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Pearson plc ("Pearson") notes that the intended date of payment of its 2022 interim dividend (Monday, 19th September 2022) has been declared a bank holiday in the United Kingdom in connection with Her Majesty Queen Elizabeth II's State Funeral. Accordingly, the interim dividend of 6.6p per share will now be paid on Tuesday, 20th September 2022.
Highlights
·
Group underlying sales up 7%. Full year sales and adjusted operating profit expectations reaffirmed.
Strong trading performance with an outstanding result in English Language Learning and a good performance in Virtual Learning, Workforce Skills and Assessment & Qualifications, offset by an expected decline in Higher Education.
Delivering strategic progress; reshaping our portfolio and increasing interconnectivity between divisions to unlock synergies and lifelong learning potential.
On track to deliver at least £100m of efficiencies in 2023 which will accelerate improved margin expectations from 2025 to 2023.
Andy Bird, Pearson's Chief Executive, said:
" This has been another good quarter for Pearson and I am pleased with the continuing momentum the business is demonstrating through our sharp focus on delivery. We are executing well on our plan for accelerated margin improvement.
"We believe Pearson is well positioned for the future, and we are confident of being able to navigate the challenging macroeconomic environment. We are making strong progress in creating a digital learning ecosystem which can serve many more people across their lifetime of learning. This will lead to better outcomes for our learners and also deliver value for our shareholders and wider stakeholders."
In accordance with the UK Corporate Governance Code, Pearson plc ("Pearson" or the "Company") is providing this update following the outcome of the Annual General Meeting on 29 April 2022. Whilst the Board very much appreciated the support by the majority of shareholders, it was naturally disappointed a significant minority (23.47%) voted against the Company's remuneration report.
The feedback we have received indicates that this outcome continues to reflect the views held by some of Pearson's shareholders around the structure of the Co-investment award, which was designed to secure the appointment of the Chief Executive Officer and voted on by shareholders in September 2020. The Company's remuneration report will continue to include detailed disclosure around the structure of this award as well as the Remuneration Committee's consideration of the performance underpins. Prior to the vesting of each tranche of the award, the Committee undertakes a thorough and robust review process which considers a holistic view of the wider stakeholder experience.
This year, the Remuneration Committee is undertaking a comprehensive review of Pearson's executive remuneration framework ahead of the renewal of the Directors' Remuneration Policy at the 2023 AGM, in line with the normal three-year cycle in the UK. As part of this process, the Committee is engaging extensively with shareholders. Pearson would like to thank all those who have participated in the engagement exercise to date or will do so in due course. All feedback received is invaluable to the Remuneration Committee as it develops and refines its proposals.
Pearson is committed to having a constructive and positive relationship with all its shareholders and their advisers and will continue to engage as appropriate going forward. Full details of the proposed new Directors' Remuneration Policy and its implementation for 2023 will be disclosed in our 2022 Annual Report.
Pearson today announces it has entered into an agreement with SHL Group to acquire Personnel Decisions Research Institutes, LLC ('PDRI'), a trusted provider of workforce assessment services. PDRI has significant expertise in providing assessment solutions to the U.S. federal government, one of the largest employers in the U.S. with more than 4 million employees. This acquisition further expands Pearson's portfolio, accelerating the Company's strategy to capture new market opportunities and grow its presence with large employers.
Founded in 1975, PDRI has built a strong reputation for delivering quality talent assessments, including tailored assessments to support hiring practices for U.S. federal government agencies. The acquisition significantly expands Pearson's services to U.S. federal agencies, including through PDRI's partnership with the Office of Personnel Management to deliver the USA Hire platform. The USA Hire platform serves more than 40 agencies and is utilised to assess more than 500,000 applicants annually.
PDRI will join Pearson's Assessment & Qualifications division. Within this division, Pearson and PDRI already have an established, strong working relationship, partnering to deliver assessments to federal jobseekers at Pearson VUE test centers. This acquisition unlocks synergies between Pearson and PDRI, whilst bringing new capabilities for Pearson to explore as the company grows its long-standing enterprise learning presence.
The consideration for PDRI represents an enterprise value of $190m, which will be funded from Pearson's existing cash and available liquidity. PDRI has a highly attractive financial profile with an impressive revenue growth opportunity, good margins and strong cash flow conversion. In the year ending December 2021, PDRI recognised revenues of $33m and delivered EBITDA CAGR of 12% from 2018-2021. The acquisition will be accretive to growth and margins for our Assessment & Qualifications division, as well as driving returns for shareholders.
