1st March
2024
|
Another year of financial outperformance. Positive outlook with a
stable platform for continued growth
|
£m
|
2023
|
2022
|
|
£m
|
2023
|
2022
|
Business performance
|
|
|
|
Statutory results
|
|
|
Sales
|
3,674
|
3,841
|
|
Sales
|
3,674
|
3,841
|
Adjusted operating profit
|
573
|
456
|
|
Operating profit
|
498
|
271
|
Operating cash flow
|
587
|
401
|
|
Profit for the year
|
380
|
244
|
Free cash flow
|
387
|
222
|
|
Net cash generated from operations
|
682
|
527
|
Adjusted earnings per share
|
58.2p
|
51.8p
|
|
Basic earnings per share
|
53.1p
|
32.8p
|
●
|
Underlying Group sales growth1 of
5%, excluding OPM2 and
the Strategic Review3 businesses.
|
●
|
Group adjusted operating profit of £573m, up 31% on an
underlying basis compared to 2022 with significant expansion in
adjusted operating profit margin from 11.9% to 15.6%, underpinned
by sales growth and execution of £120m cost efficiency
programme.
|
●
|
Operating cash conversion of 102% driving 74% headline increase in
free cash flow.
|
●
|
Proposed final dividend of 15.7p, resulting in full year dividend
up 6% to 22.7p.
|
●
|
Clear capital allocation priorities underpinning £300m share
buyback launched last September and today announcing intention to
extend share buyback programme by £200m.
|
●
|
Positive outlook for 2024 and 2025 in line with expectations and
Group guidance unchanged. Free cash flow expected to further
improve next year due to lower restructuring cash
costs.
|
●
|
We will deliver on current 2024 market
expectations4 for Group
underlying sales growth and adjusted operating profit given the
strength of our core businesses, alongside a disciplined focus on
organic growth, customer expectations and
execution.
|
●
|
The range and quality of products across our business supplying the
vast Enterprise market presents a large and still forming
opportunity, which we plan to maximise.
|
●
|
We will continue to infuse our products and services with a wide
range of AI solutions and capabilities to ensure we lead on
innovation for our end consumers.
|
●
|
We will provide a business and strategic update at our interim
results in July.
|
●
|
Assessment & Qualifications sales were up 7% largely driven by
a strong performance in Pearson VUE with good progress in IT and
healthcare alongside the commencement of new contracts. There was
also good growth across US Student Assessments, Clinical and UK
& International Qualifications, due to new contract wins, good
government funding and price increases.
|
●
|
Virtual Learning sales decreased 20%, primarily due to an expected
87% decrease in the Online Program Management (OPM) business
resulting from the previously announced ASU contract loss. Virtual
Schools sales declined 2%, with enrolments for the 2023/24 academic
year lower due to the previously announced loss of a larger partner
school.
|
●
|
Higher Education sales were down 3%, in line with expectations,
driven by loss of adoptions to non-mainstream publishers in the
first half of the year, as well as pricing mix. Pearson+ continued
to perform well, passing the milestone of 1 million cumulative paid
subscriptions for the calendar year.
|
●
|
English Language Learning sales increased 30% with all three
segments contributing to this growth. Pearson Test of English (PTE)
was the outstanding contributor, delivering volume growth of 49%
against a backdrop of favourable migration policy in Australia and
market share gains in India.
|
●
|
Workforce Skills sales grew 11% for the full year, with a solid
performance in both Vocational Qualifications and Workforce
Solutions.
|
●
|
Performance driven by sales growth and execution of the £120m
cost efficiency programme, partially offset by investment and
inflation. Adjusted operating profit margin rose to 15.6% (2022:
11.9%).
|
●
|
Headline growth was 26% reflecting business performance along with
portfolio changes and currency movements.
|
●
|
Adjusted earnings per share grew to 58.2p (2022: 51.8p) reflecting
adjusted operating profit growth, normalisation of tax and interest
charges and the reduction in issued shares as a result of share
buybacks.
|
●
|
Operating cash1 inflow
increased on a headline basis from £401m in 2022 to £587m
in 2023, representing excellent cash conversion of 102%. This
increase is reflective of the trading performance of the business,
good cash collections and reduced product development in Higher
Education connected to the cost efficiency
programme.
|
●
|
Our excellent cash conversion drove an increase in free cash flow
from £222m in 2022 to £387m in 2023, a free cash flow
conversion of 93%5.
2023 included £63m of cash restructuring costs in relation to
the cost efficiency programme.
|
●
|
We completed the acquisition of PDRI, significantly expanding
Pearson's services to the US federal government as well as growing
our presence with large employers.
|
●
|
Year-end net debt of £0.7bn (2022: £0.6bn) with net debt
/ adjusted EBITDA ratio at 1.0x (2022: 0.8x).
|
●
|
Return on capital was 10.3% (2022: 8.7%).
|
●
|
Proposed final dividend of 15.7p (2022: 14.9p) which equates to a
full year dividend of 22.7p (2022: 21.5p).
|
●
|
The previously announced buyback to repurchase £300m of shares
continued. As at 28th February
2024 £288m of shares had been repurchased at an average price
of 928p per share, representing 96% of the total
programme.
|
●
|
Given the strength of our free cash flow in 2023 we intend to
extend our share buyback programme by £200m.
|
●
|
Sales decreased 4% to £3,674m (2022: £3,841m) reflecting
business performance, portfolio changes and currency
movements.
