21 February 2020
|
Underlying revenue flat, adjusted operating profit growth achieved,
simplification programme on track, foundations for growth in
place.
|
Highlights
|
Underlying revenue flat year on year
● Core
grew 5% and Growth 4%, offset by 3% decline in North
America.
● Growth
of 4% in the businesses excluding US Higher Education Courseware
offset by declines in US Higher Education Courseware of
12%.
Adjusted operating profit up 6%
● Adjusted
operating profit of £581m for 2019 (2018:
£546m).
● Adjusted
earnings per share of 57.8p (2018: 70.3p) reflecting an effective
tax rate charge of 16.5% in 2019 compared to a credit of 5.2% in
2018.
Strong balance sheet
● Closing
net debt at 31 December 2019 of £1,016m (2018: £809m on
post-IFRS 16 basis) resulting in net debt to adjusted EBITDA of
1.3x (post-IFRS 16).
● Operating
cash flow decreased by £95m with a conversion rate of 72%
largely due to timing of disposals, incentive payments and working
capital movements.
● The
Board proposes a final dividend of 13.5p (2018: 13p), an increase
of 4%, which equates to a full year dividend of 19.5p (2018:
18.5p).
Statutory results
● Sales
decreased by 6%, or £260m, in headline terms. This was
primarily due to portfolio changes reducing sales by £347m
partially offset by currency movements increasing revenue by
£97m.
● Statutory
operating profit was £275m (2018: £553m). The decrease is
largely due to the reduced gains on disposals together with
increased intangible and restructuring charges which more than
offset the increase in adjusted operating profit.
● Statutory
EPS of 34.0p (2018: 75.6p) with the decrease due to a lower
statutory operating profit, a lower tax benefit following one-off
benefits in 2018 and higher net interest payable following the
adoption of IFRS 16.
Digital transformation and simplification programme
● Further
progress on Pearson’s digital transformation with revenue
split 36% digital (2018: 34%), 30% digitally-enabled (2018: 28%)
and 34% non-digital (2018: 38%).
● Efficiency
programme delivered incremental cost savings of £130m in 2019.
Annualised savings of £335m at the end of 2019.
Pearson’s simplification programme enables ongoing
efficiencies over time.
● Sale
of remaining 25% stake in Penguin Random House announced on 18th
December 2019. Transaction expected to close in H1
2020.
2020 outlook
● Expect
to deliver 2020 adjusted operating profit of between £410m to
£490m (based on December 2019 exchange rates) after excluding
the 25% stake in Penguin Random House.
● Expect
the businesses excluding US Higher Education Courseware to sustain
low single digit sales growth in aggregate.
● Expect
2019 US Higher Education Courseware trends to continue with heavy
declines in print partially offset by modest growth in digital as
more products are added to the Pearson Learning Platform (PLP),
previously known as the Global Learning Platform.
● PLP
product road map accelerating: 60% of all Revel fall subscriptions
on PLP by the end of the year; over 100 MyLab and Mastering titles
on PLP in 2021; new “Pearson eText” to be launched in
2020 to enhance text and platform offerings. As product releases
accelerate, digital growth is expected to increase.
● Incremental
restructuring benefits of £60m, as the restructuring plan was
delivered in 2019.
● New
reporting structure disclosed on page 6 including a longer term
outlook for growth.
|
John Fallon, Chief Executive said:
"With
76% of the company already growing strongly, and all parts of
Pearson profitable, we are a simpler and more efficient
company, completely focused on empowering people to progress
through a lifetime of learning. The future of learning will be
increasingly digital and we have built, by revenue, by far the
world's leading digital learning company. We've also built the
platform by which we can lead the next generation of digital
learning, with an exciting pipeline of new products and services
all built around the things that learners care most about -
experience, outcomes and affordability. As we benefit from further
efficiencies from the investments we have made and deploy our
strong balance sheet, Pearson is now well placed, in time, to grow
in a profitable and sustainable way.”
|
Financial
Summary
|
|||||||
£m
|
2019
|
2018
|
Headline
growth
|
CER
growth
|
Underlying
growth
|
|
|
Business performance
|
|
|
|
|
|
|
|
Sales
|
3,869
|
4,129
|
(6)%
|
(9)%
|
0%
|
|
|
Adjusted
operating profit
|
581
|
546
|
6%
|
4%
|
6%
|
|
|
Operating
cash flow
|
418
|
513
|
|
|
|
|
|
Adjusted
earnings per share
|
57.8p
|
70.3p
|
|
|
|
|
|
Dividend
per share
|
19.5p
|
18.5p
|
|
|
|
|
|
Net
debt
|
(1,016)
|
(143*)
|
|
|
|
|
|
Statutory results
|
|
|
|
|
|
|
|
Sales
|
3,869
|
4,129
|
|
|
|
|
|
Operating
profit
|
275
|
553
|
|
|
|
|
|
Profit
for the year
|
266
|
590
|
|
|
|
|
|
Cash
generated from operations
|
480
|
547
|
|
|
|
|
|
Basic
earnings per share
|
34.0p
|
75.6p
|
|
|
|
|
Investor Relations
|
Jo
Russell, Anjali Kotak
|
+44
(0) 207 010 2310
|
|
Media
|
Tom
Steiner, Gemma Terry
|
+44
(0) 207 010 2310
|
|
Brunswick
|
Charles
Pretzlik, Nick Cosgrove, Simone Selzer
|
+44
(0) 207 404 5959
|
|
Webcast details
|
Pearson’s
results presentation for investors and analysts will be
webcast live today from 0900
(GMT).
|
||
Notes
|
|
Financial Overview
Profit & loss statement. In 2019, sales decreased by
£260m in headline terms to £3,869m (2018: £4,129m)
with portfolio changes reducing sales by £347m and currency
movements increasing revenue by £97m. Stripping out the impact
of portfolio and currency movements, revenue was flat in underlying
terms. Underlying revenue in North America declined 3%, Core was up
5% and Growth was up 4%.
The
2019 adjusted operating profit of £581m (2018: £546m)
reflects a £130m year-on-year benefit from restructuring,
£19m benefit from other operational factors, and a benefit of
£15m from FX, and a £25m benefit from the adoption of
IFRS 16 offset by £37m of portfolio changes, £50m of
inflation and a £67m decrease from trading. Excluding the
impact of FX and portfolio changes, underlying adjusted operating
profit grew 6%.
