisions [line items] | ||
Current | £ 52 | £ 20 |
Non-current | 13 | 145 |
Total | 65 | 165 |
Deferred consideration [member] | ||
Disclosure of other provisions [line items] | ||
Current | 6 | |
Non-current | 36 | |
Total | 42 | |
Property [member] | ||
Disclosure of other provisions [line items] | ||
Current | 9 | 2 |
Non-current | 7 | 100 |
Total | 16 | 102 |
Disposals and closures [member] | ||
Disclosure of other provisions [line items] | ||
Current | 5 | |
Total | 5 | |
Legal and other [member] | ||
Disclosure of other provisions [line items] | ||
Current | 43 | 7 |
Non-current | 6 | 9 |
Total | £ 49 | £ 16 |
Trade and Other Liabilities - S
Trade and Other Liabilities - Summary of Trade and Other Liabilities (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Trade and other payables [abstract] | ||
Trade payables | £ 358 | £ 311 |
Sales return liability | 122 | 173 |
Social security and other taxes | 13 | 16 |
Accruals | 295 | 397 |
Deferred income | 360 | 387 |
Interest payable | 28 | 46 |
Other liabilities | 188 | 225 |
Trade and other payables | 1,364 | 1,555 |
Less: non-current portion | ||
Accruals | 15 | |
Deferred income | 55 | 66 |
Other liabilities | 31 | 74 |
Non-current payables | 86 | 155 |
Current portion | £ 1,278 | £ 1,400 |
Retirement Benefit and Other _3
Retirement Benefit and Other Post-retirement Obligations - Additional Information (Detail) £ in Millions | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2019GBP (£) | Dec. 31, 2019GBP (£)Member | Dec. 31, 2017GBP (£) | Dec. 31, 2018GBP (£) | Jan. 01, 2018GBP (£) | |
Disclosure of defined benefit plans [line items] | |||||
Liability of reference scheme test | £ 33 | £ 23 | |||
Gross assets of defined contribution section | £ 512 | 453 | |||
Expected rate of increase in salaries | 3.50% | ||||
Percentage of long-term rate improvement on CMI model | 1.50% | ||||
Net pension asset/(liability) | £ 392 | £ 533 | |||
UK [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Weighted average duration of defined benefit obligation | 16 years | ||||
United States [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Weighted average duration of defined benefit obligation | 8 years | ||||
CPI rate [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Inflation rate | 2.00% | ||||
UK Group plan [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Number of members under plan | Member | 26,000 | ||||
Inflation rate | 3.00% | 3.30% | |||
Expected rate of increase in salaries | 3.50% | 3.80% | |||
Net pension asset/(liability) | £ 429 | £ 569 | £ 163 | ||
Allocated percentage of fund to matching assets | 91.50% | ||||
Allocated percentage of fund to return seeking assets | 8.50% | ||||
Expected contributions in 2020 | £ 3 | ||||
UK Group plan [member] | RPI rate [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Inflation rate | 3.00% | ||||
Aviva and legal and general [member] | Buy-in policies [member] | UK Group plan [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Insurance expense | £ 1,200 | ||||
Percentage of pensioner liabilities matched with buy in policies | 95.00% | ||||
Legal & general [member] | Pensioner buy in policy [member] | UK Group plan [member] | |||||
Disclosure of defined benefit plans [line items] | |||||
Insurance expense | £ 500 |
Retirement Benefit and Other _4
Retirement Benefit and Other Post-retirement Obligations - Summary of Defined Plan Analysis (Detail) - UK Group plan [member] | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure of defined benefit plans [line items] | |
Defined benefit | 53.00% |
Defined contribution | 47.00% |
Total | 100.00% |
Active [member] | |
Disclosure of defined benefit plans [line items] | |
Defined contribution | 12.00% |
Total | 12.00% |
Deferred [member] | |
Disclosure of defined benefit plans [line items] | |
Defined benefit | 20.00% |
Defined contribution | 35.00% |
Total | 55.00% |
Pensioners [member] | |
Disclosure of defined benefit plans [line items] | |
Defined benefit | 33.00% |
Total | 33.00% |
Retirement Benefit and Other _5
Retirement Benefit and Other Post-retirement Obligations - Summary of Principal Assumptions Used for UK Group Plan and US PRMB (Detail) | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of defined benefit plans [line items] | ||
Expected rate of increase in salaries | 3.50% | |
UK Group plan [member] | ||
Disclosure of defined benefit plans [line items] | ||
Inflation | 3.00% | 3.30% |
Rate used to discount plan liabilities | 2.00% | 2.80% |
Expected rate of increase in salaries | 3.50% | 3.80% |
Other plans [member] | ||
Disclosure of defined benefit plans [line items] | ||
Inflation | 1.70% | 1.60% |
Rate used to discount plan liabilities | 3.00% | 4.00% |
Expected rate of increase in salaries | 2.90% | 2.90% |
PRMB [member] | ||
Disclosure of defined benefit plans [line items] | ||
Inflation | 1.50% | 1.50% |
Rate used to discount plan liabilities | 3.10% | 4.10% |
Expected rate of increase in salaries | 3.00% | 3.00% |
Bottom of range [member] | UK Group plan [member] | ||
Disclosure of defined benefit plans [line items] | ||
Expected rate of increase for pensions in payment and deferred pensions | 1.85% | 2.10% |
Top of range [member] | UK Group plan [member] | ||
Disclosure of defined benefit plans [line items] | ||
Expected rate of increase for pensions in payment and deferred pensions | 5.05% | 5.10% |
Initial rate of increase in healthcare rate [member] | PRMB [member] | ||
Disclosure of defined benefit plans [line items] | ||
Rate of increase in healthcare rate | 6.80% | 7.00% |
Ultimate rate of increase in healthcare rate [member] | PRMB [member] | ||
Disclosure of defined benefit plans [line items] | ||
Rate of increase in healthcare rate | 5.00% | 5.50% |
Retirement Benefit and Other _6
Retirement Benefit and Other Post-retirement Obligations - Summary of Remaining Average Life Expectancy in Years of Pensioner Retiring at Age 65 (Detail) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
UK [member] | ||
Disclosure of defined benefit plans [line items] | ||
Male | 24 years | 23 years 9 months 18 days |
Female | 24 years 3 months 18 days | 24 years 6 months |
Male | 25 years 6 months | 25 years 4 months 24 days |
Female | 26 years 1 month 6 days | 26 years 3 months 18 days |
United States [member] | ||
Disclosure of defined benefit plans [line items] | ||
Male | 20 years 7 months 6 days | 20 years 8 months 12 days |
Female | 22 years 7 months 6 days | 22 years 8 months 12 days |
Male | 22 years 2 months 12 days | 22 years 3 months 18 days |
Female | 24 years 1 month 6 days | 24 years 2 months 12 days |
Retirement Benefit and Other _7
Retirement Benefit and Other Post-retirement Obligations - Summary of Amounts Recognised in Income Statement (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of defined benefit plans expense recognized in income statement [line items] | |||
Current service cost | £ 66 | £ 64 | £ 65 |
Past service cost | 8 | ||
Curtailments | (3) | (11) | |
Administration expenses | 6 | 6 | 10 |
