REG - Pearson PLC - Final Results <Origin Href="QuoteRef">PSON.L</Origin> - Part 2
24/02/2017 07:09
- Part 2: For the preceding part double click ID:nRSX7401Xa
2016 2015
all figures in £ millions
(Loss) / profit for the year (2,335) 823
Items that may be reclassified to the income statement
Net exchange differences on translation of foreign operations - Group 910 (85)
Net exchange differences on translation of foreign operations - associates 3 16
Currency translation adjustment disposed - (10)
Attributable tax (5) 5
Items that are not reclassified to the income statement
Re-measurement of retirement benefit obligations - Group (268) 110
Re-measurement of retirement benefit obligations - associates (8) 8
Attributable tax 58 (24)
Other comprehensive income for the year 690 20
Total comprehensive (expense) / income for the year (1,645) 843
Attributable to:
Equity holders of the company (1,648) 845
Non-controlling interest 3 (2)
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2016
2016 2015
all figures in £ millions note
Property, plant and equipment 343 320
Intangible assets 11 3,442 5,164
Investments in joint ventures and associates 1,247 1,103
Deferred income tax assets 451 276
Financial assets - Derivative financial instruments 171 78
Retirement benefit assets 158 337
Other financial assets 65 143
Trade and other receivables 104 115
Non-current assets 5,981 7,536
1,0241 841
Intangible assets - Pre-publication 1,024 841
Inventories 235 211
Trade and other receivables 1,357 1,284
Financial assets - Derivative financial instruments - 32
Financial assets - Marketable securities 10 28
Cash and cash equivalents (excluding overdrafts) 1,459 1,703
Current assets 4,085 4,099
Total assets 10,066 11,635
Financial liabilities - Borrowings (2,424) (2,048)
Financial liabilities - Derivative financial instruments (264) (136)
Deferred income tax liabilities (466) (560)
Retirement benefit obligations (139) (139)
Provisions for other liabilities and charges (79) (71)
Other liabilities 12 (422) (356)
Non-current liabilities (3,794) (3,310)
Trade and other liabilities 12 (1,629) (1,390)
Financial liabilities - Borrowings (44) (282)
Financial liabilities - Derivative financial instruments - (29)
Current income tax liabilities (224) (164)
Provisions for other liabilities and charges (27) (42)
Current liabilities (1,924) (1,907)
Total liabilities (5,718) (5,217)
Net assets 4,348 6,418
Share capital 205 205
Share premium 2,597 2,590
Treasury shares (79) (72)
Reserves 1,621 3,691
Total equity attributable to equity holders of the company 4,344 6,414
Non-controlling interest 4 4
Total equity 4,348 6,418
The condensed consolidated financial statements were approved by the Board on
23 February 2017.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
Equity attributable to the equity holders of the company Non-controlling interest Total equity
all figures in £ millions Share capital Share premium Treasury shares Translation reserve Retained earnings Total
2016
At 1 January 2016 205 2,590 (72) (7) 3,698 6,414 4 6,418
Loss for the year - - - - (2,337) (2,337) 2 (2,335)
Other comprehensive income/(expense) - - - 912 (223) 689 1 690
Total comprehensive income/(expense) - - - 912 (2,560) (1,648) 3 (1,645)
Equity-settled transactions - - - - 22 22 - 22
Tax on equity-settled transactions - - - - - - - -
Issue of ordinary shares under share option schemes - 7 - - - 7 - 7
Purchase of treasury shares - - (27) - - (27) - (27)
Release of treasury shares - - 20 - (20) - - -
Changes in non-controlling interest - - - - - - (3) (3)
Dividends - - - - (424) (424) - (424)
At 31 December 2016 205 2,597 (79) 905 716 4,344 4 4,348
2015
At 1 January 2015 205 2,579 (75) 70 3,200 5,979 6 5,985
Profit for the year - - - - 823 823 - 823
Other comprehensive income/(expense) - - - (77) 99 22 (2) 20
Total comprehensive income/(expense) - - - (77) 922 845 (2) 843
Equity-settled transactions - - - - 26 26 - 26
Tax on equity-settled transactions - - - - (1) (1) - (1)
Issue of ordinary shares under share option schemes - 11 - - - 11 11
Purchase of treasury shares - - (23) - - (23) - (23)
Release of treasury shares - - 26 - (26) - - -
Changes in non-controlling interest - - - - - - - -
Dividends - - - - (423) (423) - (423)
At 31 December 2015 205 2,590 (72) (7) 3,698 6,414 4 6,418
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2016
2016 2015
all figures in £ millions note
Cash flows from operating activities
Net cash generated from operations 16 522 518
Interest paid (67) (75)
Tax paid (45) (232)
Net cash generated from operating activities 410 211
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 13 (15) (9)