|
●
|
Statutory operating profit was £498m (2022: £271m). The
increase in 2023 was driven by increased trading profits and a
reduction in the costs of major restructuring, partially offset by
a net loss related to acquisitions and disposals compared to a net
gain in 2022.
|
●
|
Net cash generated from operations of £682m (2022:
£527m).
|
●
|
Statutory earnings per share of 53.1p (2022: 32.8p).
|
●
|
In Assessment & Qualifications we won a number of VUE contracts
that commenced in 2023 and maintained our high customer renewal
rates. Within our UK & International Qualifications business we
leveraged our technology capabilities to extend our onscreen exams
offering with the roll out of GCSE Computer Science and
International GCSEs in English Language and Literature. Within
Clinical Assessment our high quality, trusted portfolio of
intellectual property continued to be a source of competitive
advantage, helping to drive growth in our Digital Assessment
Library for Schools (DALS) product. We won subscription contracts
with Chicago Public Schools and Miami Dade County School
District.
|
●
|
In Virtual Schools we launched a new Connections Academy Career
Pathways programme in five schools for middle and high school
students, where we are offering a tri-credit approach to
career-readiness courses in partnership with Coursera and Acadeum,
amongst others. We saw encouraging enrolment trends in these
schools and are planning to roll the initiative out to an
additional 15 schools in 2024 to drive future growth. We are
pleased to have secured two new schools in the States impacting the
2023/24 and 2024/25 academic years.
|
●
|
In Higher Education we made significant strides in converging our
platforms to enhance stability and deliver upgraded, best-in-class
features to improve our customer experience. Stability was much
improved in the Fall semester with up time improving to 99.8% for
our platform products. We also improved our technology support,
leading to improved NPS scores amongst faculty during the peak Fall
season. Within our product suite we introduced 6 new iLabs to take
our total to 21. Generative AI study tools designed to help
students better learn and understand challenging subjects were
launched in beta within select titles for Pearson+ and Mastering
for Fall back-to-school. We're encouraged by how students are
engaging with these tools, with over 60,000 AI conversations taking
place in Pearson's Tro Chemistry Mastering eText alone and 75% of
users saying the tools were 'helpful' or 'very helpful'. We have
already expanded the beta to 12 additional MyLab and Mastering
titles with at least 40 math, science, business and nursing titles
to follow by Fall semester 2024. We delivered 2% growth in platform
units in 2023. Pearson+ continued to grow, passing the milestone of
1 million cumulative paid subscriptions to reach 1,048k for the
calendar year and we continued to build out our supplementary
learning Channels offering, with 19 study channels now live. The
changes we have made to our sales team and go to market strategy
are delivering early signs of success including a number of
takeaway adoptions in the Fall back to school selling period. We
believe these changes set us up well for continued progress in
2024.
|
●
|
In English Language Learning, we have seen a strong increase in the
number of users on our digital platforms. Coupled with investment
in new digital content, including video and audio, and the strength
of the Global Scale of English, we are confident that we are
delivering engaging learning experiences while enabling teachers to
better understand and meet the needs of their learners. In our
Mondly enterprise focused business, we are launching Mondly by
Pearson Workplace English, which benefits from workplace-specific
content, leveraging our institutional courseware portfolio, and
enhanced features. Coupled with investment in our Versant suite of
tests, this strengthens our offering in the Corporate language
learning space.
|
●
|
Within our Workforce Solutions business we evolved our offering
from a unified product approach, building a powerful technology
stack that has enabled us to break down core Faethm capabilities
into modular application programming interfaces. We are seeing
contract wins across digital credentialing and strategic workforce
planning solutions with the likes of Cleveland Clinic and
ServiceNow.
|
●
|
In Assessment & Qualifications we acquired PDRI, a trusted
provider of workforce assessment services. PDRI launched a full
suite of hiring assessment programmes for the Transportation
Security Administration and also won multi-year contracts with a
number of other US federal agencies, including the US Air Force,
Drug Enforcement Administration, Bureau of Alcohol, Tobacco,
Firearms and Explosives, and Department of Homeland Security.
Within VUE we expect to derive future growth from moving further up
the technology certification value chain and we saw encouraging
signs in this market in 2023. Within Clinical Assessment we made
further progress in pursuing our strategy to partner with clinical
pharmaceutical companies, winning a contract to deliver assessments
to aid determining the effectiveness of a drug used in the
treatment of Alzheimer's disease. Our UK & International
Qualifications business delivered good international growth in
2023. We see further opportunity for growth internationally across
our Assessment & Qualifications businesses into 2024 and
beyond.
|
●
|
In English Language Learning we won recognition for the Pearson
Test of English for Canadian Student Direct Stream and economic
immigration visa applications. This grants access to the full
potential of the Canadian market, which is the largest of the three
key markets which Pearson now has recognition to operate in. We
launched PTE for Canadian Student Direct Stream visa applications
in the second half of 2023 and opened bookings for PTE for Canadian
economic immigration visa applications in February 2024. We
continue to invest in building our brand awareness and testing
capacity in the PTE market. We opened one of our largest
company-owned Pearson VUE testing centres in Chandigarh, India.
With the ability to deliver more than 14,000 tests per month,
including PTE, this marks another step forward in the important
Indian market, where based on the estimated market size we have
seen market share gains throughout 2023.
|
●
|
In our Vocational Qualifications business we signed a contract with
the Jordanian Ministry of Education to partner on the reform of
Jordan's technical and vocational education and training provision
in schools with over 50,000 learners expected to take these courses
over the next three years. International expansion will be an
important growth driver for our Vocational Qualifications business
going forwards.
|
●
|
We delivered £120m of cost efficiencies in 2023 across product
and content support costs, technology and corporate
property.
|
●
|
Cost efficiencies supported adjusted operating profit margin
improvement from 11.9% in 2022 to 15.6% in 2023.
|
●
|
We disposed of our Pearson Online Learning Services (POLS)
business, further focusing Pearson's portfolio towards future
growth opportunities.
|
●
|
We expect Group underlying sales growth, adjusted operating profit
and tax will be in line with current market
expectations4.