Total operating expense | 69 | 67 | 75 |
Interest on plan assets | (94) | (87) | (89) |
Interest on plan liabilities | 81 | 76 | 86 |
Net finance (income)/expense | (13) | (11) | (3) |
Net income statement charge | 56 | 56 | 72 |
UK Group plan [member] | |||
Disclosure of defined benefit plans expense recognized in income statement [line items] | |||
Current service cost | 6 | 7 | 8 |
Past service cost | 8 | ||
Curtailments | (2) | ||
Administration expenses | 6 | 6 | 9 |
Total operating expense | 10 | 21 | 17 |
Interest on plan assets | (89) | (82) | (84) |
Interest on plan liabilities | 73 | 68 | 77 |
Net finance (income)/expense | (16) | (14) | (7) |
Net income statement charge | (6) | 7 | 10 |
Defined benefit other [member] | |||
Disclosure of defined benefit plans expense recognized in income statement [line items] | |||
Current service cost | 3 | 2 | 1 |
Administration expenses | 1 | ||
Total operating expense | 3 | 2 | 2 |
Interest on plan assets | (5) | (5) | (5) |
Interest on plan liabilities | 6 | 6 | 7 |
Net finance (income)/expense | 1 | 1 | 2 |
Net income statement charge | 4 | 3 | 4 |
Sub-total [member] | |||
Disclosure of defined benefit plans expense recognized in income statement [line items] | |||
Current service cost | 9 | 9 | 9 |
Past service cost | 8 | ||
Curtailments | (2) | ||
Administration expenses | 6 | 6 | 10 |
Total operating expense | 13 | 23 | 19 |
Interest on plan assets | (94) | (87) | (89) |
Interest on plan liabilities | 79 | 74 | 84 |
Net finance (income)/expense | (15) | (13) | (5) |
Net income statement charge | (2) | 10 | 14 |
Defined contribution [member] | |||
Disclosure of defined benefit plans expense recognized in income statement [line items] | |||
Current service cost | 57 | 56 | 57 |
Total operating expense | 57 | 56 | 57 |
Net income statement charge | 57 | 56 | 57 |
PRMB [member] | |||
Disclosure of defined benefit plans expense recognized in income statement [line items] | |||
Current service cost | (1) | (1) | |
Curtailments | (1) | (11) | |
Total operating expense | (1) | (12) | (1) |
Interest on plan liabilities | 2 | 2 | 2 |
Net finance (income)/expense | 2 | 2 | 2 |
Net income statement charge | £ 1 | £ (10) | £ 1 |
Retirement Benefit and Other _8
Retirement Benefit and Other Post-retirement Obligations - Summary of Amounts Recognised in Balance Sheet (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2018 |
Disclosure of net defined benefit liability (asset) [line items] | |||
Fair value of plan assets | £ 3,461 | £ 3,381 | |
Present value of defined benefit obligation | (3,069) | (2,848) | |
Net pension asset/(liability) | 392 | 533 | |
Other post-retirement medical benefit obligation | (43) | (49) | |
Other pension accruals | (12) | (13) | |
Net retirement benefit asset | 337 | 471 | |
Retirement benefit assets | 429 | 571 | |
Retirement benefit obligations | (92) | (100) | |
UK Group plan [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Fair value of plan assets | 3,341 | 3,240 | |
Present value of defined benefit obligation | (2,912) | (2,671) | |
Net pension asset/(liability) | 429 | 569 | £ 163 |
Other funded plans [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Fair value of plan assets | 120 | 141 | |
Present value of defined benefit obligation | (138) | (158) | |
Net pension asset/(liability) | (18) | (17) | |
Other unfunded plans [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Present value of defined benefit obligation | (19) | (19) | |
Net pension asset/(liability) | £ (19) | £ (19) |
Retirement Benefit and Other _9
Retirement Benefit and Other Post-retirement Obligations - Summary of Gains (Losses) Recognised in Other Comprehensive Income (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of defined benefit plans gain loss recognised [line items] | |||
Gains (losses) recognised for benefit plans | £ (145) | £ 22 | £ 175 |
Defined benefit plan [member] | |||
Disclosure of defined benefit plans gain loss recognised [line items] | |||
Gains (losses) recognised for benefit plans | (148) | 16 | £ 175 |
PRMB [member] | |||
Disclosure of defined benefit plans gain loss recognised [line items] | |||
Gains (losses) recognised for benefit plans | £ 3 | £ 6 |
Retirement Benefit and Other_10
Retirement Benefit and Other Post-retirement Obligations - Summary of Fair Value of Plan Assets (Detail) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Insurance [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 43.00% | 29.00% |
Insurance [member] | UK Group plan [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 43.00% | 28.00% |
Insurance [member] | Other plans [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 0.00% | 1.00% |
Equities [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 2.00% | 2.00% |
Equities [member] | UK Group plan [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 1.00% | 1.00% |
Equities [member] | Other plans [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 1.00% | 1.00% |
Bonds [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 7.00% | 2.00% |
Bonds [member] | UK Group plan [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 5.00% | |
Bonds [member] | Other plans [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 2.00% | 2.00% |
Property [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 5.00% | 7.00% |
Property [member] | UK Group plan [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 5.00% | 7.00% |
Pooled asset investment funds [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 30.00% | 44.00% |
Pooled asset investment funds [member] | UK Group plan [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 30.00% | 44.00% |
Other [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 13.00% | 16.00% |
Other [member] | UK Group plan [member] | ||
Disclosure of fair value of plan assets [line items] | ||
Fair value of plan assets | 13.00% | 16.00% |
Retirement Benefit and Other_11
Retirement Benefit and Other Post-retirement Obligations - Summary of of Quoted and Non Quoted Market Price (Detail) | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of quoted and non quoted plane asset [line items] | ||
Quoted market price | 80.00% | 75.00% |
No quoted market price | 20.00% | 25.00% |
Insurance [member] | ||
Disclosure of quoted and non quoted plane asset [line items] | ||
Quoted market price | 43.00% | 29.00% |
Non-UK equities [member] | ||
Disclosure of quoted and non quoted plane asset [line items] | ||
No quoted market price | 2.00% | 2.00% |
Fixed-interest securities [member] | ||
Disclosure of quoted and non quoted plane asset [line items] | ||
Quoted market price | 7.00% | 2.00% |
Property [member] | ||
Disclosure of quoted and non quoted plane asset [line items] | ||
No quoted market price | 5.00% | 7.00% |
Pooled asset investment funds [member] | ||
Disclosure of quoted and non quoted plane asset [line items] | ||
Quoted market price | 30.00% | 44.00% |
Other [member] | ||
Disclosure of quoted and non quoted plane asset [line items] | ||
No quoted market price | 13.00% | 16.00% |