Acquisition of joint ventures and associates - (11)
Purchase of investments (6) (7)
Purchase of property, plant and equipment (88) (86)
Purchase of intangible assets (157) (161)
Disposal of subsidiaries, net of cash disposed (54) 1,030
Proceeds from sale of joint ventures and associates 4 379
Proceeds from sale of investments 8 92 13
Proceeds from sale of property, plant and equipment 4 2
Proceeds from sale of intangible assets - 1
Proceeds from sale of liquid resources 42 17
Loans repaid by related parties 14 7
Investment in liquid resources (24) (29)
Interest received 16 24
Dividends received from joint ventures and associates 131 162
Net cash (used in) / generated from investing activities (41) 1,332
Cash flows from financing activities
Proceeds from issue of ordinary shares 7 11
Purchase of treasury shares (27) (23)
Proceeds from borrowings 4 372
Repayment of borrowings (249) (300)
Finance lease principal payments (6) (1)
Transactions with non-controlling interests (2) -
Dividends paid to company's shareholders (424) (423)
Net cash (used in) / generated from financing activities (697) (364)
Effects of exchange rate changes on cash and cash equivalents 81 (19)
Net (decrease) / increase in cash and cash equivalents (247) 1,160
Cash and cash equivalents at beginning of year 1,671 511
Cash and cash equivalents at end of year 1,424 1,671
1,671
For the purposes of the cash flow statement, cash and cash equivalents are
presented net of overdrafts repayable on demand. These overdrafts are excluded
from cash and cash equivalents disclosed on the balance sheet.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2016
1. Basis of preparation
The condensed consolidated financial statements have been prepared in
accordance with the Disclosure and Transparency Rules of the Financial Conduct
Authority and in accordance with International Financial Reporting Standards
(IFRS) and IFRS Interpretations Committee interpretations as adopted by the
European Union (EU). In respect of accounting standards applicable to the
Group, there is no difference between EU-adopted IFRS and International
Accounting Standards Board (IASB)-adopted IFRS.
The condensed consolidated financial statements have also been prepared in
accordance with the accounting policies set out in the 2015 Annual Report and
have been prepared under the historical cost convention as modified by the
revaluation of certain financial assets and liabilities (including derivative
financial instruments) at fair value.
In April 2016 the IFRS Interpretations Committee (IFRS IC) rejected a request
to add to its agenda an item concerning cash pooling arrangements,
specifically addressing when and whether particular cash pooling arrangements
would meet the requirements for offsetting in accordance with IAS 32. After
consideration of the IFRS IC rejection notice, Pearson has settled many of the
balances within its cash pooling arrangements during the year and has chosen
to show any residual balances within these arrangements gross in the balance
sheet at 31 December 2016. Pearson has considered the prior year comparatives
in light of this guidance, and has concluded that those balances at 31
December 2015 that would not meet these requirements for net treatment are
immaterial for restatement in the context of the overall presentation of the
Group's balance sheet at these dates.
The group's forecasts and projections, taking account of reasonably possible
changes in trading performance, seasonal working capital requirements and
potential acquisition activity, show that the group should be able to operate
within the level of its current committed borrowing facilities. The directors
have confirmed that they have a reasonable expectation that the group has
adequate resources to continue in operational existence. The condensed
consolidated financial statements have therefore been prepared on a going
concern basis.
The preparation of condensed consolidated financial statements requires the
use of certain critical accounting assumptions. It also requires management
to exercise its judgement in the process of applying the Group's accounting
policies. The areas requiring a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the condensed
consolidated financial statements have been set out in the 2015 Annual
Report.
This preliminary announcement does not constitute the Group's full financial
statements for the year ended 31 December 2016. The Group's full financial
statements will be approved by the Board of Directors and reported on by the
auditors in March 2017. Accordingly, the financial information for 2016 is
presented unaudited in the preliminary announcement.