Net
interest payable was £41m, compared to £24m in 2018. The
increase is due to the adoption of IFRS 16 which resulted in an
additional £34m of net interest payable in 2019. After
excluding the impact of IFRS 16 there was a reduction in net
interest payable due to lower levels of net debt together with
favourable movements in interest on tax and the absence of one-off
costs from the redemption of bonds.
The
effective tax rate on adjusted earnings in 2019 was a charge of
16.5% compared to a credit of 5.2% in 2018. The increase in tax
rate reflects the absence of several one-off benefits in 2018,
including provision releases due to the expiry of relevant statutes
of limitation and the reassessment of historical
positions.
Adjusted
earnings per share of 57.8p (2018: 70.3p) reflects all the elements
above.
Cash generation. Operating cash flow of £418m in 2019
(2018: £513m) with cash conversion at 72% (2018: 94%). This
was impacted by the timing of the disposal of our US K12 courseware
business, a mismatch between cash and accrued incentive
compensation and challenging trading in US Higher Education. These
factors more than offset a modest benefit from the adoption of IFRS
16.
The
equivalent statutory measure, net cash generated from operations,
was £480m in 2019 compared to £547m in 2018 for the same
reasons noted above, as well as higher net restructuring payments
of £111m. 2018 had £25m restructuring cash inflow due to
proceeds from the rationalisation of our property
portfolio.
Statutory results. Our statutory operating profit was
£275m in 2019 compared to a profit of £553m in 2018. The
decrease in 2019 is largely due to the decrease in gains on
disposals together with increased intangible and restructuring
charges which more than offset the increase in adjusted operating
profit.
Capital allocation. Our capital allocation policy is to
maintain a strong balance sheet and a solid investment grade
rating, to continue to invest in the business, to have a
sustainable and progressive dividend policy, and to return surplus
cash to our shareholders. Given the strength of the balance sheet
and, with the simplification of our back office largely complete,
this gives us more scope for inorganic investment.
Balance sheet. Net debt to adjusted EBITDA was 1.3x on a
post-IFRS 16 basis). On a post-IFRS 16 basis net debt rose from
£809m in 2018 to £1,016m in 2019 reflecting lower
operating free cash flow, dividends, additional capital invested in
Penguin Random House, the acquisitions of Smart Sparrow and Lumerit
and outflows from the US K12 courseware.
In
March 2019, the Group repurchased €55m of its remaining
€500m Euro 1.875% notes due May 2021, to leave €195m
outstanding. The Group also refinanced its revolving credit
facility (RCF) in February 2019, extending the maturity to February
2024 and reducing the size to $1.19bn. Borrowings at 31 December
2019 included drawings on the Group’s RCF of £230m
(2018: £nil).
Pension plan. The overall surplus on UK pension plans
of £571m at the end of 2018 has decreased to a surplus of
£429m at the end of 2019. The decrease has arisen principally
due to the unfavourable impact from changes in discount rate
assumptions.
Dividend. In line with our policy, the Board is proposing a
final dividend of 13.5p (2018: 13p), an increase of 4%, which
results in an overall dividend of 19.5p (2018: 18.5p) subject to
shareholder approval. This will be payable on 7th May
2020.
Share buyback. In
January 2020, the Group commenced a £350m share buyback
programme in connection with the announcement in December 2019 of
the sale of its remaining 25% interest in Penguin Random House. We
have completed £79m of the share buyback so far.
Businesses held for sale. In
December 2019, the Group announced the agreement to sell its
remaining 25% interest in Penguin Random House to Bertelsmann,
generating net proceeds of approximately $675m. At the end of
December, our share of the assets of Penguin Random House has been
classified as held for sale on the balance
sheet.
Businesses disposed of. Following the decision to sell the US K12
courseware business, the assets and liabilities of that business
were classified as held for sale on the balance sheet at the end of
2018. In March 2019, the Group completed the sale resulting in a
pre-tax profit on sale of £13m.
|
2020 Outlook
In
2019, we delivered flat underlying revenue, achieved adjusted
operating profit growth, made good progress on our simplification
programme and laid the foundations for growth. Our guidance for
2020 is for adjusted operating profit between £410m and
£490m and adjusted earnings per share of 38.0p to 47.0p. This
reflects our portfolio excluding Penguin Random House, exchange
rates as at 31 December 2019 and the following
factors:
Inflation and other operational factors. Our 2020 guidance
incorporates cost inflation of c.£30m which reflects a lower
cost base and the benefits of our simplification drive, other
operational factors of £45m predominantly due to the
reinstatement of staff incentives, as well as continued investment
in our strategic growth areas.
Trading. Trading is expected to impact profit between flat
and £(80)m with the decline in US Higher Education Courseware
offset by growth in the rest of the business.
Restructuring benefits. We expect incremental in-year
benefits from the 2017-2019 restructuring programme of £60m in
2020.
Disposals. We expect an impact of £55m on adjusted
operating profit from portfolio changes including £65m from
the sale of Penguin Random House.
Interest & tax. We expect a 2020 net interest charge of
c.£50m and a tax rate of c.21% excluding Penguin Random
House.
Currency. In 2019, Pearson generated approximately 62%
of its sales in the US, 3% in Greater China, 5% in the Eurozone, 3%
in Brazil, 3% in Canada, 4% in Australia, 2% in South Africa and 2%
in India and our guidance is based on exchange rates at 31 December
2019.
We
calculate that a 5c move in the US Dollar exchange rate to Sterling
would impact adjusted EPS by around 2p to 2.5p.
