REG - Pearson PLC - Annual Financial Report <Origin Href="QuoteRef">PSON.L</Origin> - Part 2
26/02/2016 07:11
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This amendment resulted in a curtailment gain
and a reduction in the on-going service cost of the plan.
The charge to profit in respect of worldwide pensions and retirement benefits
for continuing operations amounted to £81m in 2015 (2014: £70m) of which a
charge of £85m (2014: £71m) was reported in adjusted operating profit and an
income of £4m (2014: £1m) was reported against other net finance costs. The
increase charge in 2015 is in part due to the US PRMB curtailment gain taken
in 2014 and an increase in costs relating to our defined contribution plans.
The overall surplus on the UK Group pension plan of £190m at the end of 2014
has increased to a surplus of £337m at the end of 2015. The movement has
arisen principally due to continuing asset returns, deficit funding and higher
discount rates used to value the liabilities. In total, our worldwide net
position in respect of pensions and other post-retirement benefits increased
from a net asset of £27m at the end of 2014 to a net asset of £198m at the end
of 2015.
Dividends
The dividend accounted for in our 2015 financial statements totalling £423m
represents the final dividend in respect of 2014 (34.0p) and the interim
dividend for 2015 (18.0p). We are proposing a final dividend for 2015 of
34.0p, bringing the total paid and payable in respect of 2015 to 52.0p, a 2%
increase on 2014. This final 2015 dividend which was approved by the Board in
February 2016, is subject to approval at the forthcoming AGM and will be
charged against 2016 profits. For 2015, the dividend is covered 1.4 times by
adjusted earnings.
Return on invested capital (ROIC)
Our ROIC is calculated as total adjusted operating profit less cash tax,
expressed as a percentage of average gross invested capital. ROIC increased
from 5.6% in 2014 to 5.8% in 2015. Reduced tax payments were the main reason
for the movement.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2015
2015 2014
all figures in £ millions note
Continuing operations
Sales 2 4,468 4,540
Cost of goods sold (1,981) (2,021)
Gross profit 2,487 2,519
Operating expenses (2,094) (2,125)
Impairment of intangible assets (849) (77)
Share of results of joint ventures and associates 52 31
Operating (loss) / profit 2 (404) 348
Finance costs 3 (100) (140)
Finance income 3 71 47
(Loss) / profit before tax 4 (433) 255
Income tax 5 81 (56)
(Loss) / profit for the year from continuing operations (352) 199
Discontinued operations
Profit for the year from discontinued operations 8 1,175 271
Profit for the year 823 470
Attributable to:
Equity holders of the company 823 471
Non-controlling interest - (1)
Earnings per share from continuing and discontinued operations (in pence per share)
Basic 6 101.2 p 58.1 p
Diluted 6 101.1 p 58.0 p
(Loss) / earnings per share from continuing operations (in pence per share)
Basic 6 (43.3)p 24.7 p
Diluted 6 (43.2)p 24.6 p
The accompanying notes to the condensed consolidated financial statements form
an integral part of the financial information.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
2015 2014
all figures in £ millions
Profit for the year 823 470
Items that may be reclassified to the income statement
Net exchange differences on translation of foreign operations - Group (85) 150
Net exchange differences on translation of foreign operations - associates 16 25
Currency translation adjustment disposed (10) (2)
Attributable tax 5 (6)
Items that are not reclassified to the income statement
Re-measurement of retirement benefit obligations - Group 110 23
Re-measurement of retirement benefit obligations - associates 8 (15)
Attributable tax (24) (1)
Other comprehensive income for the year 20 174
Total comprehensive income for the year 843 644
Attributable to:
Equity holders of the company 845 645
Non-controlling interest (2) (1)
CONDENSED CONSOLIDATED BALANCE SHEET
as at 31 December 2015
2015 2014
all figures in £ millions note
Property, plant and equipment 320 334
Intangible assets 11 5,164 6,310
Investments in joint ventures and associates 1,103 1,118
Deferred income tax assets 276 295
Financial assets - Derivative financial instruments 78 90
Retirement benefit assets 337 190
Other financial assets 143 54
Trade and other receivables 115 82
Non-current assets 7,536 8,473
841
Intangible assets - Pre-publication 841 820
Inventories 211 224
Trade and other receivables 1,284 1,310
Financial assets - Derivative financial instruments 32 24
Financial assets - Marketable securities 28 16
Cash and cash equivalents (excluding overdrafts) 1,703 530
Current assets 4,099 2,924
Total assets 11,635 11,397
Financial liabilities - Borrowings (2,048) (1,883)
Financial liabilities - Derivative financial instruments (136) (73)
Deferred income tax liabilities (560) (714)
Retirement benefit obligations (139) (163)
Provisions for other liabilities and charges (71) (82)
Other liabilities 12 (356) (310)
Non-current liabilities (3,310) (3,225)
Trade and other liabilities 12 (1,390) (1,601)