Our interest charge will be c.£45m given our ongoing
£300m share buyback and intended extension by a further
£200m.
|
●
|
Every 1c movement in £:$ rate will equate to approximately
£5m adjusted operating profit impact.
|
●
|
In Assessment & Qualifications we expect sales growth of low to
mid-single digit.
|
●
|
In Virtual Schools we expect sales to decline at a similar rate to
2023, given the previously cited loss of a larger partner school
for the 2024/25 academic year. We are pleased to have secured two
new schools in the States impacting the 2023/24 and 2024/25
academic years and therefore expect the division to return to
growth beyond 2024.
|
●
|
In Higher Education we expect to return to sales
growth.
|
●
|
In English Language Learning we continue to expect high single
digit sales growth.
|
●
|
In Workforce Skills we expect to achieve high single digit sales
growth.
|
●
|
We expect a free cash flow conversion of 95-100%.
|
●
|
We continue to expect the Group to achieve mid-single digit
underlying sales 3-year CAGR from 2022 to 2025, excluding OPM and
Strategic Review businesses, and remain on track to achieve our
16-17% adjusted operating profit margin guidance.
|
Investor Relations
|
Jo Russell
James Caddy
|
+44 (0) 7785 451 266
+44 (0) 7825 948 218
|
|
Gemma Terry
Brennan Matthews
|
+44 (0) 7841 363 216
+1 (332) 238-8785
|
Media
Teneo
Pearson
|
Charles Armitstead
Laura Ewart
|
+44 (0) 7703 330 269
+44 (0) 7798 846 805
|
Results event
|
Pearson's prelim results presentation today at 08:30 (GMT).
Register to receive log in details: https://pearson.connectid.cloud/register
|
|
£m
|
2023
|
2022
|
Headline
growth
|
CER
growth1
|
Underlying
growth1
|
Sales
|
|
|
|
|
|
Assessment & Qualifications
|
1,559
|
1,444
|
8%
|
9%
|
7%
|
Virtual Learning
|
616
|
820
|
(25)%
|
(24)%
|
(20)%
|
Higher Education
|
855
|
898
|
(5)%
|
(4)%
|
(3)%
|
English Language Learning
|
415
|
321
|
29%
|
32%
|
30%
|
Workforce Skills
|
220
|
204
|
8%
|
8%
|
11%
|
Strategic Review
|
9
|
154
|
(94)%
|
(94)%
|
(74)%
|
Total
|
3,674
|
3,841
|
(4)%
|
(3)%
|
1%
|
Total, excluding OPM2 and
Strategic Review3
|
|
|
|
|
5%
|
|
|
|
|
|
|
Adjusted operating profit/loss
|
|
|
|
|
|
Assessment & Qualifications
|
350
|
258
|
36%
|
36%
|
33%
|
Virtual Learning
|
76
|
70
|
9%
|
9%
|
(17)%
|
Higher Education
|
110
|
91
|
21%
|
22%
|
20%
|
English Language Learning
|
47
|
25
|
88%
|
116%
|
112%
|
Workforce Skills
|
(8)
|
(3)
|
(167)%
|
(167)%
|
(400)%
|
Strategic Review
|
(2)
|
15
|
(113)%
|
(107)%
|
94%
|
Total
|
573
|
456
|
26%
|
28%
|
31%
|
KPI
|
Objective
|
KPI Measure
|
2023 Actual
|
2022 Actual
|
Digital Growth
|
Drive digital sales growth
|
Underlying growth in Group digital and digital-enabled
sales
|
8%*
|
9%
|
Virtual Schools US enrolments**
|
100k
|
105k
|
||
OnVUE volumes
|
2.7m
|
3.0m
|
||
Higher Education US digital registrations
|
9.8m
|
9.9m
|
||
PTE volume
|
1,231k
|
827k
|
||
Consumer Engagement
|
Create engaging and personalised consumer experiences
|
NPS for Connections Academy
|
+67
|
+67
|
NPS for PTE
|
+55
|
+52
|
||
Pearson+ registered users
|
3.03m
|
2.83m
|
||
Mondly paid subscriptions
|
432k
|
446k
|
||
Workforce Skills new registered users
|
5.3m
|
4.7m
|
||
Product Effectiveness
|
Improve the effectiveness of our products to deliver better
outcomes
|
PTE speed of score return
|
1.0 days
|
1.3 days
|
VUE test volumes
|
20.7m
|
19.4m
|
||
VUE Partner retention
|
93.6%
|
99.9%
|
||
Workforce Skills number of enterprise customers
|
1,547
|
1,503
|
||
Workforce Skills enterprise customer net retention
rate
|
66%
|
74%
|
||
Higher Education product usage - text units
|
4.5m
|
4.8m
|
||
Culture of Engagement & Inclusion
|
Build a culture of engagement and inclusion where diverse talent is
heard, invested in and valued for their strengths and
skills
|
Employee engagement
Pearson uses the
GallupQ12 survey
to measure engagement, annually
|
4.09 GrandMean on a 5 point Likert scale
|
3.96 GrandMean on a 5 point Likert scale
|
Investing in diverse talent
The % of responses
who agree or strongly agree to Gallup Q12 survey
questions.