Retirement Benefit and Other_12
Retirement Benefit and Other Post-retirement Obligations - Summary of Liquidity Profile of UK Group Plan Assets (Detail) - UK Group plan [member] | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Later than 3 months [member] | ||
Disclosure of liquidity profile [line items] | ||
Liquidity percentage of plan asset | 63.00% | 49.00% |
Not later than 1 month [member] | ||
Disclosure of liquidity profile [line items] | ||
Liquidity percentage of plan asset | 37.00% | 51.00% |
Retirement Benefit and Other_13
Retirement Benefit and Other Post-retirement Obligations - Summary of Changes in Values of Plan Assets and Liabilities (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening fair value of plan assets | £ 3,381 | ||
Interest on plan assets | (94) | £ (87) | £ (89) |
Interest on plan liabilities | 81 | 76 | 86 |
Closing fair value of plan assets | 3,461 | 3,381 | |
Fair value of plan assets [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening fair value of plan assets | 3,381 | 3,492 | |
Exchange differences | (5) | 4 | |
Interest on plan assets | 94 | 87 | |
Return on plan assets excluding interest | 146 | (58) | |
Contributions by employer | 5 | 7 | |
Benefits paid | (140) | (151) | |
Other | (20) | ||
Closing fair value of plan assets | 3,461 | 3,381 | 3,492 |
Present value of defined benefit obligation [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening defined benefit obligation | (2,848) | (2,973) | |
Exchange differences | 5 | (3) | |
Current service cost | (9) | (9) | |
Past service cost | (8) | ||
Administration expenses | (6) | (6) | |
Interest on plan liabilities | (79) | (74) | |
Actuarial gains/(losses) - experience | (7) | (51) | |
Actuarial gains/(losses) - demographic | 19 | (12) | |
Actuarial gains/(losses) - financial | (306) | 137 | |
Contributions by employee | 0 | ||
Other | 20 | ||
Benefits paid | 140 | 151 | |
Closing defined benefit obligation | (3,069) | (2,848) | (2,973) |
Curtiailments | 2 | ||
UK Group plan [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening fair value of plan assets | 3,240 | ||
Interest on plan assets | (89) | (82) | (84) |
Interest on plan liabilities | 73 | 68 | 77 |
Closing fair value of plan assets | 3,341 | 3,240 | |
UK Group plan [member] | Fair value of plan assets [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening fair value of plan assets | 3,240 | 3,337 | |
Interest on plan assets | 89 | 82 | |
Return on plan assets excluding interest | 133 | (45) | |
Contributions by employer | 3 | 6 | |
Benefits paid | (124) | (140) | |
Closing fair value of plan assets | 3,341 | 3,240 | 3,337 |
UK Group plan [member] | Present value of defined benefit obligation [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening defined benefit obligation | (2,671) | (2,792) | |
Current service cost | (6) | (7) | |
Past service cost | (8) | ||
Administration expenses | (6) | (6) | |
Interest on plan liabilities | (73) | (68) | |
Actuarial gains/(losses) - experience | (6) | (49) | |
Actuarial gains/(losses) - demographic | 18 | (12) | |
Actuarial gains/(losses) - financial | (294) | 131 | |
Contributions by employee | 0 | ||
Benefits paid | 124 | 140 | |
Closing defined benefit obligation | (2,912) | (2,671) | (2,792) |
Curtiailments | 2 | ||
Other plans [member] | Fair value of plan assets [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening fair value of plan assets | 141 | 155 | |
Exchange differences | (5) | 4 | |
Interest on plan assets | 5 | 5 | |
Return on plan assets excluding interest | 13 | (13) | |
Contributions by employer | 2 | 1 | |
Benefits paid | (16) | (11) | |
Other | (20) | ||
Closing fair value of plan assets | 120 | 141 | 155 |
Other plans [member] | Present value of defined benefit obligation [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Opening defined benefit obligation | (177) | (181) | |
Exchange differences | 5 | (3) | |
Current service cost | (3) | (2) | |
Interest on plan liabilities | (6) | (6) | |
Actuarial gains/(losses) - experience | (1) | (2) | |
Actuarial gains/(losses) - demographic | 1 | ||
Actuarial gains/(losses) - financial | (12) | 6 | |
Contributions by employee | 0 | ||
Other | 20 | ||
Benefits paid | 16 | 11 | |
Closing defined benefit obligation | £ (157) | £ (177) | £ (181) |
Retirement Benefit and Other_14
Retirement Benefit and Other Post-retirement Obligations - Summary of Changes in Value of US PRMB (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of defined benefit plans [line items] | |||
Opening defined benefit obligation | £ (49) | ||
Interest on plan liabilities | 81 | £ 76 | £ 86 |
Closing defined benefit obligation | (43) | (49) | |
PRMB [member] | |||
Disclosure of defined benefit plans [line items] | |||
Interest on plan liabilities | 2 | 2 | 2 |
Present value of defined benefit obligation [member] | |||
Disclosure of defined benefit plans [line items] | |||
Exchange differences | 5 | (3) | |
Current service cost | 9 | 9 | |
Curtailments | (8) | ||
Interest on plan liabilities | (79) | (74) | |
Actuarial gains/(losses) - experience | (7) | (51) | |
Actuarial gains/(losses) - demographic | 19 | (12) | |
Actuarial gains/(losses) - financial | (306) | 137 | |
Benefits paid | 140 | 151 | |
Present value of defined benefit obligation [member] | PRMB [member] | |||
Disclosure of defined benefit plans [line items] | |||
Opening defined benefit obligation | (49) | (67) | |
Exchange differences | 1 | (2) | |
Current service cost | 1 | ||
Curtailments | 1 | 11 | |
Interest on plan liabilities | (2) | (2) | |
Actuarial gains/(losses) - experience | 4 | 4 | |
Actuarial gains/(losses) - demographic | 1 | ||
Actuarial gains/(losses) - financial | (2) | 2 | |
Benefits paid | 3 | 4 | |
Closing defined benefit obligation | £ (43) | £ (49) | £ (67) |
Retirement Benefit and Other_15
Retirement Benefit and Other Post-retirement Obligations - Summary of Effect Percentage of Discount Rate Increase (Decrease) on Defined Benefit Obligation and Total Pension Expense (Detail) - Rate used to discount plan liabilities [member] £ in Millions | Dec. 31, 2019GBP (£) |
UK Group plan [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
(Decrease) /increase in defined benefit obligation, 1% increase in discount rate | £ (434) |
(Decrease) /increase in defined benefit obligation, 1% decrease in discount rate | 591 |
US defined benefit pension plans [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
(Decrease) /increase in defined benefit obligation, 1% increase in discount rate | (11) |
US defined benefit pension plans [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
(Decrease) /increase in defined benefit obligation, 1% decrease in discount rate | £ 13 |
Retirement Benefit and Other_16
Retirement Benefit and Other Post-retirement Obligations - Summary of Effect Percentage of Discount Rate Increase (Decrease) on Defined Benefit Obligation and Total Pension Expense (Parenthetical) (Detail) - Rate used to discount plan liabilities [member] | Dec. 31, 2019 |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Percentage movement in discount rate sensitivity analysis | 1.00% |