2020 reporting structure
We
enclose details of our new reporting structure for 2020, which
reflects changes in the way we manage the business. We will report
under the following divisions from Q1 2020. We also provide a more
detailed longer-term outlook.
|
|
Segment
|
Business units
|
2020 revenue drivers
|
Longer term revenue outlook
|
Global Online Learning
|
OPM, Virtual Schools
|
● Growth
driven by enrolments
● Mid-single
digit growth
|
● Mid
to high-single digit
|
|
Global Assessment
|
Pearson VUE, US Student Assessment, US Clinical
Assessment
|
● Growth
in Pearson VUE, stabilisation in US Student Assessment
● Low
to mid-single digit growth
|
● Low
to mid-single digit
|
|
International
|
English, Core and Growth excluding online learning. Includes UK
Student Assessment & Qualifications
|
● Growth
driven by English, UK Student Assessment & Qualifications
partially offset
by loss of NCT
● Low
to mid-single digit growth
|
● Low
to mid-single digit
|
|
North American Courseware
|
US Higher Education Courseware, Canadian Courseware
|
● Similar
trends to 2019 with continued declines in print and modest growth
in digital
|
● Stabilisation,
then growth
|
£ millions
|
2019
|
2018
|
Headline
growth
|
CER
growth
|
Underlying
growth
|
Sales
|
|
|
|
|
|
North
America
|
2,534
|
2,784
|
(9)%
|
(13)%
|
(3)%
|
Core
|
838
|
806
|
4%
|
4%
|
5%
|
Growth
|
497
|
539
|
(8)%
|
(7)%
|
4%
|
Total sales
|
3,869
|
4,129
|
(6)%
|
(9)%
|
0%
|
|
|
|
|
|
|
Adjusted operating profit
|
|
|
|
|
|
North
America
|
361
|
362
|
0%
|
(6)%
|
(3)%
|
Core
|
92
|
57
|
61%
|
67%
|
58%
|
Growth
|
63
|
59
|
7%
|
7%
|
24%
|
Penguin
Random House
|
65
|
68
|
(4)%
|
(1)%
|
(1)%
|
Total adjusted operating profit
|
581
|
546
|
6%
|
4%
|
6%
|
North America
|
|
Revenue
declined 3% in underlying terms, primarily due to US Higher
Education Courseware declining 12%, and Student Assessment, which
declined slightly. Offsetting that, we saw good growth in Virtual
Schools, Online Program Management (OPM) and Professional
Certification (VUE) revenue. Headline revenue decreased due to
disposals, partly offset by FX gains.
Adjusted
operating profit declined 3% in underlying terms, due to the impact
of lower sales, inflation and other operating factors partially
offset by restructuring savings. Headline profit was flat on last
year, with the impacts on adjusted operating profit offset by the
benefits of FX and IFRS 16 adoption.
|
|
Courseware
|
In US
Higher Education Courseware,
a revenue decline of 12% with print declining close to 30% was
partially offset by modest growth in digital. In 2019 the weaker performance was
driven by a number of factors:
● Unbundling of
premium-priced print and digital products for digital only formats.
Sales of bundle units declined 45% during 2019.
● Campus bookstores
buying less physical inventory due to changing student behavior,
with over 50% of learners now preferring an eBook to a physical
text. This trend led to eBook growth of 18% during
2019.
● Modest adoption
share loss caused by the delivery issues due to the implementation
of the new ERP system in H2 2018 as well as the re-organisation of
our sales force.
We are
focused on regaining share over time as we build traction from the rollout of our next
wave of digital products on the Pearson Learning Platform, which
launched in September. 60% of all Revel fall
subscriptions will migrate onto the PLP by the end of the year
enhancing the faculty and student experience.
We are
also launching a direct-to-learner version of the Pearson eBook in
2020, with enhanced features.
US
Higher Education Courseware digital registrations, including
eBooks, declined 2%. Good registration growth in Revel, up 9%, was
offset by continued market pressure in Developmental Mathematics
and the planned retirement and deprioritisation of long-tail
products.
We
continue to make good progress with Inclusive Access signing 162
new institutions in 2019, taking the total not-for-profit and
public institutions served to 779. Including 80 longer-standing
contracts with for-profit colleges, we now have direct
relationships with over 850 institutions.
In
2019, we served 1.8m Inclusive Access enrolments up from 1.4m in
2018, making up 9% of 2019 US Higher Education Courseware revenue,
up 19% on 2018 on a like-for-like basis, excluding the 80
for-profit colleges.
|
Assessment
|
In
Student Assessment,
underlying revenue declined slightly in 2019 with continued
contraction in revenue associated with PARCC and ACT-Aspire
multi-state contracts and contract losses which were partially
offset by new contract wins.
During
2019, Pearson won new contracts or signed renewals in several key
incumbent states including Kentucky, Maryland, Colorado and New
Jersey, as well as the federal NCES contract for delivering the
National Assessment of Educational Progress (NAEP). Pearson also
won back the testing contract in the state of
Tennessee.
Automated
scoring continues to be a competitive strength for Pearson. In
2019, we scored 39m responses with AI, up 8% from
2018.
In
Professional Certification
(VUE), global test volume rose 8% to c.16.5m. Revenue in
North America was up a high single-digit percentage, mostly driven
by the IT sector with increased demand for cloud technology
certifications through Microsoft and Amazon, and volume growth in
an education contract launched at the end of 2018 which is now
operating at its full run-rate.
We
signed over 40 new contracts in 2019, including the Project
Management Institute (PMI) and our renewal rate on existing
contracts continues to be over 95%.
Clinical Assessment underlying revenue declined as demand
for new product only partially offset normal declines in products
in the later stages of their lifecycle.
|
Services
|
School Services (Virtual Schools) grew revenue 6% and served
76,000 Full Time Equivalent (FTE) students through 42 continuing
full-time virtual partner schools in 28 states, up 5% on last
year.
Six new full-time online, state-wide partner schools opened in the
2019-20 school year in the states of Oregon, Washington, Tennessee,
Minnesota and California, while a contract was exited in North
Carolina.
Higher Education Services (including OPM and Learning
Studio) grew revenue 4%, due to growth in OPM, partially offset by
a small drag from Learning Studio revenue, a learning management
system, which was fully retired in 2019.
In
OPM, revenue grew 9%, with
growth in course registrations of 5% and new programs launched more
than offsetting programs terminated. Our overall active program
count grew to 347 from 325 in 2018.
During
2019, we continued to optimise our portfolio and reduce the number
of partners to 25 from 35. This will allow us to shift towards
enterprise models where we have a number of programs with a single
partner and can benefit from economies of scale in marketing and
recruitment. We are also working to integrate more content and
assessment services into our partnerships.
|
Core
|
|
Revenue
was up 5% in underlying terms and 4% in headline terms with growth
in Student Assessment and Qualifications including the delivery of a new digital
assessment contract in Egypt, Pearson Test of English
Academic (PTE Academic), OPM and Professional Certification (VUE)
all partially offset by declines in Courseware.