Financial liabilities - Borrowings (282) (342)
Financial liabilities - Derivative financial instruments (29) (1)
Current income tax liabilities (164) (190)
Provisions for other liabilities and charges (42) (53)
Current liabilities (1,907) (2,187)
Total liabilities (5,217) (5,412)
Net assets 6,418 5,985
Share capital 205 205
Share premium 2,590 2,579
Treasury shares (72) (75)
Reserves 3,691 3,270
Total equity attributable to equity holders of the company 6,414 5,979
Non-controlling interest 4 6
Total equity 6,418 5,985
The condensed consolidated financial statements were approved by the Board on
25 February 2016.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2015
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
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 - - - (77) 99 22 (2) 20
Total comprehensive income - - - (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
2014
At 1 January 2014 205 2,568 (98) (103) 3,128 5,700 6 5,706
Profit for the year - - - - 471 471 (1) 470
Other comprehensive income - - - 173 1 174 - 174
Total comprehensive income - - - 173 472 645 (1) 644
Equity-settled transactions - - - - 32 32 - 32
Tax on equity-settled transactions - - - - (3) (3) - (3)
Issue of ordinary shares under share option schemes - 11 - - - 11 - 11
Purchase of treasury shares - - (9) - - (9) - (9)
Release of treasury shares - - 32 - (32) - - -
Changes in non-controlling interest - - - - - - 2 2
Dividends - - - - (397) (397) (1) (398)
At 31 December 2014 205 2,579 (75) 70 3,200 5,979 6 5,985
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2015
2015 2014
all figures in £ millions note
Cash flows from operating activities
Net cash generated from operations 16 518 704
Interest paid (75) (86)
Tax paid (232) (163)
Net cash generated from operating activities 211 455
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 13 (9) (448)
Acquisition of joint ventures and associates (11) (12)
Purchase of investments (7) (3)
Purchase of property, plant and equipment (86) (75)
Purchase of intangible assets (161) (107)
Disposal of subsidiaries, net of cash disposed 1,030 327
Proceeds from sale of joint ventures and associates 379 39
Proceeds from sale of investments 13 9
Proceeds from sale of property, plant and equipment 2 9
Proceeds from sale of intangible assets 1 2
Proceeds from sale of liquid resources 17 12
Loans repaid by / (advanced to) related parties 7 (10)
Loans advanced - (2)
Investment in liquid resources (29) (22)
Interest received 24 13
Dividends received from joint ventures and associates 162 120
Net cash generated from / (used in) investing activities 1,332 (148)
Cash flows from financing activities
Proceeds from issue of ordinary shares 11 11
Purchase of treasury shares (23) (9)
Proceeds from borrowings 372 404
Repayment of borrowings (300) (538)
Finance lease principal payments (1) (4)
Dividends paid to company's shareholders (423) (397)
Dividends paid to non-controlling interests - (1)
Net cash used in financing activities (364) (534)
Effects of exchange rate changes on cash and cash equivalents (19) (2)
Net increase / (decrease) in cash and cash equivalents 1,160 (229)
Cash and cash equivalents at beginning of year 511 740
Cash and cash equivalents at end of year 1,671 511
511
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 2015
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 2014 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.
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 made an assessment of the Group's ability to continue as a going concern
and consider it appropriate to adopt the going concern basis of accounting.
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 2014 Annual
Report.
This preliminary announcement does not constitute the Group's full financial
statements for the year ended 31 December 2015. The Group's full financial
statements will be approved by the Board of Directors and reported on by the
auditors in March 2016. Accordingly, the financial information for 2015 is
presented unaudited in the preliminary announcement.
The financial information for the year ended 31 December 2014 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 2014 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 2015
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 segment (to 30 November 2015) and Mergermarket (to 4 February 2014) are
shown as discontinued in the relevant periods.
2015 2014
all figures in £ millions
Sales by Geography
North America 2,940 2,906
Core 836 910
Growth 692 724
Sales - continuing operations 4,468 4,540
Sales - discontinued operations 312 343
Total sales 4,780 4,883
Adjusted operating profit by Geography
North America 480 444
Core 114 122
Growth (12) 32
PRH 90 69
Adjusted operating profit - continuing operations 672 667
Adjusted operating profit - discontinued operations 51 55
Total adjusted operating profit 723 722
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2015
2. Segment information continued
The following table reconciles adjusted operating profit to operating profit
for each of our primary segments.