Percentage movement in discount rate sensitivity analysis | 1.00% |
Retirement Benefit and Other_17
Retirement Benefit and Other Post-retirement Obligations - Summary of Effect of Members Living One Year More or One Year Less on the Defined Benefit Obligation (Detail) - Actuarial Assumption of Longevity [member] £ in Millions | Dec. 31, 2019GBP (£) |
UK Group plan [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Increase/(decrease) in defined benefit obligation, 1 year increase | £ 132 |
Increase/(decrease) in defined benefit obligation, 1 year decrease | (126) |
US defined benefit pension plans [member] | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Increase/(decrease) in defined benefit obligation, 1 year increase | 8 |
Increase/(decrease) in defined benefit obligation, 1 year decrease | £ (8) |
Retirement Benefit and Other_18
Retirement Benefit and Other Post-retirement Obligations - Summary of Effect of Members Living One Year More or One Year Less on the Defined Benefit Obligation (Parenthetical) (Detail) - Actuarial Assumption of Longevity [member] | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Movement in mortality sensitivity analysis | 1 year |
Movement in mortality sensitivity analysis | 1 year |
Retirement Benefit and Other_19
Retirement Benefit and Other Post-retirement Obligations - Summary of Effect of a Half Percentage Point Increase and Decrease in the Inflation Rate (Detail) - UK Group plan [member] - Inflation [member] £ in Millions | Dec. 31, 2019GBP (£) |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
(Decrease) /increase in defined benefit obligation, 0.5% increase | £ 153 |
(Decrease) /increase in defined benefit obligation, 0.5% decrease | £ (136) |
Retirement Benefit and Other_20
Retirement Benefit and Other Post-retirement Obligations - Summary of Effect of a Half Percentage Point Increase and Decrease in the Inflation Rate (Parenthetical) (Detail) - Inflation [member] | Dec. 31, 2019 |
Disclosure of sensitivity analysis for actuarial assumptions [line items] | |
Movement in inflation sensitivity analysis | 0.50% |
Movement in inflation sensitivity analysis | 0.50% |
Share-Based Payments - Summary
Share-Based Payments - Summary of Charges in Income Statement in Respect of Equity-Settled Share-Based Payment Plans (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of terms and conditions of share-based payment arrangement [abstract] | |||
Share-based payment charges | £ 25 | £ 37 | £ 33 |
Share-based payments - Addition
Share-based payments - Additional Information (Detail) - £ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Weighted average share price during the year | £ 8.07 | £ 8.45 |
Information about how expected volatility was determined, share options granted | The expected volatility is based on the historical volatility of the company’s share price over the previous three to seven years depending on the vesting term of the options. | |
Worldwide Save for Shares Plan [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Stock option percentage of market price | 80.00% | |
Option expiration period | 6 months | |
Worldwide Save for Shares Plan [member] | Bottom of range [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
length of share-based plans | 3 years | |
Worldwide Save for Shares Plan [member] | Top of range [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
length of share-based plans | 5 years | |
Employee Stock Purchase Plan [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
length of share-based plans | 6 months | |
Percentage of market price considering in share-based plans | 85.00% | |
Long-term incentive plan [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Description of vesting requirements for share-based payment arrangement | The vesting of restricted shares is normally dependent on continuing service over a three to five-year period, and in the case of executive directors and senior management upon the satisfaction of corporate performance targets over a three-year period. These targets may be based on market and/or non-market performance criteria. Restricted shares awarded to executive directors in May 2019 and May 2018 vest dependent on relative total shareholder return, return on invested capital and adjusted earnings per share growth. Other restricted shares awarded in 2019 and 2018 vest depending on continuing service over periods of up to three years. | |
Long-term incentive plan [member] | Restricted shares [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Vesting period | 3 years | |
Long-term incentive plan [member] | Bottom of range [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Vesting period | 3 years | |
Long-term incentive plan [member] | Top of range [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Vesting period | 5 years | |
Management incentive plan [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Vesting period | 3 years | |
Description of vesting requirements for share-based payment arrangement | Subsequently, the shares vest dependent on continuing service over a three-year period, and additionally in the case of Pearson Executive management, upon satisfaction of non-market based performance criteria as determined by the Remuneration Committee. Restricted shares awarded as part of the 2018 Management Incentive Plan were granted in April 2019. Restricted shares awarded as part of the 2019 Management Incentive Plan will be granted in April 2020. |
Share-Based Payments - Summar_2
Share-Based Payments - Summary of Number and Weighted Average Exercise Prices of Share Options Granted under Group's Plans (Detail) Unit_pure in Thousands | 12 Months Ended | |
Dec. 31, 2019£ / shares | Dec. 31, 2018£ / shares | |
Disclosure of terms and conditions of share-based payment arrangement [abstract] | ||
Number of share options, Outstanding at beginning of year | 2,728 | 2,981 |
Number of share options, Granted during the year | 660 | 729 |
Number of share options, Exercised during the year | (419) | (70) |
Number of share options, Forfeited during the year | (492) | (668) |
Number of share options, Expired during the year | (83) | (244) |
Number of share options, Outstanding at end of year | 2,394 | 2,728 |
Number of share options, Options exercisable at end of year | 161 | 169 |
Weighted average exercise price, Outstanding at beginning of year | £ 5.76 | £ 6.84 |
Weighted average exercise price, Granted during the year | 6.77 | 5.80 |
Weighted average exercise price, Exercised during the year | 6.74 | 6.57 |
Weighted average exercise price, Forfeited during the year | 6.21 | 7.58 |
Weighted average exercise price, Expired during the year | 11.15 | 8.19 |
Weighted average exercise price, Outstanding at end of year | 6.06 | 5.76 |
Weighted average exercise price, Options exercisable at end of year | £ 7.14 | £ 11.31 |
Share-Based Payments - Summar_3