Adjusted
operating profit increased 58% in underlying terms and 61% in
headline terms due to trading growth and restructuring
savings.
|
|
Courseware
|
Courseware
revenue declined moderately. Declines in School Courseware in the UK and
Australia offset growth in Italy. In Higher Education Courseware, revenue
declines in the UK and Europe more than offset growth in
Australia.
|
Assessment
|
In
Student Assessment and
Qualifications, revenue grew strongly, due to price and
volume increases for A levels and GCSEs and the delivery of a new
digital assessment contract in Egypt. This was partially offset by
continued market declines in Apprenticeships.
We
successfully delivered the National Curriculum Test (NCT) for 2019,
marking 3.8m scripts, up slightly from 2018. The NCT will be
delivered by another provider in 2020.
In
Professional Certification
(VUE), revenue was up due to good growth in the DVSA test in
the UK, additional exam series added to the ICAEW contract and good
growth in the MOI (French driving test) which launched in late
2017.
Clinical Assessment sales declined primarily in France and
the Netherlands due to an absence of new major product
introductions.
PTE Academic saw continued strong growth in test volumes in
Australia and New Zealand up 14% from 2018. This was driven by its
use to support visa applications to the Australian Department of
Home Affairs as well as good growth in New Zealand. We recently
announced the win of the UK Secure English Language Test (SELT)
contract with the UK Home Office which we expect to drive future
growth.
|
Services
|
In
Higher Education Services
(OPM), revenue growth was driven by course enrolment growth
in the UK. During the year, we also announced new OPM partnerships
in Australia with the University of Adelaide and University of
Wollongong.
|
Growth
|
|
Revenue
grew 4% in underlying terms due to strong growth in China and good
growth in Brazil and the Middle East, partially offset by declines
in South Africa. Headline revenue declined due to
disposals.
Adjusted
operating profit increased 24% in underlying terms, reflecting
higher revenue together with the benefits of restructuring. In
headline terms, adjusted operating profit increased 7% with the
impact of disposals more than offset by trading and restructuring
savings.
|
|
Courseware
|
Courseware
revenue was flat in underlying terms, with growth in English Language Courseware in China and
School Courseware in the
Middle East and Hispano America, offset by declines in Higher Education Courseware in South
Africa following a change in government funding.
|
Assessment
|
Professional Certification revenue grew well due to a
large ICT
infrastructure certification contract, and a number of new smaller
contract launches in China.
PTE Academic saw strong growth in revenue with test volumes
up 25% in India and China.
|
Services
|
In
English Services, underlying revenue grew
slightly in our English Language School franchise in Brazil due to
new product launches.
In
School Services, underlying
revenue grew slightly due to price increases and new product
launches in our sistemas in Brazil.
In
Higher Education Services,
enrolments grew 3% at the Pearson Institute of Higher Education
(formerly CTI), however revenue declined modestly due to changes in
mix.
|
Penguin
Random House
|
|
Pearson
owns 25% of Penguin Random
House, the first truly global consumer book publishing
company.
Penguin Random House performed solidly with underlying
revenue growth from a rise in audio sales, stable print sales, and
the industry’s top bestsellers, including Where the Crawdads Sing by Delia Owen,
Becoming by Michelle Obama,
and bestselling books by Margaret Atwood, Tara Westover, Lee Child,
Jamie Oliver, Jeff Kinney, and Dr. Seuss.
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
275
|
553
|
Add
back: Cost of major restructuring
|
|
159
|
102
|
Add
back: Intangible charges
|
|
163
|
113
|
Add
back: Other net gains and losses
|
|
(16)
|
(230)
|
Add
back: UK pension GMP equalisation
|
|
-
|
8
|
Adjusted
operating profit
|
|
581
|
546
|
|
|
|
|
all figures in £ millions
|
note
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
Sales
|
2
|
3,869
|
4,129
|
Cost of
goods sold
|
|
(1,858)
|
(1,943)
|
Gross
profit
|
|
2,011
|
2,186
|
|
|
|
|
Operating
expenses
|
|
(1,806)
|
(1,907)
|
Other
net gains and losses
|
2
|
16
|
230
|
Share
of results of joint ventures and associates
|
|
54
|
44
|
Operating
profit
|
2
|
275
|
553
|
|
|
|
|
Finance
costs
|
3
|
(84)
|
(91)
|
Finance
income
|
3
|
41
|
36
|
Profit
before tax
|
4
|
232
|
498
|
Income
tax
|
5
|
34
|
92
|
Profit
for the year
|
|
266
|
590
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
Equity
holders of the company
|
|
264
|
588
|
Non-controlling
interest
|
|
2
|
2
|
|
|
|
|
|
|
|
|
Earnings per share (in pence per
share)
|
|
|
|
Basic
|
6
|
34.0p
|
75.6p
|
Diluted
|
6
|
34.0p
|
75.5p
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
266
|
590
|
|
|
|
|
Items
that may be reclassified to the income statement
|
|
|
|
Net
exchange differences on translation of foreign operations –
Group
|
|
(113)
|
91
|
Net