The financial information for the year ended 31 December 2015 does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The independent auditors' report on the full financial
statements for the year ended 31 December 2015 was unqualified and did not
contain an emphasis of matter paragraph or any statement under section 498 of
the Companies Act 2006.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
2. Segment information
The primary segments for management and reporting are Geographies (North
America, Core and Growth). In addition, the Group separately discloses the
results from the Penguin Random House associate (PRH). The results of the FT
Group (to 30 November 2015) are shown as discontinued in the relevant years.
The results for 2015 have been restated to reflect minor changes in management
responsibilities between the Geographies which were effective from 1 January
2016.
2016 2015
all figures in £ millions Restated
Sales by Geography
North America 2,981 2,940
Core 803 815
Growth 768 713
Sales - continuing operations 4,552 4,468
Sales - discontinued operations - 312
Total sales 4,552 4,780
Adjusted operating profit by Geography
North America 420 480
Core 57 105
Growth 29 (3)
PRH 129 90
Adjusted operating profit - continuing operations 635 672
Adjusted operating profit - discontinued operations - 51
Total adjusted operating profit 635 723
There were no material inter-segment sales.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
2. Segment information continued
The following table reconciles adjusted operating profit to operating profit
for each of our primary segments.
all figures in £ millions North America Core Growth PRH Continuing Discontinued Total
2016
Adjusted operating profit 420 57 29 129 635 - 635
Costs of major restructuring (172) (62) (95) (9) (338) - (338)
Other net gains and losses (12) (12) (1) - (25) - (25)
Intangible charges (2,684) (16) (33) (36) (2,769) - (2,769)
Operating (loss) / profit (2,448) (33) (100) 84 (2,497) - (2,497)
2015 (restated)
Adjusted operating profit / (loss) 480 105 (3) 90 672 51 723
Costs of major restructuring - - - - - - -
Other net gains and losses 19 (5) - (1) 13 1,184 1,197
Intangible charges (386) (79) (583) (41) (1,089) (3) (1,092)
Operating profit / (loss) 113 21 (586) 48 (404) 1,232 828
828
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
2. Segment information continued
Adjusted operating profit is a non-GAAP financial measure and is included as
it is a key financial measure used by management to evaluate performance and
allocate resources to business segments. The measure also enables our
investors to more easily, and consistently, track the underlying operational
performance of the Group and its business segments by separating out those
items of income and expenditure relating to acquisition and disposal
transactions.
In 2016 the definition of adjusted operating profit has been amended to
exclude the costs of major restructuring activity. In January 2016, Pearson
announced that it was embarking on a restructuring programme to simplify the
business, reduce costs and position the company for growth in its major
markets. The costs of this programme in 2016 are significant enough to exclude
in our adjusted operating profit measure so as to better highlight the
underlying performance. There was no major restructuring in 2015 and
accordingly the change has no effect on the comparative adjusted operating
profit.
Other net gains and losses that represent profits and losses on the sale of
subsidiaries, joint ventures, associates and other financial assets are
excluded from adjusted operating profit as they distort the performance of the
Group. In 2016, the losses in the Core segment mainly relate to the closure of
our English language schools in Germany and in our North America segment to
the sale of the Pearson English Business Solutions business. In 2015, other
gains and losses included in discontinued operations relate to the sale of the
FT Group including the 50% share of the Economist. Included in other net gains
and losses within continuing operations in 2015 in the North America segment
is the profit on disposal of PowerSchool net of small losses on other
investments.
Charges relating to acquired intangibles, acquisition costs and movements in
contingent acquisition consideration are also excluded from adjusted operating
profit when relevant as these items reflect past acquisition activity and
don't necessarily reflect the current year performance of the Group. In 2016,
intangible charges include the impairment of goodwill in the North American
business of £2,548m. In 2015, intangible charges included an impairment of
goodwill and intangibles in our North American business of £282m, our core
business of £37m and our Growth business of £530m.