Share-Based Payments - Summary of Weighted Average Remaining Contractual Lives and Exercise Prices of Options Outstanding (Detail) Unit_pure in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items] | |||
Weighted average contractual life Years | 1 year 11 months 4 days | 2 years 1 month 27 days | |
Number of share options | 2,394 | 2,728 | 2,981 |
5-10 [member] | |||
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items] | |||
Weighted average contractual life Years | 1 year 11 months 8 days | 2 years 3 months 14 days | |
Number of share options | 2,376 | 2,553 | |
>10 [member] | |||
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items] | |||
Weighted average contractual life Years | 1 year 14 days | 3 months 14 days | |
Number of share options | 18 | 175 |
Share-Based Payments - Summar_4
Share-Based Payments - Summary of Weighted Average Estimated Fair Values and Inputs into Black-Scholes Model (Detail) - GBP (£) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of terms and conditions of share-based payment arrangement [abstract] | ||
Fair value | £ 2.31 | £ 1.88 |
Weighted average share price | £ 8.30 | £ 7.49 |
Weighted average exercise price | £ 6.77 | £ 5.80 |
Expected volatility | 32.07% | 35.78% |
Expected life | 3 years 8 months 12 days | 3 years 8 months 12 days |
Risk-free rate | 0.66% | 0.87% |
Expected dividend yield | 2.11% | 5.21% |
Forfeiture rate | 3.20% | 3.20% |
Share-Based Payments - Summar_5
Share-Based Payments - Summary of Shares Granted under Restricted Share Arrangements (Detail) - Restricted shares [member] Unit_pure in Thousands | 12 Months Ended | |
Dec. 31, 2019GBP (£) | Dec. 31, 2018GBP (£) | |
Long-term incentive plan [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Number of shares | 2,785 | 2,907 |
Weighted average fair value | £ 8.09 | £ 7.55 |
Management incentive plan [member] | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Number of shares | 1,435 | 2,035 |
Weighted average fair value | £ 8.49 | £ 7.45 |
Share Capital and Share Premi_3
Share Capital and Share Premium - Summary of Share Capital and Share Premium (Detail) - GBP (£) shares in Thousands, £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of classes of share capital [line items] | |||
Beginning Balance | £ 4,525 | £ 4,021 | £ 4,348 |
Issue of ordinary shares - share option schemes | 7 | 6 | 5 |
Ending balance | £ 4,323 | £ 4,525 | £ 4,021 |
Beginning Balance | 781,078 | 802,054 | |
Issue of ordinary shares - share option schemes | 1,021 | 864 | |
Purchase of own shares | (21,840) | ||
Ending Balance | 782,099 | 781,078 | 802,054 |
Share premium [member] | |||
Disclosure of classes of share capital [line items] | |||
Beginning Balance | £ 2,607 | £ 2,602 | £ 2,597 |
Issue of ordinary shares - share option schemes | 7 | 5 | 5 |
Ending balance | 2,614 | 2,607 | 2,602 |
Share capital [member] | |||
Disclosure of classes of share capital [line items] | |||
Beginning Balance | 195 | 200 | |
Issue of ordinary shares - share option schemes | 1 | ||
Purchase of own shares | (6) | ||
Ending balance | £ 195 | £ 195 | £ 200 |
Share Capital and Share Premi_4
Share Capital and Share Premium - Additional Information (Detail) - GBP (£) £ / shares in Units, £ in Millions, shares in Millions | Jan. 18, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2017 |
Disclosure of classes of share capital [abstract] | ||||
Par value per share | £ 25 | £ 25 | ||
Amount of shares authorized for repurchase | £ 300 | |||
Number of shares repurchased | 22 | |||
Nominal value of canceled shares | £ 11 | £ 11 |
Treasury shares - Schedule of T
Treasury shares - Schedule of Treasury Shares (Detail) - GBP (£) shares in Thousands, £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [abstract] | ||
Beginning Balance | 3,225 | 5,994 |
Purchase of treasury shares | 6,100 | |
Release of treasury shares | (6,067) | (2,769) |
Ending Balance | 3,258 | 3,225 |
Beginning Balance | £ 33 | £ 61 |
Purchase of treasury shares | 52 | |
Release of treasury shares | (61) | (28) |
Ending Balance | £ 24 | £ 33 |
Treasury shares - Additional In
Treasury shares - Additional Information (Detail) - GBP (£) £ / shares in Units, £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Treasury shares transaction [line items] | ||
Percentage of called up share capital | 0.40% | 0.40% |
Treasury shares held, par value | £ 25 | £ 25 |
Treasury shares, nominal value | £ 0.8 | £ 0.8 |
Treasury shares, market value | £ 21 | £ 30 |
Treasury shares [member] | ||
Treasury shares transaction [line items] | ||
Treasury shares held, par value | £ 0.25 |
Other Comprehensive Income - Sc
Other Comprehensive Income - Schedule of Other Comprehensive Income (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Items that may be reclassified to the income statement | |||
Currency translation adjustment disposed | £ 4 | £ (4) | £ (51) |
Attributable tax | 5 | (4) | 9 |
Items that are not reclassified to the income statement | |||
Fair value gain on other financial assets | 20 | 8 | 13 |
Attributable tax | (4) | (4) | |
Attributable tax | 22 | 9 | (42) |
Other comprehensive income/(expense) for the year | (217) | 124 | (155) |
Group [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (113) | 91 | (158) |
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | (145) | 22 | 175 |
Associates [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (2) | (1) | (104) |
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | (4) | 3 | 7 |
Fair value reserve [member] | |||
Items that are not reclassified to the income statement | |||
Fair value gain on other financial assets | 20 | 8 | 13 |
Other comprehensive income/(expense) for the year | 20 | 8 | 13 |
Translation reserve [member] | |||
Items that may be reclassified to the income statement | |||
Currency translation adjustment disposed | 4 | (4) | (51) |
Items that are not reclassified to the income statement | |||
Other comprehensive income/(expense) for the year | (111) | 86 | (313) |
Translation reserve [member] | Group [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (113) | 91 | (158) |
Translation reserve [member] | Associates [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (2) | (1) | (104) |
Retained earnings [member] | |||
Items that may be reclassified to the income statement | |||
Attributable tax | 5 | (4) | 9 |
Items that are not reclassified to the income statement | |||
Attributable tax | (4) | (4) | |
Attributable tax | 22 | 9 | (42) |
Other comprehensive income/(expense) for the year | (126) | 30 | 145 |
Retained earnings [member] | Group [member] | |||
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | (145) | 22 | 175 |
Retained earnings [member] | Associates [member] | |||
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | (4) | 3 | 7 |
Equity attributable to equity holders of the company [member] | |||
Items that may be reclassified to the income statement | |||
Currency translation adjustment disposed | 4 | (4) | (51) |
Attributable tax | 5 | (4) | 9 |
Items that are not reclassified to the income statement | |||