exchange differences on translation of foreign operations –
associates
|
(2)
|
(1)
|
|
Currency
translation adjustment on disposals
|
|
4
|
(4)
|
Attributable
tax
|
|
5
|
(4)
|
|
|
|
|
Items
that are not reclassified to the income statement
|
|
|
|
Fair
value gain on other financial assets
|
|
20
|
8
|
Attributable
tax
|
|
(4)
|
-
|
|
|
|
|
Remeasurement of
retirement benefit obligations – Group
|
|
(145)
|
22
|
Remeasurement of
retirement benefit obligations – associates
|
|
(4)
|
3
|
Attributable
tax
|
|
22
|
9
|
Other
comprehensive (expense) / income for the year
|
|
(217)
|
124
|
|
|
|
|
Total
comprehensive income for the year
|
|
49
|
714
|
|
|
|
|
Attributable
to:
|
|
|
|
Equity
holders of the company
|
|
47
|
712
|
Non-controlling
interest
|
|
2
|
2
|
|
|
|
|
all figures in £ millions
|
note
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
618
|
237
|
Intangible
assets
|
11
|
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
|
Non-current
assets
|
|
4,477
|
4,529
|
|
|
|
|
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
|
Current
assets
|
|
2,776
|
2,728
|
|
|
|
|
Assets classified
as held for sale
|
10
|
397
|
648
|
Total
assets
|
|
7,650
|
7,905
|
|
|
|
|
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
|
12
|
(86)
|
(155)
|
Non-current
liabilities
|
|
(1,835)
|
(1,246)
|
|
|
|
|
Trade and other
liabilities
|
12
|
(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)
|
Current
liabilities
|
|
(1,492)
|
(1,561)
|
|
|
|
|
Liabilities
classified as held for sale
|
10
|
-
|
(573)
|
Total
liabilities
|
|
(3,327)
|
(3,380)
|
|
|
|
|
Net
assets
|
|
4,323
|
4,525
|
|
|
|
|
Share
capital
|
|
195
|
195
|
Share
premium
|
|
2,614
|
2,607
|
Treasury
shares
|
|
(24)
|
(33)
|
Reserves
|
|
1,528
|
1,747
|
Total equity
attributable to equity holders of the company
|
|
4,313
|
4,516
|
Non-controlling
interest
|
|
10
|
9
|
Total
equity
|
|
4,323
|
4,525
|
|
|
|
|
|||||||
|
Equity
attributable to equity holders of the company
|
|
|
|||||||
all figures in £ millions
|
Share
capital
|
Share
premium
|
Treasury
shares
|
Capital
redemption reserve
|
Fair
value reserve
|
Translation
reserve
|
Retained
earnings
|
Total
|
Non-controlling
interest
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
||||||||||
At
1 January 2019
|
195
|
2,607
|
(33)
|
11
|
19
|
678
|
1,039
|
4,516
|
9
|
4,525
|
Adjustment on
initial application of IFRS 16 net of tax (see note
1b)
|
-
|
-
|
-
|
-
|
-
|
-
|
(83)
|
(83)
|
-
|
(83)
|
Adjustment on
initial application of IFRIC 23 (see note 1c)
|
-
|
-
|
-
|
-
|
-
|
-
|
5
|
5
|
-
|
5
|
At
1 January 2019 (restated)
|
195
|
2,607
|
(33)
|
11
|
19
|
678
|
961
|
4,438
|
9
|
4,447
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
264
|
264
|
2
|
266
|
Other
comprehensive income / (expense)
|
-
|
-
|
-
|
-
|
20
|
(111)
|
(126)
|
(217)
|
-
|
(217)
|
Total
comprehensive income / (expense)
|
-
|
-
|
-
|
-
|
20
|
(111)
|
138
|
47
|
2
|
49
|
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
|
Buyback
of equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Purchase of
treasury shares
|
-
|
-
|
(52)
|
-
|
-
|
-
|
-
|
(52)
|
-
|
(52)
|
Release
of treasury shares
|
-
|
-
|
61
|
-
|
-
|
-
|
(61)
|
-
|
-
|
-
|
Transfer of gain on
disposal of FVOCI investment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(147)
|
(147)
|
(1)
|
(148)
|
At
31 December 2019
|
195
|
2,614
|
(24)
|
11
|
39
|
567
|
911
|
4,313
|
10
|
4,323
|
|
|
|
|
|||||||
|
Equity
attributable to equity holders of the company
|
|
|
|||||||
all figures in £ millions
|
Share
capital
|
Share
premium
|
Treasury
shares
|
Capital
redemption reserve
|
Fair
value reserve
|
Translation
reserve
|
Retained
earnings
|
Total
|
Non-controlling
interest
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
||||||||||
At 1
January 2018
|
200
|
2,602
|
(61)
|
5
|
13
|
592
|
544
|
3,895
|
8
|
3,903
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
588
|
588
|
2
|
590
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
8
|
86
|
30
|
124
|
-
|
124
|
Total
comprehensive income
|
-
|
-
|
-
|
-
|
8
|
86
|
618
|
712
|
2
|
714
|
Equity-settled
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
37
|
37
|
-
|
37
|
Tax on
equity settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
4
|
4
|
-
|
4
|
Issue
of ordinary shares under share option schemes
|
1
|
5
|
-
|
-
|
-
|
-
|
-
|
6
|
-
|
6
|
Buyback
of equity
|
(6)
|
-
|
-
|
6
|
-
|
-
|
(2)
|
(2)
|
-
|
(2)
|
Purchase of
treasury shares
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Release
of treasury shares
|
-
|
-
|
28
|
-
|
-
|
-
|
(28)
|
-
|
-
|
-
|
Transfer of gain on
disposal of FVOCI investment
|
-
|
-
|
-
|
-
|
(2)
|
-
|
2
|
-
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(136)
|
(136)
|
(1)
|
(137)
|
At 31
December 2018
|
195
|
2,607
|
(33)
|
11
|
19
|
678
|
1,039
|
4,516
|
9
|
4,525
|
|
|
|
|
all figures in £ millions
|
note
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
Net
cash generated from operations
|
17
|
480
|
547
|
Interest
paid
|
|
(81)
|
(42)
|
Tax
paid
|
|
(30)
|
(43)
|
Net
cash generated from operating activities
|
|
369
|
462
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