Highlights
Group underlying sales for the full year up 5% and adjusted operating profit of c.£455m at £:$ 1.24, up c.11% on an underlying basis compared to 2021, ahead of expectations.
Strong trading performance reflects good result in English Language Learning, Virtual Learning, Workforce Skills and Assessment & Qualifications, offset by an expected, albeit reduced, decline in Higher Education.
A year of strategic and operational progress; reshaping our portfolio for growth, adding capabilities and increasing interconnectivity between divisions to unlock synergies and build further lifelong learning potential.
On track to deliver approximately £120m of cost efficiencies in 2023, weighted to Higher
Education, some £20m of which will be used to offset inflationary pressures.
Andy Bird, Pearson's Chief Executive, said:
"These results are testament to the strong momentum that we've been building operationally and strategically over the past 24 months. For a second consecutive year, our financial performance was ahead of expectations, and we saw progress in our strategic initiatives, which are taking Pearson on a new, exciting journey.
Our portfolio continues to strengthen, with our new Workforce Skills talent investment platform created to leverage the structural growth in our markets and increased need for upskilling and reskilling. This will be a key growth driver for Pearson over the coming years. Our confidence for the future is underpinned by ongoing innovation, alongside our increasing divisional interconnectivity. This is combined with accelerating demand for our digital solutions, a growing consumer-focused proposition and our ability to serve more people across their lifelong learning journeys."
Underlying sales growth1 of 5%
Assessment & Qualifications up 8% driven by strong performances in US Student Assessment and UK & International Qualifications as exams resumed, and in Clinical Assessment due to good government funding and continued focus on health and wellbeing. Pearson VUE saw particularly strong growth in the IT and healthcare segments.
Virtual Learning up 4% driven by firm retention rates in Virtual Schools in the prior academic year (2021/22) and favourable revenue mix. OPM sales were up 4%.
Higher Education down 4% driven by a decline in enrolments and a loss of adoptions to non-mainstream publishers, including open educational resources, partially offset by improved pricing. Pearson+ increased paid subscriptions to 406k in the Fall semester (Fall 2021:133k).
English Language Learning up 24% due to increased Pearson Test of English (PTE) volumes, which were up 90%, as global mobility continued to improve with border re-openings and market share gains in India.
Workforce Skills up 7% with growth driven by BTEC and Apprenticeships, GED and TalentLens.
Businesses under strategic review down 16%.
Adjusted operating profit1 up 11% on an underlying basis to £456m
Driven by operating leverage on revenue growth and property cost savings, partially offset by inflation. We continued to invest in growth, including in our new Workforce Skills talent investment platform, supported by the reallocation of costs from other areas of the business.
Headline growth was 18% reflecting underlying performance, portfolio changes and currency movements.
Interest and tax charges were lower than normal in 2022, due to the release of tax provisions. This, along with the significant increase in adjusted operating profit and the reduction in issued shares given the share buyback, has driven a 48% increase in adjusted earnings per share of 51.8p (2021: 34.9p). The effective tax rate was 16% (2021: 20%) and the net interest charge was £1m (2021: £57m).
Cash performance
·Operating cash1 inflow increased on a headline basis from £388m in 2021 to £401m in 2022, representing strong cash conversion of 88% despite the impact of the timing of the disposal of our international courseware local publishing businesses.
Strong balance sheet supports continued investment and increased shareholder returns
Acquisitions of Mondly, Credly and PDRI (subject to close) to support growth strategy across the Pearson ecosystem.
Year-end net debt of £0.6bn (2021: £0.4bn) with leverage at 0.8x (2021: 0.6x).
Proposed final dividend of 14.9p (2021: 14.2p) which equates to a full year dividend of 21.5p (2021:20.5p).
Completed the £350m share buyback with a total of 42.3m shares repurchased in 2022.
And later;
The directors are proposing a final dividend of 14.9p per equity share, payable on 5 May 2023 to shareholders on the register at the close of business on 24 March 2023. This final dividend, which will absorb an estimated £107m of shareholders' funds, has not been included as a liability as at 31 December 2022.