|
In the last six months, someone at work has talked to me about my
progress = 73%
|
In the last six months, someone at work has talked to me about my
progress = 67%
|
||
This last year, I have had opportunities at work to learn and grow
= 76%
|
This last year, I have had opportunities at work to learn and grow
= 72%
|
|||
Culture of Inclusion Index
The GrandMean of 3
Gallup Q12 survey
questions:
- At work, I am treated with respect
- My company is committed to building the strengths of each
employee
- If I raised a concern about ethics and integrity, I am confident
my employer would do what is right
|
4.21 GrandMean
on a 5 point Likert scale
|
4.12 GrandMean
on a 5 point Likert scale
|
||
Increasing diverse talent***
Objective: Increase BIPOC / BAME representation at all manager
levels and maintain overall gender parity
|
Representation of BIPOC/BAME employees at Manager level and above =
22.0%
|
Representation of BIPOC/BAME employees at Manager level and above =
20.7%
|
||
Global % of female employees = 59.1%
|
Global % of female employees = 59.0%
|
|||
Sustainability Strategy
|
Achieve net zero carbon by 2030
|
Progress against achieving net zero carbon by 2030, as measured
through percentage carbon reduction****
|
16% reduction vs 2022
|
3% reduction vs 2021
|
|
|
|
|
All figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
498
|
271
|
Add
back: Cost of major restructuring
|
|
-
|
150
|
Add
back: Property charges
|
|
11
|
-
|
Add
back: Intangible charges
|
|
48
|
56
|
Add
back: UK pension discretionary increases
|
|
-
|
3
|
Add
back: Other net gains and losses
|
|
16
|
(24)
|
Adjusted operating profit
|
|
573
|
456
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
Sales
|
2
|
3,674
|
3,841
|
Cost
of goods sold
|
|
(1,839)
|
(2,046)
|
Gross profit
|
|
1,835
|
1,795
|
|
|
|
|
Operating
expenses
|
|
(1,322)
|
(1,549)
|
Other
net gains and losses
|
2
|
(16)
|
24
|
Share
of results of joint ventures and associates
|
|
1
|
1
|
Operating profit
|
2
|
498
|
271
|
|
|
|
|
Finance
costs
|
3
|
(81)
|
(71)
|
Finance
income
|
3
|
76
|
123
|
Profit before tax
|
|
493
|
323
|
Income
tax
|
4
|
(113)
|
(79)
|
Profit for the year
|
|
380
|
244
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
Equity
holders of the company
|
|
378
|
242
|
Non-controlling
interest
|
|
2
|
2
|
|
|
|
|
|
|
|
|
Earnings per
share (in
pence per share)
|
|
|
|
Basic
|
5
|
53.1p
|
32.8p
|
Diluted
|
5
|
52.7p
|
32.6p
|
|
|
|
|
all figures in £ millions (unaudited)
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
380
|
244
|
|
|
|
|
Items that may be reclassified to the income statement
|
|
|
|
Net
exchange differences on translation of foreign
operations
|
|
(177)
|
330
|
Currency
translation adjustment disposed
|
|
(122)
|
(5)
|
Attributable
tax
|
|
-
|
4
|
|
|
|
|
Items that are not reclassified to the income
statement
|
|
|
|
Fair
value gain on other financial assets
|
|
1
|
18
|
Attributable
tax
|
|
-
|
1
|
Remeasurement
of retirement benefit obligations
|
|
(85)
|
54
|
Attributable
tax
|
|
20
|
(12)
|
Other comprehensive (expense) / income for the year
|
|
(363)
|
390
|
|
|
|
|
Total comprehensive income for the year
|
|
17
|
634
|
|
|
|
|
Attributable to:
|
|
|
|
Equity
holders of the company
|
|
16
|
630
|
Non-controlling
interest
|
|
1
|
4
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
217
|
250
|
Investment property
|
|
79
|
60
|
Intangible assets
|
9
|
3,091
|
3,177
|
Investments in joint ventures and associates
|
|
22
|
25
|
Deferred income tax assets
|
|
35
|
57
|
Financial assets - derivative financial instruments
|
|
32
|
43
|
Retirement benefit assets
|
|
499
|
581
|
Other financial assets
|
|
143
|
133
|
Income tax assets
|
|
41
|
41
|
Trade and other receivables
|
|
135
|
139
|
Non-current assets
|
|
4,294
|
4,506
|
|
|
|
|
Intangible assets - product development
|
|
947
|
975
|
Inventories
|
|
91
|
105
|
Trade and other receivables
|
|
1,050
|
1,139
|
Financial assets - derivative financial instruments
|
|
16
|
16
|
Income tax assets
|
|
15
|
9
|
Cash and cash equivalents (excluding overdrafts)
|
|
312
|
558
|
Current assets
|
|
2,431
|
2,802
|
|
|
|
|
Assets classified as held for sale
|
|
2
|
16
|
Total assets
|
|
6,727
|
7,324
|
|
|
|
|
Financial liabilities - borrowings
|
|
(1,094)
|
(1,144)
|
Financial liabilities - derivative financial
instruments
|
|
(38)
|
(54)
|
Deferred income tax liabilities
|
|
(46)
|
(37)
|