13
|
(45)
|
(5)
|
Additional capital
invested in associates
|
13
|
(40)
|
-
|
Purchase of
investments
|
|
(12)
|
(10)
|
Purchase of
property, plant and equipment
|
|
(55)
|
(70)
|
Purchase of
intangible assets
|
|
(138)
|
(130)
|
Disposal of
subsidiaries, net of cash disposed
|
14
|
(101)
|
83
|
Proceeds from sale
of joint ventures and associates
|
|
-
|
18
|
Proceeds from sale
of investments
|
|
5
|
6
|
Proceeds from sale
of property, plant and equipment
|
|
1
|
128
|
Proceeds from sale
of liquid resources
|
|
-
|
10
|
Lease
receivables repaid
|
|
26
|
-
|
Loans
(advanced to) / repaid by related parties
|
|
(49)
|
46
|
Investment in
liquid resources
|
|
-
|
(2)
|
Interest
received
|
|
17
|
20
|
Investment
income
|
|
2
|
-
|
Dividends received
from joint ventures and associates
|
|
64
|
117
|
Net
cash (used in) / generated from investing activities
|
|
(325)
|
211
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Proceeds from issue
of ordinary shares
|
|
7
|
6
|
Buyback
of equity
|
|
-
|
(153)
|
Purchase of
treasury shares
|
|
(52)
|
-
|
Proceeds from
borrowings
|
|
230
|
-
|
Repayment of
borrowings
|
|
(48)
|
(441)
|
Repayment of lease
liabilities
|
|
(91)
|
(4)
|
Dividends paid to
company’s shareholders
|
|
(147)
|
(136)
|
Dividends paid to
non-controlling interest
|
|
(1)
|
(1)
|
Net
cash used in financing activities
|
|
(102)
|
(729)
|
|
|
|
|
Effects
of exchange rate changes on cash and cash equivalents
|
|
(33)
|
(49)
|
Net
decrease in cash and cash equivalents
|
|
(91)
|
(105)
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
525
|
630
|
Cash
and cash equivalents at end of year
|
|
434
|
525
|
|
|
|
|
all figures in £ millions
|
|
|
2019
|
|
|
|
1
January
|
|
|
|
|
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)
|
|
|
|
|
all figures in £ millions
|
|
|
2019
|
|
|
|
1
January
|
|
|
|
|
Operating lease
commitments disclosed at 31 December 2018
|
|
|
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
as:
|
|
|
|
Current
lease liabilities
|
|
|
89
|
Non-current lease
liabilities
|
|
|
792
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Sales
by geography
|
|
|
|
North
America
|
|
2,534
|
2,784
|
Core
|
|
838
|
806
|
Growth
|
|
497
|
539
|
Total
sales
|
|
3,869
|
4,129
|
|
|
|
|
Adjusted
operating profit by geography
|
|
|
|
North
America
|
|
361
|
362
|
Core
|
|
92
|
57
|
Growth
|
|
63
|
59
|
PRH
|
|
65
|
68
|
Total
adjusted operating profit
|
|
581
|
546
|
|
|
|
|
|
|
all figures in £ millions
|
|
North
|
Core
|
Growth
|
Total
|
|
|
America
|
|
|
|
|
|
|
|
|
|
2019
|
|||||
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
sales
|
|
2,534
|
838
|
497
|
3,869
|
|
|
|
|
|
|
all figures in £ millions
|
|
North
|
Core
|
Growth
|
Total
|
|
|
America
|
|
|
|
|
|
|
|
|
|
2018
|
|||||
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*
|
|
|
|
|
|
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
sales
|
|
2,784
|
806
|
539
|
4,129
|
|
|
|
|
|
|
* The analysis
of Assessment revenues for 2018 has been
re-presented to better reflect the nature of
sales.
|
|
|
|
|
|
|
all figures in £ millions
|
North
America
|
Core
|
Growth
|
PRH
|
Total
|
|
|
|
|
|
|
2019
|
|||||
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
|
UK
pension GMP equalisation
|
-
|
-
|
-
|
-
|
-
|
Operating
profit
|
202
|
65
|
(43)
|
51
|
275
|
|
|
|
|
|
|
2018
|
|||||
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
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Net
interest payable
|
|
(41)
|
(24)
|
Net
finance income in respect of retirement benefits
|
|
13
|
11
|
Finance
costs associated with transactions
|
|
-
|
(1)
|
Net
foreign exchange losses
|
|
(5)
|
(36)
|
Derivatives in a
hedge relationship
|
|
-
|
(4)
|
Derivatives not in
a hedge relationship
|
|
(10)
|
(1)
|
Net
finance costs
|
|
(43)
|
(55)
|
|
|
|
|
Analysed
as:
|
|
|
|
Finance
costs
|
|
(84)
|
(91)
|
Finance
income
|
|
41
|
36
|
Net
finance costs
|
|
(43)
|
(55)
|
|
|
|
|
Analysed
as:
|
|
|
|
Net
interest payable reflected in adjusted earnings
|
|
(41)
|
(24)
|
Other
net finance costs
|
|
(2)
|
(31)
|
Net
finance costs
|
|
(43)
|
(55)
|
|
|
|
|
all figures in £ millions
|
note
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Profit
before tax
|
|
232
|
498
|
Cost of
major restructuring
|
2
|
159
|
102
|
Other
net gains and losses
|
2
|
(16)
|
(230)
|
Intangible
charges
|
2
|
163
|
113
|
Other
net finance costs
|
3
|
2
|
31
|
UK
pension GMP equalisation
|
2
|
-
|
8
|
Adjusted
profit before tax
|
|
540
|
522
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Income
tax benefit
|
|
34
|
92
|
Tax
benefit on cost of major restructuring
|
|
(35)
|
(37)
|
Tax
benefit on other net gains and losses
|
|
(68)
|
(31)
|
Tax
benefit on intangible charges
|
|
(48)
|
(18)
|
Tax
benefit on other net finance costs
|
|
-
|
(6)
|
Tax
benefit on UK pension GMP equalisation
|
|
-
|
(2)
|
Tax
amortisation benefit on goodwill and intangibles
|
|
28
|
29
|
Adjusted
income tax (charge) / benefit
|
|
(89)
|
27
|
|
|
|
|
Tax
rate reflected in statutory earnings
|
|
(14.7)%
|
(18.5)%
|
Tax
rate reflected in adjusted earnings
|
|
16.5
%
|
(5.2)%
