XML 33 R19.htm IDEA: XBRL DOCUMENT v3.20.1
Assets held for sale and discontinued operations
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Assets held for sale and discontinued operations
12. Assets held for sale and discontinued operations
 
In July 2019, the Group announced the proposed sale of its Kantar business to Bain Capital. On 5 December 2019 the first stage of the transaction completed, consisting of approximately 90% of the Kantar group, with consideration of £2,140.2 million after tax and disposal costs. The sale involved the Group disposing of the Kantar business and holding a 40% equity stakes post-transaction which are treated as an associate. This generated a pre-tax gain of £73.8 million, tax charge of £157.4 million and goodwill impairment of £94.5 million for the Group. The remaining stages of the transaction are expected to complete in 2020 with further consideration expected to be approximately £200 million after tax and disposal costs.
 
As outlined in the accounting policies, the criterion of a highly probable sale was met on 9 July 2019, following Board approval of the disposal of Kantar to Bain Capital, representing the date at which the appropriate level of management was committed to a plan to sell the disposal group. The Kantar disposal group therefore became held for sale on this date.
 
The Kantar group (both the portion that has been disposed of by year end and the portion that is expected to be disposed of in 2020) is classified as a discontinued operation in 2019 under IFRS 5 as it forms a separate major line of business and there was a single co-ordinated plan to dispose of it. Kantar represents materially all of the Data Investment Management segment of the Group.
 
As at 31 December 2019 the remaining portion of the company not yet sold is disclosed as held for sale.
 
Results of the discontinued operations, which have been included in profit for the year, were as follows:
 
 
  
2019
£m
 
 
2018
£m
 
 
2017
£m
 
Revenue
  
 
2,387.5
 
 
 
2,555.7
 
 
 
2,657.8
 
Costs of services
  
 
(1,951.5
) 
 
 
(2,104.4
) 
 
 
(2,147.4
) 
Gross profit
  
 
436.0
 
 
 
451.3
 
 
 
510.4
 
General and administrative costs
  
 
(151.7
) 
 
 
(257.8
) 
 
 
(180.1
) 
Operating profit
  
 
284.3
 
 
 
193.5
 
 
 
330.3
 
Share of results of associates
  
 
6.5
 
 
 
13.0
 
 
 
15.5
 
Profit before interest and taxation
  
 
290.8
 
 
 
206.5
 
 
 
345.8
 
Finance income
  
 
3.6
 
 
 
5.4
 
 
 
6.2
 
Finance costs
  
 
(17.3
) 
 
 
(9.7
) 
 
 
(7.9
) 
Revaluation of financial instruments
  
 
(9.4
) 
 
 
3.5
 
 
 
18.3
 
Profit before taxation
  
 
267.7
 
 
 
205.7
 
 
 
362.4
 
Attributable tax expense
  
 
(78.8
) 
 
 
(67.9
) 
 
 
(114.0
) 
Profit after taxation
  
 
188.9
 
 
 
137.8
 
 
 
248.4
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment on classification as held for sale
1
  
 
(94.5
) 
 
 
–
 
 
 
–
 
Gain on sale of discontinued operations
  
 
73.8
 
 
 
–
 
 
 
–
 
Attributable tax expense on sale of discontinued operations
  
 
(157.4
) 
 
 
–
 
 
 
–
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Net gain attributable to discontinued operations
  
 
10.8
 
 
 
137.8
 
 
 
248.4
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Attributable to
  
 
 
 
 
 
 
 
 
 
 
 
Equity holders of the parent
  
 
(3.8
) 
 
 
126.4
 
 
 
237.1
 
Non-controlling
interests
  
 
14.6
 
 
 
11.4
 
 
 
11.3
 
 
  
 
10.8
 
 
 
137.8
 
 
 
248.4
 
 
Note
1
 
 
Goodwill impairment of £94.5 million arose from the assessment of fair value less costs to sell under IFRS 5.
 
For the year ended 31 December 2019, the Kantar group contributed £322.9 million (2018: £292.5 million, 2017: £378.4 million) to the Group’s net operating cash flows, paid £53.2 million (2018: £59.5 million, 2017: £67.8 million) in respect of investing activities and paid £27.2 million (2018: £7.9 million, 2017: £9.1 million) in respect of financing activities.
 
