Pearson PLC 6-K, filed Feb 28, 2025
Pearson PLC (PSO)
6-K
2025-02-28
For: 2025-02-28
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Added on
April 08, 2026
About this 6-K
Pearson PLC filed this 6-K on February 28, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the
month of February 2025
PEARSON plc
(Exact
name of registrant as specified in its charter)
N/A
(Translation
of registrant's name into English)
80 Strand
London, England WC2R 0RL
44-20-7010-2000
(Address
of principal executive office)
Indicate
by check mark whether the Registrant files or will file annual
reports
under
cover of Form 20-F or Form 40-F:
Form
20-F
X
Form 40-F
Indicate
by check mark whether the Registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934
Yes
No X
Pearson 2024 Preliminary Results (Unaudited)
|
28th February
2025
|
Confident in outlook building on year of good financial and
strategic delivery. Further progress on AI and Enterprise
priorities with new strategic partnership with
AWS. Strong cash
generation and financial position support launch of new £350m
share buyback.
|
Financial
Highlights
|
£m
|
2024
|
vs 2023
|
|
£m
|
2024
|
2023
|
|
Business performance
|
|
|
|
Statutory results
|
|
|
|
Sales (growth
ex. OPM3 and
Strategic Review4)
|
3,552
|
+3%1
|
|
Sales
|
3,552
|
3,674
|
|
Adjusted
operating profit
|
600
|
+10%1
|
|
Operating
profit
|
541
|
498
|
|
Operating
cash flow
|
662
|
+£75m
|
|
Profit
for the year
|
435
|
380
|
|
Free
cash flow
|
490
|
+£103m
|
|
Net
cash generated from operations
|
811
|
682
|
|
Adjusted
earnings per share
|
62.1p
|
+7%2
|
|
Basic
earnings per share
|
64.5p
|
53.1p
|
Highlights
|
●
|
Underlying Group sales growth1 of
3%, excluding OPM3 and
the Strategic Review4 businesses.
|
||
|
●
|
Group adjusted operating profit of £600m, up 10%
underlying1 with
130bps margin expansion from 15.6% to 16.9%, underpinned by sales
growth and cost efficiencies.
|
||
|
●
|
Free cash flow of £490m representing free cash flow conversion
of 117%5.
|
||
|
●
|
Full year dividend per share up 6% to 24.0p. Announcing intention
to commence a £350m share buyback.
|
||
|
●
|
Positive outlook for 2025
in line with market expectations6.
Reiterating medium term guidance for mid-single digit underlying
sales growth CAGR and sustained margin improvement that will equate
to an average increase of 40 basis points per
annum.
|
||
|
●
|
Accelerated roll out of AI across our product offering - remains a
key priority in 2025.
|
||
|
●
|
Further Enterprise momentum with new
strategic partnership with AWS (link here):
|
||
|
o
|
Extending the commercial relationship between Pearson VUE and
AWS;
|
|
o
|
Expansion of AWS Cloud infrastructure and AI capabilities to
further enhance and scale our learning products and services;
and
|
|
o
|
Collaboration on joint go-to market activities to drive growth
across a range of learning experiences.
|
Omar Abbosh, Pearson's Chief
Executive, said:
"2024 was another year of delivery and strategic progress for
Pearson. The application of innovative technologies, like AI, in
our learning experiences, alongside a sharper focus on how we go to
market, is building good momentum across our businesses.
"We also continue to focus on expanding our presence in the highly
attractive Enterprise skills market at a time where Pearson can
play an important role in helping bridge the critical skills gap
that impacts the economy, workforce and individuals.
Today's strategic partnership
with AWS is another example of how in joining forces with
significant industry players we can reach more
learners and provide them with the tools
they need to succeed.
"We are pleased to announce our intention to commence a £350m
share buyback programme. This initiative underscores our strong
cash position and confidence in Pearson's future. We are well
set up to deliver our financial guidance, allowing for further
investment and attractive returns for shareholders."