Fair value gain on other financial assets | 20 | 8 | 13 |
Attributable tax | (4) | (4) | |
Attributable tax | 22 | 9 | (42) |
Other comprehensive income/(expense) for the year | (217) | 124 | (155) |
Equity attributable to equity holders of the company [member] | Group [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (113) | 91 | (158) |
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | (145) | 22 | 175 |
Equity attributable to equity holders of the company [member] | Associates [member] | |||
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (2) | (1) | (104) |
Items that are not reclassified to the income statement | |||
Remeasurement of retirement benefit obligations | £ (4) | £ 3 | £ 7 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) £ in Millions | 12 Months Ended | |
Dec. 31, 2019GBP (£)Acquisitions | Dec. 31, 2018GBP (£)Acquisitions | |
Disclosure of detailed information about business combination [line items] | ||
Number of significant acquisitions during period | Acquisitions | 0 | 0 |
Investment made in group associates | £ 404 | £ 392 |
Lumerit Education and Smart Sparrow [member] | ||
Disclosure of detailed information about business combination [line items] | ||
Total consideration transferred | 40 | |
Penguin Random House [member] | ||
Disclosure of detailed information about business combination [line items] | ||
Investment made in group associates | £ 40 |
Business Combinations - Schedul
Business Combinations - Schedule of Cash Flow on Acquisitions (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about business combination [line items] | |||
Net cash outflow | £ (45) | £ (5) | £ (11) |
Goodwill | 2,139 | 2,111 | |
Business combinations [member] | |||
Disclosure of detailed information about business combination [line items] | |||
Cash - current year acquisitions | (40) | ||
Deferred payments for prior year acquisitions and other items | (5) | (5) | (11) |
Net cash outflow | (45) | £ (5) | £ (11) |
Intangible assets | 23 | ||
Net assets acquired at fair value | 22 | ||
Goodwill | 18 | ||
Trade And Other Receivables | 1 | ||
Trade And Other Liabilities | (2) | ||
Total | 40 | ||
Cash transferred | 40 | ||
Total consideration | £ 40 |
Disposals - Additional Informat
Disposals - Additional Information (Detail) £ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2019GBP (£) | Dec. 31, 2019GBP (£) | Dec. 31, 2019USD ($) | Dec. 31, 2018GBP (£) | |
Disclosure of disposal of subsidiaries [line items] | ||||
Pre-tax gain on sale of subsidiaries and associates | £ 13 | |||
Tax on disposal of subsidiaries and associates | £ 51 | |||
Deferred income from vendor notes | 360 | £ 387 | ||
Disposal of major subsidiary [member] | ||||
Disclosure of disposal of subsidiaries [line items] | ||||
Cash payment received from disposal of business | 200 | |||
Deferred income from vendor notes | £ 180 | |||
Fair value of unconditional sale of assets | $ | $ 225 | |||
Repayment percentage entitled for equity holders in future cash flow | 20.00% | |||
Repayment percentage accounted as net proceeds in future cash flow | 20.00% |
Disposals - Schedule of Disposa
Disposals - Schedule of Disposals Including Business Closures (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of disposal of subsidiaries [line items] | |||
Property, plant and equipment | £ (618) | £ (237) | £ (281) |
Investments in joint ventures and associates | (7) | (392) | |
Intangible assets - pre-publication | (870) | (817) | |
Inventories | (169) | (164) | |
Trade and other receivables | (1,275) | (1,178) | |
Cash and cash equivalents (excluding overdrafts) | (437) | (568) | |
Trade and other liabilities | 1,278 | 1,400 | |
Provisions for other liabilities and charges | 13 | 145 | |
Net (assets)/liabilities disposed | 4,323 | 4,525 | |
Disposal of subsidiaries and associates [member] | |||
Disclosure of disposal of subsidiaries [line items] | |||
Property, plant and equipment | (17) | (7) | |
Intangible assets | (17) | (9) | |
Investments in joint ventures and associates | (3) | (352) | |
Net deferred income tax assets | (3) | ||
Intangible assets - pre-publication | (8) | (1) | |
Inventories | (1) | (2) | |
Trade and other receivables | (30) | (16) | |
Cash and cash equivalents (excluding overdrafts) | (119) | (13) | |
Net deferred income tax liabilities | 16 | ||
Trade and other liabilities | 172 | 34 | |
Provisions for other liabilities and charges | 1 | ||
Cumulative currency translation adjustment | 4 | 51 | |
Net (assets)/liabilities disposed | (2) | (323) | |
Cash - current year disposals | 20 | 243 | 468 |
Deferred proceeds | 2 | ||
Cash and cash equivalents disposed | (104) | (119) | (13) |
Fair value of financial asset acquired | 3 | ||
Costs and other disposal liabilities paid | (17) | (23) | (25) |
Costs | (16) | (17) | |
Net cash inflow | (101) | 101 | 430 |
Gain on disposal | 230 | 128 | |
Cash inflow/ from sale of subsidiaries | (101) | 83 | 19 |
Cash inflow from sale of joint ventures and associates | £ 18 | £ 411 | |
Disposal of subsidiaries and associates [member] | WSE [member] | |||
Disclosure of disposal of subsidiaries [line items] | |||
Intangible assets | (101) | ||
Net deferred income tax assets | (100) | ||
Intangible assets - pre-publication | (238) | ||
Inventories | (64) | ||
Trade and other receivables | (70) | ||
Cash and cash equivalents (excluding overdrafts) | (104) | ||
Trade and other liabilities | 520 | ||
Cumulative currency translation adjustment | (4) | ||
Net (assets)/liabilities disposed | (161) | ||
Cash - current year disposals | 20 | ||
Deferred proceeds | 180 | ||
Costs | (26) | ||
Gain on disposal | 13 | ||
Disposal of subsidiaries and associates [member] | UTEL [member] | |||
Disclosure of disposal of subsidiaries [line items] | |||
Costs | 3 | ||
Gain on disposal | 3 | ||
Disposal of subsidiaries and associates [member] | Business closures other [member] | |||
Disclosure of disposal of subsidiaries [line items] | |||
Intangible assets | (101) | ||
Net deferred income tax assets | (100) | ||
Intangible assets - pre-publication | (238) | ||
Inventories | (64) | ||
Trade and other receivables | (70) | ||
Cash and cash equivalents (excluding overdrafts) | (104) | ||
Trade and other liabilities | 520 | ||
Cumulative currency translation adjustment | (4) | ||
Net (assets)/liabilities disposed | (161) | ||
Cash - current year disposals | 20 | ||
Deferred proceeds | 180 | ||
Costs | (23) | ||
Gain on disposal | £ 16 |
Held for sale - Additional info
Held for sale - Additional information (Detail) - Penguin Random House [member] | 12 Months Ended |
Dec. 31, 2019 | |
Assets and Liabilities Held for Sale [line items] | |
Proportion of ownership interest in associate | 25.00% |
Proportion of ownership interest in subsidiary | 22.00% |
Held for sale - Summary of Asse
Held for sale - Summary of Assets and Liabilities (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Non-current assets | |||
Intangible assets | £ 2,900 | £ 3,009 | £ 2,964 |
Investments in joint ventures and associates | 7 | 392 | |