North America Core Growth PRH Continuing Discontinued Total
all figures in £ millions
2015
Adjusted operating profit / (loss) 480 114 (12) 90 672 51 723
Other net gains and losses 19 (5) - (1) 13 1,184 1,197
Acquisition costs - - - - - - -
Intangible charges (386) (79) (583) (41) (1,089) (3) (1,092)
Operating profit / (loss) 113 30 (595) 48 (404) 1,232 828
2014
Adjusted operating profit 444 122 32 69 667 55 722
Other net gains and losses 2 - - - 2 273 275
Acquisition costs (2) (1) (3) - (6) - (6)
Intangible charges (108) (21) (132) (54) (315) (3) (318)
Operating profit / (loss) 336 100 (103) 15 348 325 673
673
Included in total adjusted operating profit are gross restructuring costs of
£47m (2014: £84m).
There were no material inter-segment sales.
Adjusted operating profit is one of Pearson's key business performance
measures; it includes the operating profit from the total business including
the results of discontinued operations when relevant.
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 2015, other gains and losses included in discontinued operations relate to
the sale of the FT Group including the 50% share of the Economist. In 2014,
other gains and losses in discontinued operations relate to the gain on the
disposal of Mergermarket and an adjustment to liabilities relating to the
Penguin disposal.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2015
2. Segment information continued
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. In the Core segment the loss on disposal
relates to adjustments to prior year disposals.
In 2014 other gains and losses in the North America segment of £2m relate to
the loss on disposal of Nook Media (£38m) and the gain on sale of our joint
venture interests in Safari Books Online and CourseSmart (£40m).
Charges relating to intangibles, acquisition costs and movements in contingent
acquisition consideration are also excluded from adjusted operating profit as
these items are not considered to be fully reflective of the underlying
performance of the Group. In 2015 intangible charges include an impairment of
goodwill and intangibles in our North American business of £282m, our core
business of £37m and our Growth business of £530m and in 2014 intangible
charges include an impairment of goodwill and intangibles in our Growth
business in India business of £77m (see also note 11).
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 2015
3. Net finance costs
2015 2014
all figures in £ millions
Net interest payable (46) (64)
Finance income in respect of retirement benefits 4 1
Net foreign exchange gains / (losses) 7 (36)
Derivatives not in a hedging relationship 6 6
Net finance costs (29) (93)
Analysed as:
Finance costs (100) (140)
Finance income 71 47
Net finance costs (29) (93)
Analysed as:
Net interest payable (46) (64)
Other net finance income / (costs) 17 (29)
Net finance costs (29) (93)
Net finance costs classified as other net finance income / costs 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 and we have excluded the finance costs for deferred
consideration as they relate to future earn outs and similar payments on
acquisitions and do not reflect cash expended.
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 2015 and 2014 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 2015
4. Profit before tax
2015 2014
all figures in £ millions note
(Loss) / profit before tax - continuing operations (433) 255
Intangible charges 2 1,089 315
Acquisition costs 2 - 6
Other gains and losses 2 (13) (2)
Other net finance (income) / costs 3 (17) 29
Adjusted profit before tax - continuing operations 626 603
Adjusted profit before tax - discontinued operations 51 55
Total adjusted profit before tax 677 658
5. Income tax
2015 2014
all figures in £ millions
Income tax benefit / (charge) - continuing operations 81 (56)
Tax benefit on intangible charges (257) (72)
Tax benefit on acquisition costs - (1)
Tax charge on other gains and losses 40 1
Tax benefit / (charge) on other net finance costs 7 (5)
Tax amortisation benefit on goodwill and intangibles 33 24
Adjusted income tax charge - continuing operations (96) (109)
Adjusted income tax charge - discontinued operations (9) (9)
Total adjusted income tax charge (105) (118)
Tax rate reflected in adjusted earnings 15.5% 17.9%
15.5%
17.9%
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 2015
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 or loss attributable, if applicable, to account for any tax
consequences that might arise from conversion of those shares.
2015 2014
all figures in £ millions
(Loss) / profit for the year from continuing operations (352) 199
Non-controlling interest - 1
(Loss) earnings from continuing operations (352) 200
Profit for the year from discontinued operations 1,175 271
Non-controlling interest - -
Earnings 823 471
Weighted average number of shares (millions) 813.3 810.9
Effect of dilutive share options (millions) 0.8 1.0
Weighted average number of shares (millions) for diluted earnings 814.1 811.9
Earnings per share from continuing and discontinued operations
Basic 101.2 p 58.1 p
Diluted 101.1 p 58.0 p
(Loss) / earnings per share from continuing operations
Basic (43.3)p 24.7 p
Diluted (43.2)p 24.6 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.