Retirement benefit obligations
|
|
(44)
|
(61)
|
Provisions for other liabilities and charges
|
|
(15)
|
(14)
|
Other liabilities
|
|
(98)
|
(120)
|
Non-current liabilities
|
|
(1,335)
|
(1,430)
|
|
|
|
|
Trade and other liabilities
|
|
(1,275)
|
(1,254)
|
Financial liabilities - borrowings
|
|
(67)
|
(86)
|
Financial liabilities - derivative financial
instruments
|
|
(5)
|
(11)
|
Income tax liabilities
|
|
(32)
|
(43)
|
Provisions for other liabilities and charges
|
|
(25)
|
(85)
|
Current liabilities
|
|
(1,404)
|
(1,479)
|
|
|
|
|
Liabilities classified as held for sale
|
|
-
|
-
|
Total liabilities
|
|
(2,739)
|
(2,909)
|
|
|
|
|
Net assets
|
|
3,988
|
4,415
|
|
|
|
|
Share capital
|
|
174
|
179
|
Share premium
|
|
2,642
|
2,633
|
Treasury shares
|
|
(19)
|
(15)
|
Reserves
|
|
1,177
|
1,605
|
Total equity attributable to equity holders of the
company
|
|
3,974
|
4,402
|
Non-controlling interest
|
|
14
|
13
|
Total equity
|
|
3,988
|
4,415
|
|
|
|
|
|||||||
|
Equity
attributable to equity holders of the company
|
|
|
|||||||
all figures in £ millions (unaudited)
|
Share
capital
|
Share
premium
|
Treasury
shares
|
Capital
redemption reserve
|
Fair
value reserve
|
Translation
reserve
|
Retained
earnings
|
Total
|
Non-controlling
interest
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
||||||||||
At 1 January 2023
|
179
|
2,633
|
(15)
|
28
|
(13)
|
709
|
881
|
4,402
|
13
|
4,415
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
378
|
378
|
2
|
380
|
Other
comprehensive (expense) / income
|
-
|
-
|
-
|
-
|
1
|
(298)
|
(65)
|
(362)
|
(1)
|
(363)
|
Total
comprehensive (expense) / income
|
-
|
-
|
-
|
-
|
1
|
(298)
|
313
|
16
|
1
|
17
|
Equity-settled
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
40
|
40
|
-
|
40
|
Taxation
on equity-settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
-
|
1
|
Transfer
of gain on disposal of FVOCI investment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Issue
of ordinary shares
|
-
|
9
|
-
|
-
|
-
|
-
|
-
|
9
|
-
|
9
|
Buyback
of equity
|
(5)
|
-
|
-
|
5
|
-
|
-
|
(304)
|
(304)
|
-
|
(304)
|
Purchase
of treasury shares
|
-
|
-
|
(35)
|
-
|
-
|
-
|
-
|
(35)
|
-
|
(35)
|
Release
of treasury shares
|
-
|
-
|
31
|
-
|
-
|
-
|
(31)
|
-
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(155)
|
(155)
|
-
|
(155)
|
At 31 December 2023
|
174
|
2,642
|
(19)
|
33
|
(12)
|
411
|
745
|
3,974
|
14
|
3,988
|
2022
|
||||||||||
At
1 January 2022
|
189
|
2,626
|
(12)
|
18
|
(4)
|
386
|
1,067
|
4,270
|
10
|
4,280
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
242
|
242
|
2
|
244
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
18
|
323
|
47
|
388
|
2
|
390
|
Total
comprehensive income
|
-
|
-
|
-
|
-
|
18
|
323
|
289
|
630
|
4
|
634
|
Equity-settled
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
38
|
38
|
-
|
38
|
Taxation
on equity-settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
3
|
3
|
-
|
3
|
Transfer
of gain on disposal of FVOCI investment
|
-
|
-
|
-
|
-
|
(27)
|
-
|
27
|
-
|
-
|
-
|
Issue
of ordinary shares
|
-
|
7
|
-
|
-
|
-
|
-
|
-
|
7
|
-
|
7
|
Buyback
of equity
|
(10)
|
-
|
-
|
10
|
-
|
-
|
(353)
|
(353)
|
-
|
(353)
|
Purchase
of treasury shares
|
-
|
-
|
(37)
|
-
|
-
|
-
|
-
|
(37)
|
-
|
(37)
|
Release
of treasury shares
|
-
|
-
|
34
|
-
|
-
|
-
|
(34)
|
-
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(156)
|
(156)
|
(1)
|
(157)
|
At
31 December 2022
|
179
|
2,633
|
(15)
|
28
|
(13)
|
709
|
881
|
4,402
|
13
|
4,415
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
Profit
before tax
|
|
493
|
323
|
Net
finance costs / (income)
|
3
|
5
|
(52)
|
Depreciation
& impairment - PPE, investment property & assets held for
sale
|
|
90
|
136
|
Amortisation
and impairment - software
|
|
123
|
125
|
Amortisation
and impairment - acquired intangible assets
|
|
46
|
54
|
Other
net gains and losses
|
|
13
|
(24)
|
Product
development capital expenditure
|
|
(300)
|
(357)
|
Product
development amortisation
|
|
284
|
303
|
Share-based
payment costs
|
|
40
|
35
|
Change
in inventories
|
|
9
|
(34)
|
Change
in trade and other receivables
|
|
(24)
|
33
|
Change
in trade and other liabilities
|
|
(20)
|
(84)
|
Change
in provisions for other liabilities and charges
|
|
(61)
|
50
|
Other
movements
|
|
(16)
|
19
|
Net
cash generated from operations
|
|
682
|
527
|
Interest
paid
|
|
(60)
|
(57)
|
Tax
paid
|
|
(97)
|
(109)
|
Net cash generated from operating activities