Deferred income tax assets | 59 | 60 | |
Trade and other receivables | 313 | 100 | |
Total non-current assets | 4,477 | 4,529 | |
Current assets | |||
Intangible assets - pre-publication | 870 | 817 | |
Inventories | 169 | 164 | |
Trade and other receivables | 1,275 | 1,178 | |
Non-current liabilities | |||
Non-current liabilities | (1,835) | (1,246) | |
Current liabilities | |||
Trade and other liabilities | (1,278) | (1,400) | |
Total liabilities | (3,327) | (3,380) | |
Net assets | 4,323 | 4,525 | |
Disposal groups classified as held for sale [member] | |||
Non-current assets | |||
Intangible assets | 168 | ||
Investments in joint ventures and associates | 397 | ||
Deferred income tax assets | 98 | ||
Trade and other receivables | 25 | ||
Total non-current assets | 397 | 291 | |
Current assets | |||
Intangible assets - pre-publication | 242 | ||
Inventories | 55 | ||
Trade and other receivables | 60 | ||
Total current assets | 357 | ||
Assets classified as held for sale | 397 | 648 | |
Non-current liabilities | |||
Other liabilities | (371) | ||
Non-current liabilities | (371) | ||
Current liabilities | |||
Trade and other liabilities | (202) | ||
Current liabilities | (202) | ||
Total liabilities | (573) | ||
Net assets | £ 397 | £ 75 |
Cash Generated from Operation_2
Cash Generated from Operations - Summary of Cash Generated from Operations (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from (used in) operating activities [abstract] | |||
Profit for the year | £ 266 | £ 590 | £ 408 |
Adjustments for: | |||
Income tax | (34) | (92) | 13 |
Depreciation | 123 | 66 | 90 |
Amortisation and impairment of acquired intangibles and goodwill | 151 | 99 | 138 |
Amortisation of software | 115 | 88 | 85 |
Net finance costs | 43 | 55 | 30 |
Charges relating to GMP equalisation | 8 | ||
Share of results of joint ventures and associates | (54) | (44) | (78) |
Profit on disposal of subsidiaries, associates, investments and fixed assets | (9) | (315) | (116) |
Net profit on disposal of right-of-use assets held under leases | (4) | ||
Net foreign exchange adjustment from transactions | (21) | 28 | (26) |
Investment income | (2) | ||
Share-based payment costs | 25 | 37 | 33 |
Pre-publication | (55) | (37) | (35) |
Inventories | (20) | (10) | 24 |
Trade and other receivables | 59 | (15) | 133 |
Trade and other liabilities | (157) | 35 | 6 |
Retirement benefit obligations | 5 | (9) | (232) |
Provisions for other liabilities and charges | 49 | 63 | (11) |
Net cash generated from operations | £ 480 | £ 547 | £ 462 |
Cash Generated from Operation_3
Cash Generated from Operations - Summary of Proceeds from Sale of Property, Plant and Equipment (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, plant and equipment [abstract] | |||
Net book value of property plant and equipment disposed | £ 3 | £ 41 | £ 12 |
Profit/(loss) on sale of property, plant and equipment | (2) | 87 | £ (12) |
Proceeds from sale of property, plant and equipment | £ 1 | £ 128 |
Cash generated from operation_4
Cash generated from operations - Summary of Current and Non-current Borrowings (Detail) - GBP (£) £ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||
Beginning balance | £ 668 | £ 1,070 | £ 2,526 |
IFRS 16 Transition | 881 | ||
New leases/ disposal of leases | 61 | ||
Financing cash flows | 91 | (442) | (1,299) |
Foreign exchange movements | (64) | 32 | (150) |
Fair value and other movements | 9 | 8 | (7) |
Ending balance | 1,646 | 668 | 1,070 |
Long-term borrowings [member] | |||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||
Beginning balance | 643 | 1,066 | 2,517 |
IFRS 16 Transition | 792 | ||
New leases/ disposal of leases | 61 | ||
Transfer from non-current to current | (88) | ||
Financing cash flows | 230 | (441) | (1,292) |
Foreign exchange movements | (80) | 10 | (149) |
Fair value and other movements | 9 | 8 | (10) |
Ending balance | 1,567 | 643 | 1,066 |
Short-term borrowings [member] | |||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||
Beginning balance | 25 | 4 | 9 |
IFRS 16 Transition | 89 | ||
Transfer from non-current to current | 88 | ||
Financing cash flows | (139) | (1) | (7) |
Foreign exchange movements | 16 | 22 | (1) |
Fair value and other movements | 3 | ||
Ending balance | £ 79 | £ 25 | £ 4 |
Contingencies and commitme
Contingencies and commitments - Additional Information (Detail) £ in Millions, R$ in Millions | Dec. 31, 2019GBP (£) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018GBP (£) |
Disclosure of commitments and contingent liabilities [line items] | |||
Benefit from FCPE | £ 116 | ||
Current Brazil [Member] | |||
Disclosure of commitments and contingent liabilities [line items] | |||
Total Potential exposure | £ 124 | R$ 656 | |
Additional potential exposure | £ 45 | R$ 239 |
Leases - Summary of information
Leases - Summary of information about leases in income statement (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Disclosure of quantitative information about leases for lessee [abstract] | |
Interest on lease liabilities | £ (45) |
Expenses relating to short-term leases | (2) |
Depreciation of right-of-use assets | £ (64) |
Leases - Summary of informati_2
Leases - Summary of information about right to use asset as follows (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Disclosure of quantitative information about right-of-use assets [line items] | |
Adjustment on initial application of IFRS 16 (see note 1b) | £ 424 |
Balance at 31 December 2019 | 409 |
Land and buildings [member] | |
Disclosure of quantitative information about right-of-use assets [line items] | |
Adjustment on initial application of IFRS 16 (see note 1b) | 418 |
Balance at 31 December 2019 | 402 |
Plant and equipment [member] | |
Disclosure of quantitative information about right-of-use assets [line items] | |
Adjustment on initial application of IFRS 16 (see note 1b) | 6 |
Balance at 31 December 2019 | £ 7 |
Leases - Summary of maturities
Leases - Summary of maturities of operating lease payments (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Disclosure of maturity analysis of operating lease payments [line items] | |||
Undiscounted lease liabilities | £ 1,165 | ||
Lease liabilities included in the balance sheet | 838 | £ 881 | £ 5 |
Current | 89 | 89 | |
Non-current | 749 | £ 792 | |
Less than one year [member] | |||
Disclosure of maturity analysis of operating lease payments [line items] | |||
Undiscounted lease liabilities | 123 | ||
One to five years [member] | |||
Disclosure of maturity analysis of operating lease payments [line items] | |||
Undiscounted lease liabilities | 420 | ||
More than five years [member] | |||
Disclosure of maturity analysis of operating lease payments [line items] | |||
Undiscounted lease liabilities | £ 622 |
Leases - Additional information
Leases - Additional information (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Presentation of leases for lessee [abstract] | ||
Lease expenditure | £ 128 | |
Contractual capital commitments | £ 25 | |