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 2015
7. Adjusted earnings per share continued
Statutory income Re-analyse discontinued operations Other net gains and losses Acquisition costs Intangible charges Other net finance costs Tax amortisation benefit 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 814.1
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 2015
7. Adjusted earnings per share continued
Statutory income Re-analyse discontinued operations Other net gains and losses Acquisition costs Intangible charges Other net finance costs Tax amortisation benefit Adjusted income
all figures in £ millions note
2014
Operating profit 2 348 55 (2) 6 315 - - 722
Net finance costs 3 (93) - - - - 29 - (64)
Profit before tax 4 255 55 (2) 6 315 29 - 658
Income tax 5 (56) (9) 1 (1) (72) (5) 24 (118)
Profit for the year - continuing 199 46 (1) 5 243 24 24 540
Profit for the year - discontinued 8 271 (46) (227) - 2 - - -
Profit for the year 470 - (228) 5 245 24 24 540
Non-controlling interest 1 - - - - - - 1
Earnings 471 - (228) 5 245 24 24 541
Weighted average number of shares (millions) 810.9
Weighted average number of shares (millions) for diluted earnings 811.9
Adjusted earnings per share (basic) 66.7p
Adjusted earnings per share (diluted) 66.6p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2015
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 in 2014 and to the date of sale in
2015.
Additionally, on 4 February 2014, Pearson completed the sale of Mergermarket
and the results to the date of sale in 2014 are included in discontinued
operations.
The sales and profit for the year for discontinued operations are analysed
below.
2015 2014
all figures in £ millions
Sales by discontinued operations 312 343
Operating profit included in adjusted earnings 51 55
Intangible amortisation (3) (3)
Gain on disposal of the Financial Times 711 -
Gain on disposal of the Economist 473 -
Gain on disposal of Penguin - 29
Gain on disposal of Mergermarket - 244
Profit before tax 1,232 325
Attributable tax charge (57) (54)
Profit for the year - discontinued operations 1,175 271
Operating profit included in adjusted earnings 51 55
Attributable tax charge (9) (9)
Profit for the year included in adjusted earnings 42 46
Intangible amortisation (3) (3)
Attributable tax benefit 1 1
Gain on disposal of the Financial Times 711 -
Attributable tax charge (49) -
Gain on disposal of the Economist 473 -
Attributable tax charge - -
Gain on disposal of Penguin - 29
Attributable tax benefit - -
Gain on disposal of Mergermarket - 244
Attributable tax charge - (46)
Profit for the year - discontinued operations 1,175 271
-
(46)
Profit for the year - discontinued operations
1,175
271
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2015
8. Discontinued operations continued
The gains on disposal of the Financial Times and economist in 2015 and
Mergermarket in 2014 are shown in the tables below. The gain of £29m in 2014
relating to Penguin arose as a result of adjustments to liabilities following
the Penguin disposal and formation of PRH in 2013.
2015 2014
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 377 -
Remeasurement of retained asset at fair value 92 -
Net liabilities disposed 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 remeasurement of retained assets relates to an 11%
stake in the Economist which is now held at fair value within other financial
assets on the balance sheet.
Gain on sale of Mergermarket
Proceeds - 375
Net assets disposed - (130)
Cost of disposal - (1)
Gain on disposal before tax - 244
Attributable tax charge - (46)
Gain on disposal after tax - 198
-
198
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2015
9. Dividends
2015 2014
all figures in £ millions
Amounts recognised as distributions to equity shareholders in the year 423 397
The directors are proposing a final dividend of 34.0p per equity share,
payable on 6 May 2016 to shareholders on the register at the close of business
on 8 April 2016. This final dividend, which will absorb an estimated £277m of
shareholders' funds, has not been included as a liability as at 31 December
2015.
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:
2015 2014
Average rate for profits 1.53 1.65
Year end rate 1.47 1.56
1.56
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2015
11. Non-current intangible assets
2015 2014
all figures in £ millions
Goodwill 4,134 5,030
Other intangibles 1,030 1,280
Non-current intangible assets 5,164 6,310
6,310
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, management's expectations
of future returns were revised down in the course of 2015. It was determined
during the goodwill impairment review that the fair value less costs of
disposal of the Growth, North America and Core CGUs no longer supported the
carrying value of the goodwill. 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.
In 2014 following deterioration in the market conditions for the Group's
online tutoring business based in India, it was determined in the course of
the impairment review that the value in use of the India CGU no longer
supported the carrying value of the goodwill in that CGU. An impairment of
£67m was booked,
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