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Earnings for the
year
|
|
266
|
590
|
Non-controlling
interest
|
|
(2)
|
(2)
|
Earnings
attributable to equity shareholders
|
|
264
|
588
|
|
|
|
|
|
|
|
|
Weighted average
number of shares (millions)
|
|
777.0
|
778.1
|
Effect
of dilutive share options (millions)
|
|
0.5
|
0.6
|
Weighted average
number of shares (millions) for diluted earnings
|
|
777.5
|
778.7
|
|
|
|
|
|
|
|
|
Earnings
per share
|
|
|
|
Basic
|
|
34.0p
|
75.6p
|
Diluted
|
|
34.0p
|
75.5p
|
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
note
|
Statutory
income statement
|
Cost of
major restructuring
|
Other
net gains and losses
|
Intangible
charges
|
Other
net finance costs
|
Impact
of GMP equalisation
|
Tax
amortisation benefit
|
Adjusted
income statement
|
|
|
|
|
|
|
|
|
|
|
2019
|
|||||||||
Operating
profit
|
2
|
275
|
159
|
(16)
|
163
|
-
|
-
|
-
|
581
|
Net
finance costs
|
3
|
(43)
|
-
|
-
|
-
|
2
|
-
|
-
|
(41)
|
Profit
before tax
|
4
|
232
|
159
|
(16)
|
163
|
2
|
-
|
-
|
540
|
Income
tax
|
5
|
34
|
(35)
|
(68)
|
(48)
|
-
|
-
|
28
|
(89)
|
Profit
for the year
|
|
266
|
124
|
(84)
|
115
|
2
|
-
|
28
|
451
|
Non-controlling
interest
|
|
(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
Earnings
|
|
264
|
124
|
(84)
|
115
|
2
|
-
|
28
|
449
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares (millions)
|
|
|
|
777.0
|
|||||
Weighted
average number of shares (millions) for diluted
earnings
|
|
|
|
777.5
|
|||||
|
|
|
|
|
|||||
Adjusted earnings per share (basic)
|
|
|
|
57.8p
|
|||||
Adjusted
earnings per share (diluted)
|
|
|
|
57.7p
|
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
note
|
Statutory
income statement
|
Cost of
major restructuring
|
Other
net gains and losses
|
Intangible
charges
|
Other
net finance costs
|
Impact
of GMP equalisation
|
Tax
amortisation benefit
|
Adjusted
income statement
|
|
|
|
|
|
|
|
|
|
|
2018
|
|||||||||
Operating
profit
|
2
|
553
|
102
|
(230)
|
113
|
-
|
8
|
-
|
546
|
Net
finance costs
|
3
|
(55)
|
-
|
-
|
-
|
31
|
-
|
-
|
(24)
|
Profit
before tax
|
4
|
498
|
102
|
(230)
|
113
|
31
|
8
|
-
|
522
|
Income
tax
|
5
|
92
|
(37)
|
(31)
|
(18)
|
(6)
|
(2)
|
29
|
27
|
Profit
for the year
|
|
590
|
65
|
(261)
|
95
|
25
|
6
|
29
|
549
|
Non-controlling
interest
|
|
(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
Earnings
|
|
588
|
65
|
(261)
|
95
|
25
|
6
|
29
|
547
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares (millions)
|
|
|
|
778.1
|
|||||
Weighted
average number of shares (millions) for diluted
earnings
|
|
|
|
778.7
|
|||||
|
|
|
|
|
|||||
Adjusted
earnings per share (basic)
|
|
|
|
70.3p
|
|||||
Adjusted
earnings per share (diluted)
|
|
|
|
70.2p
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Amounts
recognised as distributions to equity shareholders in the
year
|
|
147
|
136
|
|
|
|
|
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Average
rate for profits
|
|
1.28
|
1.34
|
Year
end rate
|
|
1.32
|
1.27
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
-
|
168
|
Investments in
joint ventures and associates
|
|
397
|
-
|
Deferred income tax
assets
|
|
-
|
98
|
Trade
and other receivables
|
|
-
|
25
|
Non-current
assets
|
|
397
|
291
|
|
|
|
|
Intangible assets
– pre-publication
|
|
-
|
242
|
Inventories
|
|
-
|
55
|
Trade
and other receivables
|
|
-
|
60
|
Current
assets
|
|
-
|
357
|
|
|
|
|
Total
assets
|
|
397
|
648
|
|
|
|
|
Other
liabilities
|
|
-
|
(371)
|
Non-current
liabilities
|
|
-
|
(371)
|
|
|
|
|
Trade
and other liabilities
|
|
-
|
(202)
|
Current
liabilities
|
|
-
|
(202)
|
|
|
|
|
Total
liabilities
|
|
-
|
(573)
|
|
|
|
|
Net
assets
|
|
397
|
75
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Goodwill
|
|
2,139
|
2,111
|
Other
intangibles
|
|
761
|
898
|
Non-current
intangible assets
|
|
2,900
|
3,009
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
(358)
|
(311)
|
Sales
return liability
|
|
(122)
|
(173)
|
Accruals
|
|
(295)
|
(397)
|
Deferred
income
|
|
(360)
|
(387)
|
Other
liabilities
|
|
(229)
|
(287)
|
Trade
and other liabilities
|
|
(1,364)
|
(1,555)
|
|
|
|
|
Analysed
as:
|
|
|
|
Trade
and other liabilities – current
|
|
(1,278)
|
(1,400)
|
Other
liabilities – non-current
|
|
(86)
|
(155)
|
Total
trade and other liabilities
|
|
(1,364)
|
(1,555)
|
|
|
|
|
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
|
|
|
|
|
all figures in £ millions
|
|
|
2019
|
|
|
|
|
|
|
|
|
Cash –
current year acquisitions
|
|
|
(40)
|
Deferred payments
for prior year acquisitions
|
|
|
(5)
|
Net
cash outflow on acquisitions
|
|
|
(45)
|
|
|
|
|
|
all figures in £ millions
|
|
K12
|
Other
|
Total
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
(101)
|
-
|
(101)
|
Intangible assets
– pre-publication
|
|
(238)
|
-
|
(238)
|
Inventories
|
|
(64)
|
-
|
(64)
|
Trade and other
receivables
|
|
(70)
|
-
|
(70)
|
Cash and cash
equivalents (excluding overdrafts)
|
|
(104)
|
-
|
(104)
|
Net deferred income
tax liabilities
|
|
(100)
|
-
|
(100)
|
Trade
and other liabilities
|
|
520
|
-
|
520
|
Cumulative
translation adjustment
|
|
(4)
|
-
|
(4)
|
Net
assets disposed
|
|
(161)
|
-
|
(161)
|
|
|
|
|
|
Cash
proceeds
|
|
20
|