|
|
525
|
361
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Acquisition
of subsidiaries, net of cash acquired
|
10
|
(171)
|
(228)
|
Acquisition
of joint ventures and associates
|
10
|
(5)
|
(5)
|
Purchase
of investments
|
|
(8)
|
(12)
|
Purchase
of property, plant and equipment
|
|
(30)
|
(57)
|
Purchase
of intangible assets
|
|
(96)
|
(90)
|
Disposal
of subsidiaries, net of cash disposed
|
11
|
(38)
|
333
|
Proceeds
from sale of investments
|
11
|
7
|
17
|
Proceeds
from sale of property, plant and equipment
|
|
5
|
14
|
Lease
receivables repaid including disposals
|
|
15
|
18
|
Interest
received
|
|
20
|
22
|
Dividends
from joint ventures and associates
|
|
-
|
1
|
Net cash (used in) / generated from investing
activities
|
|
(301)
|
13
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds
from issue of ordinary shares
|
|
9
|
7
|
Buyback
of equity
|
|
(186)
|
(353)
|
Purchase
of treasury shares
|
|
(35)
|
(37)
|
Proceeds
from borrowings
|
|
285
|
-
|
Repayment
of borrowings
|
|
(285)
|
(171)
|
Repayment
of lease liabilities
|
|
(84)
|
(93)
|
Dividends
paid to company's shareholders
|
|
(154)
|
(156)
|
Dividends
paid to non-controlling interest
|
|
-
|
(1)
|
Net cash used in financing activities
|
|
(450)
|
(804)
|
Effects
of exchange rate changes on cash and cash equivalents
|
|
(8)
|
36
|
Net decrease in cash and cash equivalents
|
|
(234)
|
(394)
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
543
|
937
|
Cash and cash equivalents at end of year
|
|
309
|
543
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
Assessments
& Qualifications
|
|
1,559
|
1,444
|
Virtual
Learning
|
|
616
|
820
|
English
Language Learning
|
|
415
|
321
|
Workforce
Skills
|
|
220
|
204
|
Higher
Education
|
|
855
|
898
|
Strategic
Review
|
|
9
|
154
|
Total sales
|
|
3,674
|
3,841
|
|
|
|
|
Adjusted operating profit
|
|
|
|
Assessments
& Qualifications
|
|
350
|
258
|
Virtual
Learning
|
|
76
|
70
|
English
Language Learning
|
|
47
|
25
|
Workforce
Skills
|
|
(8)
|
(3)
|
Higher
Education
|
|
110
|
91
|
Strategic
Review
|
|
(2)
|
15
|
Total adjusted operating profit
|
|
573
|
456
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
|
573
|
456
|
Cost
of major restructuring
|
|
-
|
(150)
|
Property
charges
|
|
(11)
|
-
|
Intangible
charges
|
|
(48)
|
(56)
|
UK
Pension discretionary increases
|
|
-
|
(3)
|
Other
net gains and losses
|
|
(16)
|
24
|
Operating profit
|
|
498
|
271
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Interest
payable on financial liabilities at amortised cost and associated
derivatives
|
|
(34)
|
(32)
|
Interest
on lease liabilities
|
|
(23)
|
(25)
|
Interest
on deferred and contingent consideration
|
|
(4)
|
(5)
|
Fair
value movements on derivatives
|
|
(20)
|
(2)
|
Interest
on provisions for uncertain tax positions
|
|
-
|
(7)
|
Finance costs
|
|
(81)
|
(71)
|
|
|
|
|
Interest
receivable on financial assets at amortised cost
|
|
16
|
18
|
Interest
on lease receivables
|
|
4
|
5
|
Net
finance income in respect of retirement benefits
|
|
26
|
9
|
Fair
value movements on investments held at FVTPL
|
|
13
|
28
|
Net
foreign exchange gains
|
|
3
|
1
|
Fair
value movements on derivatives
|
|
10
|
27
|
Interest
on provisions for uncertain tax positions
|
|
4
|
35
|
Finance income
|
|
76
|
123
|
|
|
|
|
Analysed
as:
|
|
|
|
Net
interest payable reflected in adjusted earnings
|
|
(33)
|
(1)
|
Other
net finance income
|
|
28
|
53
|
Net finance (costs) / income
|
|
(5)
|
52
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Net
finance (costs) / income
|
|
(5)
|
52
|
Net
finance income in respect of retirement benefits
|
|
(26)
|
(9)
|
Interest
on deferred and contingent consideration
|
|
4
|
5
|
Fair
value movements on investments held at FVTPL
|
|
(13)
|
(28)
|
Net
foreign exchange gains
|
|
(3)
|
(1)
|
Fair
value movements on derivatives
|
|
10
|
(25)
|
Interest
on provisions for uncertain tax positions
|
|
-
|
5
|
Net interest payable reflected in adjusted earnings
|
|
(33)
|
(1)
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
493
|
323
|
Tax
calculated at UK rate of 23.5% (2022:19%)
|
|
(116)
|
(62)
|
Effect
of overseas tax rate
|
|
(1)
|
(12)
|
Non-deductible
expenses
|
|
(6)
|
(9)
|
Impact
of rate changes
|
|
(1)
|
3
|
Other
tax items
|
|
11
|
1
|
Income tax charge
|
|
(113)
|
(79)
|
|
|
|
|
Tax
rate reflected in statutory earnings
|
|
23.0%
|
24.5%
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Income tax charge