The gain on sale of discontinued operations disposed by 31 December 2019 is calculated as follows:
 
 
  
2019
£m
 
Intangible assets (including goodwill)
  
 
2,410.0
 
Property, plant and equipment
  
 
115.7
 
Right-of-use
assets
  
 
103.5
 
Interests in associates and joint ventures
  
 
92.3
 
Other investments
  
 
11.5
 
Deferred tax assets
  
 
44.1
 
Corporate income tax recoverable
  
 
49.8
 
Trade and other receivables
  
 
748.8
 
Cash and cash equivalents
  
 
324.9
 
Trade and other payables
  
 
(839.8
) 
Corporate income tax payable
  
 
(48.2
) 
Lease liabilities
  
 
(106.3
) 
Deferred tax liabilities
  
 
(98.6
) 
Provisions for post-employment benefits
  
 
(26.7
) 
Provisions for liabilities and charges
  
 
(22.4
) 
Net assets
  
 
2,758.6
 
 
  
 
 
 
Non-controlling
interests
  
 
(19.1
) 
Net assets excluding
non-controlling
interests
  
 
2,739.5
 
 
  
 
 
 
Consideration received in cash and cash equivalents
  
 
2,352.1
 
Re-investment in equity stake
1
  
 
231.7
 
Transaction costs
  
 
(56.1
) 
Deferred consideration
2
  
 
1.6
 
Total consideration received
  
 
2,529.3
 
 
  
 
 
 
Loss on sale before exchange adjustments
  
 
(210.2
) 
Exchange adjustments recycled to the income statement
  
 
284.0
 
Gain on sale of discontinued operation
  
 
73.8
 
 
Notes
 
 
1
 
 
Re-investment in equity stake represents the value of the Group’s 40% stake in the new Kantar group as part of the disposal.
2
 
 
Deferred consideration is made up of £79.6 million expected to be received in future periods on the satisfaction of certain conditions and the deferral of £78.0 million consideration against services the Group will supply to Kantar on favourable terms in the future. The conditions expected to be met in the future include the settlement of ongoing legal cases, realisation of the value of certain investments and the utilisation of certain tax losses and allowances. There was uncertainty at the date of disposal in regard to the ultimate resolution of these items and estimates of amounts due to be received were required to be made; there were no individually material estimates. Future services provided by the Group to Kantar arose through the negotiation of Transition Service Arrangements, as is customary for a disposal of this magnitude. The Group will support Kantar for a period of up to 4 years, primarily in the area of IT, on terms which are favourable to the disposal group. As such, an element of consideration has been deferred and will be recognised as the services are provided.
 
The major classes of assets and liabilities comprising the operations classified as held for sale at 31 December 2019 are as follows:
 
 
  
2019
£m
 
Non-current
assets
  
 
 
 
Intangible assets:
  
 
 
 
Goodwill
  
 
155.4
 
Other
  
 
5.9
 
Property, plant and equipment
  
 
12.8
 
Right-of-use
assets
  
 
25.7
 
Interests in associates and joint ventures
  
 
4.6
 
Other investments
  
 
0.6
 
Deferred tax assets
  
 
5.9
 
Trade and other receivables
  
 
2.6
 
 
  
 
213.5
 
 
  
 
 
 
Current assets
  
 
 
 
Corporate income tax recoverable
  
 
15.9
 
Trade and other receivables
  
 
189.4
 
Cash and short-term deposits
  
 
66.5
 
 
  
 
271.8
 
 
  
 
 
 
Total assets classified as held for sale
  
 
485.3
 
 
  
 
 
 
Current liabilities
  
 
 
 
Trade and other payables
  
 
(130.4
) 
Corporate income tax payable
  
 
(3.8
) 
Bank overdrafts
  
 
(0.2
) 
Short-term lease liabilities
  
 
(3.9
) 
 
  
 
(138.3
) 
Non-current
liabilities
  
 
 
 
Trade and other payables
  
 
(1.3
) 
Deferred tax liabilities
  
 
(1.2
) 
Provisions for post-employment benefits
  
 
(8.5
) 
Provisions for liabilities and charges
  
 
(0.6
) 
Long-term lease liabilities
  
 
(20.5
) 
 
  
 
(32.1
) 
 
  
 
 
 
Total liabilities associated with assets classified as held for sale
  
 
(170.4
) 
 
  
 
 
 
Net assets of disposal group
  
 
314.9
 
 
On 27 February 2020, the second stage of the Kantar transaction completed, consisting of approximately 4% of the Kantar
g
roup, with cash consideration received of £136.7 million. The remaining stages of the transaction are expected to complete in 2020.