Operating expenses (Tables)

12 Months Ended

Dec. 31, 2019

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Summary of Operating Expenses by Function

All figures in £ millions	2019			2018			2017
By function:
Cost of goods sold		1,858			1,943			2,066
Operating expenses
Distribution costs		73			88			84
Selling, marketing and product development costs		631			759			896
Administrative and other expenses		999			1,039			1,207
Restructuring costs		157			90			79
Other income		(54	)		(69	)		(64	)
Total net operating expenses		1,806			1,907			2,202
Other net gains and losses		(16	)		(230	)		(128	)
Total		3,648			3,620			4,140

Summary of Analysis of Restructuring Costs

An analysis of major restructuring costs is as follows:

All figures in £ millions	2019		2018			2017
By nature:
Product costs		16		12			15
Employee costs		90		56			11
Depreciation and amortisation		14		1			13
Property and facilities		12		(5	)		24
Technology and communications		2		1			2
Professional and outsourced services		17		9			12
General and administrative costs		6		16			2
Total restructuring – operating expenses		157		90			79
Share of associate restructuring		2		12			—
Total		159		102			79

Summary of Operating Expenses by Nature

All figures in £ millions	Notes		2019			2018			2017
By nature:
Royalties expensed				242			236			246
Other product costs				466			516			564
Employee benefit expense		5		1,452			1,637			1,805
Contract labour				139			161			152
Employee-related expense				94			115			127
Promotional costs				254			233			229
Depreciation of property, plant and equipment		10		123			66			90
Amortisation of intangible assets – pre-publication		20		271			338			338
Amortisation of intangible assets – software		11		115			88			85
Amortisation and impairment of intangible assets – other		11		151			99			138
Property and facilities				96			147			202
Technology and communications				196			192			218
Professional and outsourced services				480			396			322
Other general and administrative costs				104			85			140
Costs capitalised to intangible assets				(465	)		(390	)		(324	)
Other net gains and losses				(16	)		(230	)		(128	)
Other income				(54	)		(69	)		(64	)
Total				3,648			3,620			4,140

Summary of Services From the Group's Auditors

During the year the Group obtained the following services from the Group’s auditors:

All figures in £ millions	2019		2018		2017
The audit of parent company and consolidated financial statements		5		4		4
The audit of the company’s subsidiaries		2		2		2
Total audit fees		7		6		6
Audit-related and other assurance services		—		1		1
Other non-audit services		—		—		1
Total other services		—		1		2
Total non-audit services		—		1		2
Total		7		7		8

Summary of Reconciliation Between Audit and Non-Audit Service Fees

Reconciliation between audit and non-audit service fees is shown below:

All figures in £ millions	2019		2018		2017
Group audit fees including fees for attestation under section 404 of the Sarbanes-Oxley Act		7		6		6
Non-audit fees		—		1		2
Total		7		7		8