Today, Pearson announces that it has agreed to sell POLS to Regent, a global private equity firm focused on acquiring businesses and deploying its strategic and operational expertise to fuel growth and innovation. The sale of this business concludes the strategic review and demonstrates further progress in reshaping Pearson's portfolio towards future growth opportunities centered around lifelong learning.
The consideration to be received by Pearson is deferred and comprises:
· Each year, for a period of 6-years from completion of the transaction, 27.5% of POLS positive Adjusted EBITDA in each calendar year (pro-rated where only a portion of a calendar year falls within the period). Pearson will not share in any loss making periods;
· A further contingent payment equal to 27.5% of the proceeds received by Regent in relation to any monetisation event of POLS following completion of the transaction1.
When received, the proceeds of this transaction will be used for general corporate purposes within Pearson's capital allocation framework.
Pearson today announces it has completed the acquisition of Personnel Decisions Research Institutes, LLC ('PDRI'), a trusted provider of workforce assessment services. PDRI has significant expertise in providing assessment solutions to the U.S. federal government, one of the largest employers in the U.S. with more than 4 million employees. This acquisition further expands Pearson's portfolio, accelerating the Company's strategy to capture new market opportunities and grow its presence with large employers. PDRI will now operate under the 'PDRI by Pearson' brand name.
Founded in 1975, PDRI has built a strong reputation for delivering quality talent assessments, including tailored assessments to support hiring practices for U.S. federal government agencies. The acquisition significantly expands Pearson's services to U.S. federal agencies, including through PDRI's partnership with the Office of Personnel Management to deliver the USA Hire platform. The USA Hire platform serves more than 40 agencies and is utilised to assess more than 500,000 applicants annually.
PDRI will join Pearson's Assessment & Qualifications division. Within this division, Pearson and PDRI already have an established, strong working relationship, partnering to deliver assessments to federal jobseekers at Pearson VUE test centers. This acquisition unlocks synergies between Pearson and PDRI, whilst bringing new capabilities for Pearson to explore as the company grows its long-standing enterprise learning presence.
Highlights
Underlying sales growth excluding OPM1 and Strategic Review2 of 6%.
Performance in each of Pearson's divisions in line with or ahead of our expectations.
Strong progress executing our strategic priorities, including further portfolio reshaping with the sale of OPM and completion of PDRI acquisition.
On track for delivery of £120m of cost efficiencies this year .
Remain on track to achieve our 2023 guidance.
Intention to commence a buyback to repurchase £300m of shares in the second half of 2023.
Andy Bird, Pearson's Chief Executive, said:
"Pearson has had a strong start to the year with results ahead of our expectations. This ongoing momentum is testament to our increasingly interconnected, consumer-focused, and innovative approach alongside relentless commercial execution. We delivered double-digit sales growth in our enterprise facing businesses, reflecting our strategy to address the upskilling and reskilling opportunity around the world. With our new talent investment platform on track to be launched later this year, this progress reinforces our belief that partnerships with enterprises will be a strong driver of future growth. Our continuing outperformance and the proven resilience of our business underpins our confidence of delivering on our financial expectations for the full year and over the medium term."
Pearson today updates on the generative AI enhancements in products across its portfolio. These enhancements, when combined with Pearson's unparalleled collection of high quality proprietary intellectual property assets, further strengthen the Company's position as a digital-first learning company focused on delivering an unmatched experience for the consumer across their lifetime of learning.
Andy Bird, Pearson's Chief Executive, said:
"AI has played an important role across our product portfolio for many years. As generative AI develops, we expect it to create significant positive opportunities for Pearson, due to our unrivalled depth of content and data. Learners and educators place enormous trust in us so we have a responsibility to be thoughtful and considered in how we use this technology, whilst continuing to move at pace to enhance our products."
Highlights
Underlying Group sales growth1 of 6%, excluding OPM2 and the Strategic Review3 businesses with particularly strong performances in English Language Learning and Assessment & Qualifications.
Underlying adjusted operating profit growth of 44% and strong operating cash flow performance of £79m, reflecting strong trading and benefits of the cost efficiency programme in H1, with the remainder to be realised in H2.
Further portfolio reshaping with completion of the acquisition of Personnel Decisions Research Institutes (PDRI) within our Assessment & Qualifications division and the completion of the disposal of Pearson Online Learning Services (POLS).
·Good strategic progress, including ongoing execution of Artificial Intelligence (AI) strategy.