|
|
(113)
|
(79)
|
Tax
on cost of major restructuring
|
|
-
|
(37)
|
Tax
on property charges
|
|
(3)
|
-
|
Tax
on other net gains and losses
|
|
(10)
|
10
|
Tax
on intangible charges
|
|
(11)
|
(11)
|
Tax
on UK pension discretionary increase
|
|
-
|
(1)
|
Tax
on other net finance costs
|
|
7
|
13
|
Tax
on goodwill and intangibles
|
|
4
|
16
|
Tax
on UK tax rate change
|
|
1
|
(1)
|
Other
tax items
|
|
1
|
19
|
Adjusted income tax charge
|
|
(124)
|
(71)
|
|
|
|
|
Adjusted
profit before tax
|
|
540
|
455
|
|
|
|
|
Tax
rate reflected in adjusted earnings
|
|
23.0%
|
15.6%
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Earnings
for the year
|
|
380
|
244
|
Non-controlling
interest
|
|
(2)
|
(2)
|
Earnings attributable to equity holders
|
|
378
|
242
|
|
|
|
|
|
|
|
|
Weighted
average number of shares (millions)
|
|
711.5
|
738.1
|
Effect
of dilutive share options (millions)
|
|
5.8
|
3.9
|
Weighted
average number of shares (millions) for diluted
earnings
|
|
717.3
|
742.0
|
|
|
|
|
|
|
|
|
Earnings per
share (in
pence per share)
|
|
|
|
Basic
|
|
53.1p
|
32.8p
|
Diluted
|
|
52.7p
|
32.6p
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
all figures in £ millions
|
note
|
Statutory income statement
|
Cost of major restructuring
|
Property charges
|
Other net gains and losses
|
Intangible charges
|
UK pension discretionary increases
|
Other finance costs
|
Other tax items
|
Adjusted income statement
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
2023
|
||||||||||||||||
Operating profit
|
2
|
498
|
-
|
11
|
16
|
48
|
-
|
-
|
-
|
573
|
|||||||
Net
finance costs
|
3
|
(5)
|
-
|
-
|
-
|
-
|
-
|
(28)
|
-
|
(33)
|
|||||||
Profit before tax
|
|
493
|
-
|
11
|
16
|
48
|
-
|
(28)
|
-
|
540
|
|||||||
Income
tax
|
4
|
(113)
|
-
|
(3)
|
(10)
|
(11)
|
-
|
7
|
6
|
(124)
|
|||||||
Profit for the year
|
|
380
|
-
|
8
|
6
|
37
|
-
|
(21)
|
6
|
416
|
|||||||
Non-controlling
interest
|
|
(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
|||||||
Earnings
|
|
378
|
-
|
8
|
6
|
37
|
-
|
(21)
|
6
|
414
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Weighted average number of shares (millions)
|
|
|
|
711.5
|
||||||||||||
|
Weighted average number of shares (millions) for diluted
earnings
|
|
|
|
717.3
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
Adjusted earnings per share (basic)
|
|
|
|
58.2p
|
||||||||||||
|
Adjusted earnings per share (diluted)
|
|
|
|
57.7p
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
all figures in £ millions
|
note
|
Statutory income statement
|
Cost of major restructuring
|
Property charges
|
Other net gains and losses
|
Intangible charges
|
UK pension discretionary increases
|
Other finance costs
|
Other tax items
|
Adjusted income statement
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2022
|
|||||||||||||||||||
Operating profit
|
2
|
271
|
150
|
-
|
(24)
|
56
|
3
|
-
|
-
|
456
|
||||||||||
Net
finance costs
|
3
|
52
|
-
|
-
|
-
|
-
|
-
|
(53)
|
-
|
(1)
|
||||||||||
Profit before tax
|
|
323
|
150
|
-
|
(24)
|
56
|
3
|
(53)
|
-
|
455
|
||||||||||
Income
tax
|
4
|
(79)
|
(37)
|
-
|
10
|
(11)
|
(1)
|
13
|
34
|
(71)
|
||||||||||
Profit for the year
|
|
244
|
113
|
-
|
(14)
|
45
|
2
|
(40)
|
34
|
384
|
||||||||||
Non-controlling
interest
|
|
(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
||||||||||
Earnings
|
|
242
|
113
|
-
|
(14)
|
45
|
2
|
(40)
|
34
|
382
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Weighted average number of shares (millions)
|
|
|
|
738.1
|
|||||||||||||||
|
Weighted average number of shares (millions) for diluted
earnings
|
|
|
|
742.0
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
Adjusted earnings per share (basic)
|
|
|
|
51.8p
|
|||||||||||||||
|
Adjusted earnings per share (diluted)
|
|
|
|
51.5p
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Amounts
recognised as distributions to equity shareholders in the
year
|
|
155
|
156
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Average
rate for profits
|
|
1.25
|
1.24
|
Year
end rate
|
|
1.27
|
1.21
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Goodwill
|
|
2,434
|
2,480
|
Other
intangibles
|
|
657
|
697
|
Non-current intangible assets
|
|
3,091
|
3,177
|
|
|
|
|
|
all figures in £ millions
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
117
|
110
|
Deferred tax assets
|
|
|
-
|
8
|
Trade and other receivables
|
|
|
8
|
8
|