Corporate costs are allocated to business segments including discontinued
operations on an appropriate basis depending on the nature of the cost and
therefore the total segment result is equal to the Group operating profit.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
3. Net finance costs
2016 2015
all figures in £ millions
Net interest payable (59) (46)
Finance income in respect of retirement benefits 11 4
Net foreign exchange gains / (losses) (20) 7
Derivatives not in a hedging relationship 8 6
Net finance costs (60) (29)
Analysed as:
Finance costs (97) (100)
Finance income 37 71
Net finance costs (60) (29)
Analysed as:
Net interest payable (59) (46)
Other net finance (costs) / income (1) 17
Net finance costs (60) (29)
Net finance costs classified as other net finance costs / income are excluded
in the calculation of our adjusted earnings.
We have excluded finance costs relating to retirement benefits as we believe
the presentation does not reflect the economic substance of the underlying
assets and liabilities.
Foreign exchange and other gains and losses are also excluded as they
represent short-term fluctuations in market value and are subject to
significant volatility. Other gains and losses may not be realised in due
course as it is normally the intention to hold the related instruments to
maturity. In 2016 and 2015 the foreign exchange gains and losses largely
relate to foreign exchange differences on unhedged US dollar and Euro loans,
cash and cash equivalents.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
4. Profit before tax
2016 2015
all figures in £ millions note
Loss before tax - continuing operations (2,557) (433)
Costs of major restructuring 2 338 -
Intangible charges 2 2,769 1,089
Other gains and losses 2 25 (13)
Other net finance costs / (income) 3 1 (17)
Adjusted profit before tax - continuing operations 576 626
Adjusted profit before tax - discontinued operations - 51
Total adjusted profit before tax 576 677
5. Income tax
2016 2015
all figures in £ millions
Income tax benefit - continuing operations 222 81
Tax benefit on costs of major restructuring (84) -
Tax benefit on intangible charges (255) (257)
Tax (benefit) / charge on other gains and losses (14) 40
Tax charge on other net finance costs - 7
Tax amortisation benefit on goodwill and intangibles 36 33
Adjusted income tax charge - continuing operations (95) (96)
Adjusted income tax charge - discontinued operations - (9)
Total adjusted income tax charge (95) (105)
Tax rate reflected in adjusted earnings 16.5% 15.5%
16.5%
15.5%
The adjusted income tax charge excludes the tax benefit or charge on items
that are excluded from the profit or loss before tax (see note 4).
The tax benefit from tax deductible goodwill and intangibles is added to the
adjusted income tax charge as this benefit more accurately aligns the adjusted
tax charge with the expected rate of cash tax payments.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
6. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss
attributable to equity shareholders of the Company (earnings) 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 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. A dilution is not calculated
for a loss.
2016 2015
all figures in £ millions
Loss for the year from continuing operations (2,335) (352)
Non-controlling interest (2) -
Loss from continuing operations (2,337) (352)
Profit for the year from discontinued operations - 1,175
Non-controlling interest - -
(Loss) / earnings (2,337) 823
Weighted average number of shares (millions) 814.8 813.3
Effect of dilutive share options (millions) - -
Weighted average number of shares (millions) for diluted earnings 814.8 813.3
(Loss) / earnings per share from continuing and discontinued operations
Basic (286.8)p 101.2 p
Diluted (286.8)p 101.2 p
Loss per share from continuing operations
Basic (286.8)p (43.3)p
Diluted (286.8)p (43.3)p
7. Adjusted earnings per share
In order to show results from operating activities on a consistent basis, an
adjusted earnings per share is presented which excludes certain items as set
out below. Adjusted earnings is a non-GAAP financial measure and is included
as it is a key financial measure used by management to evaluate performance
and also enables our investors to more easily, and consistently, track the
underlying operational performance of the Group.