Finance lease receivable decreased | £ 19 |
Leases - Summary of informati_3
Leases - Summary of information about leases in cash flow statement (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Disclosure of quantitative information about leases for lessee [abstract] | |
Cash outflow for leases as a lessee | £ 136 |
Leases - Summary of informati_4
Leases - Summary of information about leases of lessor in income statement (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Disclosure of quantitative information about leases for lessor [abstract] | |
Interest on finance lease receivable | £ 11 |
Income from sub-leasing right-of-use assets (within other income) | £ 17 |
Leases - Summary of informati_5
Leases - Summary of information about leases of lessor in cash flow statement (Detail) £ in Millions | 12 Months Ended |
Dec. 31, 2019GBP (£) | |
Disclosure of quantitative information about leases for lessor [abstract] | |
Cash inflow for leases as a lessor | £ 37 |
Leases - Summary of detailed in
Leases - Summary of detailed information about undiscounted lease payments to be received after the reporting date (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | £ 46 | |
Finance leases | 235 | £ 5 |
Undiscounted lease payments receivable | 281 | |
Unearned finance income | (39) | |
Net investment in finance lease receivable | 196 | 5 |
Less than one year [member] | ||
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | 12 | |
Finance leases | 34 | 3 |
Undiscounted lease payments receivable | 46 | |
Net investment in finance lease receivable | 3 | |
One to two years [member] | ||
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | 4 | |
Finance leases | 40 | 1 |
Undiscounted lease payments receivable | 44 | |
Two to three years [member] | ||
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | 4 | |
Finance leases | 33 | £ 1 |
Undiscounted lease payments receivable | 37 | |
Three to four years [member] | ||
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | 3 | |
Finance leases | 30 | |
Undiscounted lease payments receivable | 33 | |
Four to five years [member] | ||
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | 3 | |
Finance leases | 31 | |
Undiscounted lease payments receivable | 34 | |
More than five years [member] | ||
Disclosure of undiscounted lease payments to net investment in finance lease [line items] | ||
Operating leases | 20 | |
Finance leases | 67 | |
Undiscounted lease payments receivable | £ 87 |
Leases - Summmary of maturity o
Leases - Summmary of maturity of the group's finance lease obligations is as follows (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of maturity analysis of finance lease payments receivable [line items] | ||
Present value of finance lease liabilities | £ 235 | £ 5 |
Not later than one year [member] | ||
Disclosure of maturity analysis of finance lease payments receivable [line items] | ||
Present value of finance lease liabilities | 34 | 3 |
Later than one year and not later than two years [member] | ||
Disclosure of maturity analysis of finance lease payments receivable [line items] | ||
Present value of finance lease liabilities | 40 | 1 |
Later than two years and not later than three years [member] | ||
Disclosure of maturity analysis of finance lease payments receivable [line items] | ||
Present value of finance lease liabilities | £ 33 | £ 1 |
Leases - Summary of the present
Leases - Summary of the present value of the group's finance lease obligations is as follows (Detail) - GBP (£) £ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of present value of finance lease obligations [line items] | ||
Net investment in finance lease receivable | £ 196 | £ 5 |
Not later than one year [member] | ||
Disclosure of present value of finance lease obligations [line items] | ||
Net investment in finance lease receivable | 3 | |
Later than one year and not later than five years | ||
Disclosure of present value of finance lease obligations [line items] | ||
Net investment in finance lease receivable | £ 2 |
Leases - Summary of Future Aggr
Leases - Summary of Future Aggregate Minimum Lease Payments in Respect of Operating Leases (Detail) £ in Millions | Dec. 31, 2018GBP (£) |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | £ 1,175 |
In less than one year [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | 143 |
Later than one year and not later than two years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | 130 |
Later than two years and not later than three years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | 115 |
Later than three years and not later than four years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | 101 |
Later than four years and not later than five years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | 91 |
Later than five years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum lease payments in respect of operating leases | £ 595 |
Leases - Summary of Future Ag_2
Leases - Summary of Future Aggregate Minimum Sub-lease Payments Expected to Received under Non-cancellable Sub-leases (Detail) £ in Millions | Dec. 31, 2018GBP (£) |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | £ 334 |
In less than one year [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | 51 |
Later than one year and not later than two years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | 44 |
Later than two years and not later than three years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | 41 |
Later than three years and not later than four years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | 39 |
Later than four years and not later than five years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | 35 |
Later than five years [member] | |
Disclosure of finance lease and operating lease by lessee [line items] | |
Future aggregate minimum sub-lease payments expected to be received under non-cancellable sub-leases | £ 124 |
Related Party Transactions - Su
Related Party Transactions - Summary of Key Management Personnel Compensation (Detail) - GBP (£) £ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of transactions between related parties [abstract] | ||
Short-term employee benefits | £ 5 | £ 6 |
Retirement benefits | 1 | 1 |
Share-based payment costs | 4 | 7 |
Total | £ 10 | £ 14 |
Post Balance Sheet Events - Add
Post Balance Sheet Events - Additional Informations (Detail) - GBP (£) £ in Millions | Jan. 31, 2020 | Jan. 31, 2020 | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure of non-adjusting events after reporting period [line items] | ||||
Buyback of equity | £ 2 | £ 300 | ||
Buy-in policies [member] | ||||
Disclosure of non-adjusting events after reporting period [line items] | ||||
Percentage of Sale Ownership Interest Of Subsidiary | 25.00% | |||
Events after reporting period [member] | Buy-in policies [member] | ||||
Disclosure of non-adjusting events after reporting period [line items] | ||||
Cost Of Share Repurchased Under Buyback Program | £ 350 | |||
Buyback of equity | £ 167 |