Cash and cash equivalents
|
|
|
4
|
13
|
Trade
and other liabilities
|
|
|
(7)
|
(26)
|
Deferred
tax liabilities
|
|
|
(31)
|
(22)
|
Net assets acquired
|
|
|
91
|
91
|
Goodwill
|
|
|
61
|
204
|
Total
|
|
|
152
|
295
|
|
|
|
|
|
Satisfied by:
|
|
|
|
|
Cash consideration
|
|
|
152
|
223
|
Deferred and contingent consideration
|
|
|
-
|
41
|
Fair value of existing investment
|
|
|
-
|
31
|
Total consideration
|
|
|
152
|
295
|
|
|
|
|
|
Cash flow from acquisitions
|
|
|
|
|
Cash - current year acquisitions
|
|
(152)
|
(223)
|
|
Cash and cash equivalents acquired
|
|
4
|
13
|
|
Deferred payments for prior year acquisitions and other
items
|
|
(23)
|
(18)
|
|
Net cash outflow
|
|
|
(171)
|
(228)
|
|
|
|
|
|
all figures in £ millions
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, including goodwill
|
|
|
(53)
|
(77)
|
Property, plant and equipment
|
|
|
(5)
|
(11)
|
Intangible assets - product development
|
|
|
(15)
|
(39)
|
Inventories
|
|
|
(1)
|
(33)
|
Trade and other receivables
|
|
|
(65)
|
(106)
|
Deferred tax
|
|
|
8
|
(12)
|
Current tax (receivable) / payable
|
|
|
(2)
|
7
|
Cash and cash equivalents (excluding overdrafts)
|
|
|
(12)
|
(21)
|
Provisions for other liabilities and charges
|
|
|
-
|
1
|
Retirement
benefit obligations
|
|
|
-
|
2
|
Trade
and other liabilities
|
|
|
31
|
45
|
Financial
liabilities - borrowings
|
|
|
-
|
8
|
Net assets disposed
|
|
|
(114)
|
(236)
|
|
|
|
|
|
Cumulative currency translation adjustment
|
|
|
122
|
5
|
Cash proceeds
|
|
|
1
|
291
|
Deferred proceeds
|
|
|
12
|
2
|
Costs of disposal
|
|
|
(30)
|
(25)
|
(Loss) / gain on disposal
|
|
|
(9)
|
37
|
|
|
|
|
|
Cash flow from disposals
|
|
|
|
|
Proceeds - current year disposals
|
|
|
1
|
291
|
Proceeds - prior year disposals
|
|
|
-
|
86
|
Cash and cash equivalents disposed
|
|
|
(12)
|
(21)
|
Costs and other disposal liabilities paid
|
|
|
(27)
|
(23)
|
Net cash (outflow) / inflow from disposals
|
|
|
(38)
|
333
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
Derivative
financial instruments
|
|
32
|
43
|
Trade
and other receivables - investment in finance lease
|
|
82
|
104
|
Current assets
|
|
|
|
Derivative
financial instruments
|
|
16
|
16
|
Trade
and other receivables - investment in finance lease
|
|
18
|
17
|
Cash
and cash equivalents (excluding overdrafts)
|
|
312
|
558
|
Non-current liabilities
|
|
|
|
Borrowings
|
|
(1,094)
|
(1,144)
|
Derivative
financial instruments
|
|
(38)
|
(54)
|
Current liabilities
|
|
|
|
Borrowings
(including overdrafts)
|
|
(67)
|
(86)
|
Derivative
financial instruments
|
|
(5)
|
(11)
|
Net debt
|
|
(744)
|
(557)
|
all figures in £ millions
|
Statutory measure
|
Cost of major restructuring
|
Property charges
|
Other net gains and losses
|
Intangible charges
|
UK pension discretionary increases
|
Purchase/ disposal of PPE and software
|
Net addition of right-of-use assets
|
Dividends from joint ventures & associates
|
Adjusted
measure
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
2023
|
||||||||||||||
Operating
profit
|
498
|
-
|
11
|
16
|
48
|
-
|
-
|
-
|
-
|
573
|
Adjusted operating profit
|
|||||
Net cash generated from operations
|
682
|
63
|
-
|
4
|
-
|
-
|
(121)
|
(41)
|
-
|
587
|
Operating cash flow
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
2022
|
||||||||||||||
Operating
profit
|
271
|
150
|
-
|
(24)
|
56
|
3
|
-
|
-
|
-
|
456
|
Adjusted operating profit
|
|||||
Net cash generated from operations
|
527
|
35
|
-
|
-
|
-
|
-
|
(133)
|
(29)
|
1
|
401
|
Operating cash flow
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Reconciliation of operating cash flow to closing net
debt
|
|
|
|
|
|
|
|
Operating cash flow
|
|
587
|
401
|
Tax
paid
|
|
(97)
|
(109)
|
Net
finance costs paid
|
|
(40)
|
(35)
|
Net
cost paid for major restructuring
|
|
(63)
|
(35)
|
Free cash flow
|
|
387
|
222
|
Dividends
paid (including to non-controlling interest)
|
|
(154)
|
(157)
|
Net movement of funds from operations
|
|
233
|
65
|
Acquisitions
and disposals
|
|
(219)
|
105
|
Disposal
of lease liabilities
|
|
-
|
8
|
Net
equity transactions
|
|
(212)
|
(383)
|
Other
movements on financial instruments
|
|
11
|
(2)
|
Movement in net debt
|
|
(187)
|
(207)
|
Opening
net debt
|
|
(557)
|
(350)
|
Closing net debt
|
12
|
(744)
|
(557)
|
|
PEARSON
plc
|
|
|
Date: 01
March 2024
|
|
|
By: /s/
NATALIE WHITE
|
|
|
|
------------------------------------
|
|
Natalie
White
|
|
Deputy
Company Secretary
|