Intangible assets (Tables)

12 Months Ended

Dec. 31, 2019

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Summary of Intangible Assets

All figures in £ millions	Goodwill			Software			Acquired customer lists, contracts and relationships			Acquired trademarks and brands			Acquired publishing rights			Other intangibles acquired			Total
Cost
At 1 January 2018		2,030			882			889			281			184			489			4,755
Exchange differences		74			32			39			(2	)		—			1			144
Additions – internal development		—			124			—			—			—			—			124
Additions – purchased		—			6			—			—			—			—			6
Disposals		—			(94	)		(18	)		(12	)		—			(33	)		(157	)
Disposal through business disposal		—			(2	)		—			—			—			—			(2	)
Transfer from property, plant and equipment		—			11			—			—			—			—			11
Transfer to assets classified as held for sale		7			—			—			—			—			—			7
At 31 December 2018		2,111			959			910			267			184			457			4,888
Exchange differences		(57	)		(22	)		(29	)		(10	)		(5	)		(20	)		(143	)
Additions – internal development		—			137			—			—			—			—			137
Additions – purchased		—			1			—			—			—			—			1
Disposals		—			(15	)		(88	)		(19	)		—			(47	)		(169	)
Acquisition through business combination		18			—			—			—			—			23			41
Transfer from property, plant and equipment		—			7			—			—			—			—			7
Transfer to intangible assets – pre-publication		—			(28	)		—			—			—			—			(28	)
Movement in held for sale		67			—			—			—			—			—			67
At 31 December 2019		2,139			1,039			793			238			179			413			4,801

All figures in £ millions	Goodwill		Software			Acquired customer lists, contracts and relationships			Acquired trademarks and brands			Acquired publishing rights			Other intangibles acquired			Total
Amortisation
At 1 January 2018		—		(493	)		(580	)		(180	)		(178	)		(360	)		(1,791	)
Exchange differences		—		(23	)		(26	)		1			2			(10	)		(56	)
Charge for the year		—		(88	)		(59	)		(14	)		(2	)		(24	)		(187	)
Disposals		—		92			18			12			—			33			155
At 31 December 2018		—		(512	)		(647	)		(181	)		(178	)		(361	)		(1,879	)
Exchange differences		—		16			22			7			4			19			68
Charge for the year		—		(115	)		(51	)		(23	)		(2	)		(75	)		(266	)
Disposals		—		10			88			19			—			46			163
Transfer from property, plant and equipment		—		(3	)		—			—			—			—			(3	)
Transfer to intangible assets – pre-publication		—		16			—			—			—			—			16
At 31 December 2019		—		(588	)		(588	)		(178	)		(176	)		(371	)		(1,901	)
Carrying amounts
At 1 January 2018		2,030		389			309			101			6			129			2,964
At 31 December 2018		2,111		447			263			86			6			96			3,009
At 31 December 2019		2,139		451			205			60			3			42			2,900

Summary of Useful Economic Life of Intangible Assets

The range of useful economic lives for each major class of intangible asset (excluding goodwill and software) is shown below:

	2019
Class of intangible asset	Useful economic life
Acquired customer lists, contracts and relationships		3-20 years
Acquired trademarks and brands		2-20 years
Acquired publishing rights		5-20 years
Other intangibles acquired		2-20 years

Summary of Amortisation Profile of Intangible Assets

The expected amortisation profile of acquired intangible assets is shown below:

	2019
All figures in £ millions	One to five years		Six to ten years		More than ten years		Total
Class of intangible asset
Acquired customer lists, contracts and relationships		154		49		2		205
Acquired trademarks and brands		42		14		4		60
Acquired publishing rights		3		—		—		3
Other intangibles acquired		31		11		—		42

Summary of Carrying Value of Goodwill

Impairment reviews were conducted on these revised CGUs as summarised below:

2019 CGUs

	2019
All figures in £ millions	Goodwill
North American Courseware		—
OPM		18
Virtual Schools		386
Assessments		1,035
Core		700
Growth (includes the separate CGUs of Brazil, China, India and South Africa)		—
Total		2,139

Goodwill is tested at least annually for impairment. The recoverable amount of each aggregated CGU is based on the higher of value in use and fair value less costs of disposal. The value in use was higher than the fair value less costs of disposal in each of the CGUs. Other than goodwill there are no intangible assets with indefinite lives.

2018 CGUs

All figures in £ millions	2018
North America		930
Core		701
Growth (includes the separate CGUs of Brazil, China, India and South Africa)		—
Pearson VUE		480
Total		2,111

Summary of Detailed Information About In Carrying Value Of Goodwill

The table below shows the key assumptions for those CGUs for which the carrying value of goodwill is significant in comparison to the total carrying value of goodwill:

	Discount rate			Perpetuity growth rate
Virtual Schools		10	%		2	%
Core		10	%		2	%
Assessments		10	%		2	%

Summary of Cumulative Impact of Changes in Assumptions Used in Calculating the Fair Value

	Headroom at 31 December  2019		Discount rate			Discount rate for zero headroom			Perpetuity growth  rate			Perpetuity growth  rate for zero headroom			Contribution* reduction p.a. for zero headroom
North American Courseware	£	115m		10.0	%		10.3	%		2.0	%		1.6	%	£	9m
OPM	£	81m		10.0	%		10.3	%		2.0	%		0.3	%	£	7m
Core	£	191m		10.0	%		10.7	%		2.0	%		1.2	%	£	15m
Brazil		—		16.3	%		16.3	%		4.1	%		4.1	%		—