And later;
Dividend;
The directors are declaring an interim dividend of 7p per equity share, payable on 18 September 2023 to shareholders on the register at the close of business on 11 August 2023. This interim dividend, which will absorb an estimated £50m of shareholders' funds, has not been included as a liability as at 30 June 2023.
The Board of Pearson plc today announces the appointment of Omar Abbosh as its new Chief Executive Officer and Executive Director, effective early 2024. Omar Abbosh will succeed Andy Bird, who has decided to retire as CEO of Pearson.
Highlights
Underlying Group revenue growth1 of 5%, excluding OPM2 and the Strategic Review3 businesses, with particularly strong performances in Pearson VUE and Pearson Test of English.
Full year Group adjusted operating profit guidance upgraded by c.£20m to £570m - £575m at £:$ of 1.24. Current Vuma consensus is £552m at £:$ of 1.244.
Initiated £300m share buyback programme.
We are hosting an investor seminar focused on our Assessment & Qualifications business on Monday 6th November at the New York Stock Exchange.
Andy Bird, Pearson's Chief Executive, said:
"This third quarter performance illustrates the continuing momentum across our businesses, led by Pearson VUE and Pearson Test of English. Our Higher Education business reported as expected and remains on plan to return to growth next year. We've received positive initial feedback from our Generative AI tools and are evolving our AI capabilities to create further opportunities to maximise the potential of our trusted, proprietary content and data sets. I would like to thank every employee for supporting me over the last three years and creating a period of sustained growth and strategic progress. Pearson is well positioned for the next stage of its growth and development and poised to take advantage of long-term future opportunities."
Further to Pearson plc's announcement on 20th September 2023, Pearson today confirms that Omar Abbosh will assume the role of Chief Executive Officer and Executive Director on 8th January 2024, succeeding Andy Bird. Andy will step down as Chief Executive Officer and as a Pearson Board member at this time but will remain with the company until 31st March 2024 to ensure a smooth transition.
Pearson, the world's leading learning company, will host an investor seminar today at the New York Stock Exchange for analysts and investors on its largest and most profitable business, Assessment & Qualifications.
The seminar will be hosted by CEO, Andy Bird, and Sally Johnson, CFO. It will feature presentations and Q&A from Art Valentine, President, Assessment & Qualifications; Gary Gates, Managing Director, Pearson VUE; Sharon Hague, Managing Director, US Student Assessment and UK & International Qualifications; and Mary Kempf, SVP, Finance, Assessment & Qualifications. No new material financial information will be provided and there will be no new disclosures on current trading with the Group having already announced Q3 results on 30th October.
Highlights
Underlying Group sales growth1 of 5% for the full year, excluding OPM2 and the Strategic Review3 businesses.
Group adjusted operating profit of c.£570-575m at £:$ of 1.25 for the full year, up more than 30% on an underlying basis compared to 2022, resulting in a margin of c.15.5%.
Strong full year performance driven by Assessment & Qualifications and English Language Learning.
Cost efficiency programme successfully delivered £120m of savings.
We're encouraged by how students are engaging with our generative AI study tools and will be expanding the current beta to many more MyLab and Mastering titles by Fall semester 2024. Higher Education platform units also delivered encouraging growth.
Pearson+ passed the milestone of 1 million cumulative paid subscriptions for the calendar year.
Highlights
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.
And later;
Dividend.
The Directors are proposing a final dividend of 15.7p per equity share, payable on 3 May 2024 to shareholders on the register at the close of business on 22 March 2024. This final dividend, which will absorb an estimated £107m of shareholders' funds, has not been included as a liability as at 31 December 2023.
Highlights
Underlying sales growth excluding OPM1 and Strategic Review2 of 3%.
Strong operational progress in all divisions and continued execution momentum across our 2024 strategic priorities.
Continuing to infuse our products with AI and on-track to include AI features in more than 40 Higher Education titles for the Fall semester.
Initial £300m share buyback completed; the previously announced £200m buyback extension has commenced.
Omar Abbosh, Pearson's Chief Executive, said:
"The year has started well. Financial performance was in line with our expectations, thanks to strong execution across the business, and we maintain a sharp focus on delivering against the priorities that I outlined. The year is unfolding as we anticipated, and we continue to expect an acceleration of growth in the second half, which will see us achieve our guidance for the full year. We look forward to providing an update on our strategic progress with our half year results in July."
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