The adjusted earnings per share includes both continuing and discontinued
businesses on an undiluted basis. The Company's definition of adjusted
earnings per share may not be comparable to other similarly titled measures
reported by other companies.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
7. Adjusted earnings per share continued
Statutory income Re-analyse discontinued ops Costs of major restructuring Other net gains and losses Acquisition costs Intangible charges Other net finance costs Tax amortisation Adjusted income
all figures in £ millions note
2016
Operating profit 2 (2,497) - 338 25 - 2,769 - - 635
Net finance costs 3 (60) - - - - - 1 - (59)
Profit before tax 4 (2,557) - 338 25 - 2,769 1 - 576
Income tax 5 222 - (84) (14) - (255) - 36 (95)
Profit for the year - continuing (2,335) - 254 11 - 2,514 1 36 481
Profit for the year - discontinued 8 - - - - - - - - -
Profit for the year (2,335) - 254 11 - 2,514 1 36 481
Non - controlling interest (2) - - - - - - - (2)
Earnings (2,337) - 254 11 - 2,514 1 36 479
Weighted average number of shares (millions) 814.8
Weighted average number of shares (millions) for diluted earnings 814.8
Adjusted earnings per share (basic) 58.8p
Adjusted earnings per share (diluted) 58.8p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
7. Adjusted earnings per share continued
Statutory income Re-analyse discontinued ops Costs of major restructuring Other net gains and losses Acquisition costs Intangible charges Other net finance costs Tax amortisation Adjusted income
all figures in £ millions note
2015
Operating profit 2 (404) 51 - (13) - 1,089 - - 723
Net finance costs 3 (29) - - - - - (17) - (46)
Profit before tax 4 (433) 51 - (13) - 1,089 (17) - 677
Income tax 5 81 (9) - 40 - (257) 7 33 (105)
Profit for the year - continuing (352) 42 - 27 - 832 (10) 33 572
Profit for the year - discontinued 8 1,175 (42) - (1,135) - 2 - - -
Profit for the year 823 - - (1,108) - 834 (10) 33 572
Non - controlling interest - - - - - - - - -
Earnings 823 - - (1,108) - 834 (10) 33 572
Weighted average number of shares (millions) 813.3
Weighted average number of shares (millions) for diluted earnings 813.3
Adjusted earnings per share (basic) 70.3p
Adjusted earnings per share (diluted) 70.3p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
8. Discontinued operations
On 16 October 2015, Pearson substantially completed the sale of its 50%
interest in the Economist and on 30 November 2015 Pearson completed the sale
of the Financial Times. The results of the Economist and the Financial Times
are included in discontinued operations to the date of sale in 2015.
The sales and profit for the year for discontinued operations are analysed
below.
2016 2015
all figures in £ millions
Sales by discontinued operations - 312
-
Operating profit included in adjusted earnings - 51
Intangible amortisation - (3)
Gain on disposal of the Financial Times - 711
Gain on disposal of the Economist - 473
Profit before tax - 1,232
Attributable tax charge - (57)
Profit for the year - discontinued operations - 1,175
-
Operating profit included in adjusted earnings - 51
Attributable tax charge - (9)
Profit for the year included in adjusted earnings - 42
Intangible amortisation - (3)
Attributable tax benefit - 1
Gain on disposal of the Financial Times - 711
Attributable tax charge - (49)
Gain on disposal of the Economist - 473
Attributable tax charge - -
Profit for the year - discontinued operations - 1,175
-
-
Profit for the year - discontinued operations
-
1,175
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
8. Discontinued operations continued
The gains on disposal of the Financial Times and Economist in 2015 are shown
in the tables below.
2016 2015
all figures in £ millions
Gain on sale of the Financial Times
Proceeds - 858
Net assets disposed - (100)
Cost of disposal - (47)
Gain on disposal before tax - 711
Attributable tax charge - (49)
Gain on disposal after tax - 662
Gain on sale of the Economist
Proceeds 92 377
Re-measurement of retained asset at fair value - 92
Net (assets) / liabilities disposed (92) 4
Cost of disposal - -
Gain on disposal before tax - 473
Attributable tax charge - -
Gain on disposal after tax - 473
Gain on disposal after tax
-
473
The amount included as re-measurement of retained assets related to an 11%
stake in the Economist which was held at fair value within other financial
assets on the balance sheet at 31 December 2015 but was subsequently disposed
in the first half of 2016 with no further gain or loss.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
9. Dividends
2016 2015
all figures in £ millions
Amounts recognised as distributions to equity shareholders in the year 424 423
The directors are proposing a final dividend of 34.0p per equity share,
payable on 12 May 2017 to shareholders on the register at the close of
business on 7 April 2017. This final dividend, which will absorb an estimated
£278m of shareholders' funds, has not been included as a liability as at 31
December 2016.