-
|
20
|
Deferred
proceeds
|
|
180
|
-
|
180
|
Costs of
disposal
|
|
(26)
|
3
|
(23)
|
Gain
on disposal
|
|
13
|
3
|
16
|
|
|
|
|
|
Cash
flow from disposals
|
|
|
|
|
Proceeds –
current year disposals
|
|
|
|
20
|
Cash and cash
equivalents disposed
|
|
|
|
(104)
|
Costs and other
disposal liabilities paid
|
|
|
|
(17)
|
Net
cash outflow from disposals
|
|
|
|
(101)
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
Derivative
financial instruments
|
|
29
|
67
|
Trade
and other receivables – investment in finance
lease
|
|
171
|
-
|
Current
assets
|
|
|
|
Derivative
financial instruments
|
|
25
|
1
|
Trade
and other receivables – investment in finance
lease
|
|
25
|
-
|
Cash
and cash equivalents (excluding overdrafts)
|
|
437
|
568
|
Non-current
liabilities
|
|
|
|
Borrowings
|
|
(1,572)
|
(674)
|
Derivative
financial instruments
|
|
(24)
|
(36)
|
Current
liabilities
|
|
|
|
Borrowings
|
|
(92)
|
(46)
|
Derivative
financial instruments
|
|
(15)
|
(23)
|
Net
debt
|
|
(1,016)
|
(143)
|
|
Level
2
|
---Level
3---
|
Total
fair value
|
|
all figures in £ millions
|
Derivatives
|
FVOCI
investments
|
FVTPL -
Other
receivables
|
|
2019
|
||||
|
|
|
|
|
Investments in
unlisted securities
|
-
|
122
|
-
|
122
|
Other
receivables
|
-
|
-
|
182
|
182
|
Derivative
financial instruments
|
54
|
-
|
-
|
54
|
Total
financial assets held at fair value
|
54
|
122
|
182
|
358
|
|
|
|
|
|
Derivative
financial instruments
|
(39)
|
-
|
-
|
(39)
|
Total
financial liabilities held at fair value
|
(39)
|
-
|
-
|
(39)
|
|
|
|
|
|
2018
|
||||
|
|
|
|
|
Investments in
unlisted securities
|
-
|
93
|
-
|
93
|
Other
receivables
|
-
|
-
|
-
|
-
|
Derivative
financial instruments
|
68
|
-
|
-
|
68
|
Total
financial assets held at fair value
|
68
|
93
|
-
|
161
|
|
|
|
|
|
Derivative
financial instruments
|
(59)
|
-
|
-
|
(59)
|
Total
financial liabilities held at fair value
|
(59)
|
-
|
-
|
(59)
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Investments
in unlisted securities
|
|
|
|
At
beginning of year 2020
revenue drivers
|
|
93
|
77
|
Exchange
differences - OCI
|
|
(3)
|
3
|
Additions
|
|
12
|
13
|
Fair
value movements - OCI
|
|
20
|
8
|
Disposals
|
|
-
|
(8)
|
At
end of year
|
|
122
|
93
|
|
|
|
|
all figures in £ millions
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Reconciliation
of profit for the year to net cash generated from
operations
|
|
|
|
|
|
|
|
Profit
for the year
|
|
266
|
590
|
Income
tax
|
|
(34)
|
(92)
|
Depreciation,
amortisation and impairment charges
|
|
389
|
253
|
Net
profit on disposal of businesses
|
|
(16)
|
(230)
|
Charges
relating to GMP equalisation
|
|
-
|
8
|
Net
loss / (profit) on disposal of fixed assets
|
|
7
|
(85)
|
Net
profit on disposal of right of use assets held under
leases
|
|
(4)
|
-
|
Net
finance costs
|
|
43
|
55
|
Share
of results of joint ventures and associates
|
|
(54)
|
(44)
|
Net
foreign exchange adjustment
|
|
(21)
|
28
|
Investment
income
|
|
(2)
|
-
|
Share-based payment
costs
|
|
25
|
37
|
Pre-publication
|
|
(55)
|
(37)
|
Inventories
|
|
(20)
|
(10)
|
Trade
and other receivables
|
|
59
|
(15)
|
Trade
and other liabilities
|
|
(157)
|
35
|
Retirement benefit
obligations
|
|
5
|
(9)
|
Provisions for
other liabilities and charges
|
|
49
|
63
|
Net
cash generated from operations
|
|
480
|
547
|
|
|
|
|
all figures in £ millions
|
note
|
2019
|
2018
|
|
|
|
|
|
|
|
|
Reconciliation
of net cash generated from operations to closing net
debt
|
|
|
|
|
|
|
|
Net
cash generated from operations
|
|
480
|
547
|
Dividends from
joint ventures and associates
|
|
64
|
117
|
Less:
re-capitalisation dividends from PRH
|
|
-
|
(50)
|
Purchase of
PPE
|
|
(55)
|
(74)
|
Acquisition of new
right-of-use lease assets
|
|
(64)
|
-
|
Proceeds from sale
of PPE
|
|
1
|
128
|
Disposal of
right-of-use lease assets
|
|
17
|
-
|
Purchase of
intangible assets
|
|
(138)
|
(130)
|
Investment
income
|
|
2
|
-
|
Add
back: net costs paid for / (proceeds from) major
restructuring
|
|
111
|
(25)
|
Operating
cash flow
|
|
418
|
513
|
Operating tax
paid
|
|
(9)
|
(43)
|
Net
operating finance costs paid
|
|
(64)
|
(22)
|
Operating
free cash flow
|
|
345
|
448
|
Non-operating tax
paid
|
|
(21)
|
-
|
Net
(cost paid for) / proceeds from major restructuring
|
|
(111)
|
25
|
Free
cash flow
|
|
213
|
473
|
Dividends paid
(including to non-controlling interest)
|
|
(148)
|
(137)
|
Net
movement of funds from operations
|
|
65
|
336
|
Acquisitions and
disposals
|
|
(193)
|
92
|
Re-capitalisation
dividends from PRH
|
|
-
|
50
|
Loans
(advanced) / repaid
|
|
(49)
|
46
|
New
equity
|
|
7
|
6
|
Buyback
of equity
|
|
-
|
(153)
|
Purchase of
treasury shares
|
|
(52)
|
-
|
Other
movements on financial instruments
|
|
(9)
|
(6)
|
Net
movement of funds
|
|
(231)
|
371
|
Exchange movements
on net debt
|
|
24
|
(82)
|
Movement
in net debt
|
|
(207)
|
289
|
Opening
net debt
|
|
(143)
|
(432)
|
Adjustment on
initial application of IFRS 16
|
|
(666)
|
-
|
Closing
net debt
|
15
|
(1,016)
|
(143)
|
|
PEARSON
plc
|
|
|
Date: 21
February 2020
|
|
|
By: /s/
NATALIE WHITE
|
|
|
|
------------------------------------
|
|
Natalie
White
|
|
Deputy
Company Secretary
|