10. Exchange rates
Pearson earns a significant proportion of its sales and profits in overseas
currencies, the most important being the US dollar. The relevant rates are as
follows:
2016 2015
Average rate for profits 1.33 1.53
Year end rate 1.23 1.47
1.47
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
11. Non-current intangible assets
2016 2015
all figures in £ millions
Goodwill 2,341 4,134
Other intangibles 1,101 1,030
Non-current intangible assets 3,442 5,164
5,164
At the end of 2016, following trading in the final quarter of the year, it
became clear that the underlying issues in the North American higher education
courseware market were more severe than anticipated. These issues related to
declining student enrolments, changes in buying patterns of students and
correction of inventory levels by distributors and bookshops. As a result, in
January 2017, strategic plans and estimates for future cash flows were revised
and we determined during the goodwill impairment review that the fair value
less costs of disposal of the North America cash generating unit (CGU) no
longer supported the carrying value of this goodwill and as a consequence
impaired goodwill by £2,548m.
In 2015, following significant economic and market deterioration in the
Group's operations in emerging markets and ongoing cyclical and policy related
pressures in the Group's mature market operations, an impairment of £507m was
booked in respect of the Group's Growth operations, representing impairments
of £269m in the Brazil CGU, £181m in the China CGU, £48m in the South Africa
CGU and £9m in the Other Growth CGU, thereby bringing the carrying value of
goodwill in those CGUs down to £nil. Impairments of £10m and £13m were also
booked in respect of other acquired intangibles in the South Africa and Other
Growth CGUs respectively, bringing their carrying value down to £nil.
Impairments of £282m and £37m were also booked in respect of the North America
and Core CGUs respectively, bringing the carrying value of the goodwill in
those CGUs down to fair value less costs of disposal.
12. Trade and other liabilities
2016 2015
all figures in £ millions
Trade payables (333) (319)
Accruals (532) (393)
Deferred income (883) (766)
Other liabilities (303) (268)
Trade and other liabilities (2,051) (1,746)
Analysed as:
Trade and other liabilities - current (1,629) (1,390)
Other liabilities - non-current (422) (356)
Total trade and other liabilities (2,051) (1,746)
Total trade and other liabilities
(2,051)
(1,746)
The deferred income balance comprises principally multi-year obligations to
deliver workbooks to adoption customers in school businesses; advance payments
in assessment, testing and training businesses; subscription income in school
and college businesses; and obligations to deliver digital content in future
periods.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
13. Business combinations
There were no significant acquisitions completed in the year and there were no
material adjustments to prior year acquisitions.
The net cash outflow relating to acquisitions in the year is shown in the
table below:
Total
all figures in £ millions
Cash - Current year acquisitions (7)
Deferred payments for prior year acquisitions and other items (8)
Net cash outflow on acquisitions (15)
(15)
14. Net debt and EBITDA
2016 2015
all figures in £ millions note
Non-current assets
Derivative financial instruments 171 78
Current assets
Derivative financial instruments - 32
Marketable securities 10 28
Cash and cash equivalents (excluding overdrafts) 1,459 1,703
Non-current liabilities
Borrowings (2,424) (2,048)
Derivative financial instruments (264) (136)
Current liabilities
Borrowings (44) (282)
Derivative financial instruments - (29)
Total net debt (1,092) (654)
(29)
Total net debt
(1,092)
(654)
EBITDA (excluding restructuring)
Adjusted operating profit 2 635 723
Depreciation 80 75
Software amortisation 70 74
Total EBITDA 785 872
785
872
Net Debt / EBITDA ratio 1.4x 0.8x
0.8x
In May 2016, Pearson repaid its $350m 4.0% US Dollar Notes on maturity.
The net debt / EBITDA ratio is presented as it is a measure commonly used by
investors to measure balance sheet strength.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2016
15. Classification of assets and liabilities measured at fair value
---------Level 2--------- -----Level 3------
Available for sale assets Derivatives Other assets Available for sale assets Other liabilities Total fair value
all figures in £ millions
- More to follow, for following part double click ID:nRSX7401XcRecent news on Pearson
See all newsREG - Pearson PLC - Director/PDMR Shareholding
AnnouncementREG - Pearson PLC - Director/PDMR Shareholding
AnnouncementREG - Pearson PLC - Director/PDMR Shareholding
AnnouncementREG - Pearson PLC - Transaction in Own Shares
AnnouncementREG - Pearson PLC - Transaction in Own Shares
Announcement