2025 priorities
|
●
|
Deliver
on 2025 market expectations6 for
underlying Group sales growth, adjusted operating profit and cash
flow;
|
|
●
|
Continue
to lead on the application of innovative technologies, like GenAI,
in our learning and assessment experience platforms;
and
|
|
●
|
Grow
Pearson's business across the Enterprise customer
segment.
|
2024
Financial Performance
Underlying sales
growth1 of
3%, excluding OPM3 and
Strategic Review4 businesses;
2% in aggregate
|
●
|
Assessment
& Qualifications delivered a solid performance across all sub
business units, with sales up 3% for the full year and accelerating
in the second half of 2024.
|
|
●
|
Virtual Schools sales decreased 1%, due to the previously announced
partner school losses, 2024/25 academic year enrolments were up 4%
on a same school basis and we also opened 3 new schools. Virtual
Learning sales declined 4% attributable to the final portion of the
OPM ASU contract in the first half of 2023.
|
|
●
|
Higher
Education returned to growth with sales increasing 1% driven by
continued gains in adoption share, enrolments, and pricing,
partially offset by mix impacts.
|
|
●
|
English
Language Learning delivered a strong performance with sales growth
of 8%, driven by Institutional, with Pearson Test of English (PTE)
performing well against a tough market backdrop.
|
|
●
|
Workforce
Skills sales grew 6%, with a solid performance in both Vocational
Qualifications and Workforce Solutions.
|
Adjusted operating profit1 up
10% on an underlying basis to £600m
|
●
|
Underlying
performance driven by sales growth and cost efficiencies, partially
offset by investment and inflation. Adjusted operating profit
margin rose to 16.9% (2023: 15.6%).
|
|
●
|
Headline
adjusted operating profit growth was 5% reflecting business
performance partially offset by currency movements and some
portfolio changes.
|
|
●
|
Adjusted
net finance costs increased to £45m (2023: £33m). The
effective tax rate on adjusted profit before tax increased to 24.4%
(2023: 23.0%).
|
|
●
|
Adjusted
earnings per share increased 7% to 62.1p (2023: 58.2p) reflecting
adjusted operating profit growth and the reduction in issued shares
as a result of share buybacks, partially offset by increased
interest and tax.
|
Excellent cash performance
|
●
|
Operating
cash1 inflow
increased on a headline basis from £587m in 2023 to £662m
in 2024, representing excellent cash conversion of 110%. This
increase is reflective of the trading performance of the business
and favourable working capital movements.
|
|
●
|
This
operating cash performance and a reduction in below the line
reorganisation costs drove an increase in free cash flow from
£387m in 2023 to £490m in 2024, a free cash flow
conversion of 117%5.
|
Strong balance sheet supporting continued investment and
shareholder returns
|
●
|
Year-end
net debt of £0.9bn (2023: £0.7bn), with free cash flow
more than offset by dividends and share buybacks. Net debt /
adjusted EBITDA ratio of 1.1x (2023: 1.0x).
|
|
●
|
Proposed
final dividend of 16.6p (2023: 15.7p) which equates to a full year
dividend of 24.0p (2023: 22.7p) an increase of 6% compared to
2023.
|
|
●
|
In 2024
we completed a £500m share buyback which commenced in
September 2023, reducing our share count by 7%. Consistent with our
capital allocation framework and strong free cash flow we are
announcing our intention to commence a £350m share
buyback.
|
|
●
|
Issued
a £350m Education Bond providing long term financing for the
business.
|
|
●
|
Both
Moody's and Fitch upgraded Pearson's long-term issuer ratings,
moving the outlook to stable.
|
|
●
|
Return
on capital was 10.4% (2023: 10.3%) with earnings increase
counterbalanced by FX changes.
|
Statutory results
|
●
|
Sales decreased 3% on a headline basis to £3,552m (2023:
£3,674m) with currency movements and portfolio changes
offsetting underlying business performance.
|
|
●
|
Statutory operating profit increased 9% to £541m (2023:
£498m) driven by increased trading profits, a reduction in
property and intangible amortisation charges, a lower year on year
net loss from acquisitions and disposals, partially offset by one
off UK discretionary pension charges.
|
|
●
|
Net cash generated from operations of £811m (2023:
£682m).
|
|
●
|
Statutory earnings per share of 64.5p (2023: 53.1p).
|
Driving
performance in the core business, infusing AI into our products and
services and sharpening focus on the Enterprise market
|
●
|
In Assessment & Qualifications we continued to demonstrate good
financial performance and strong customer renewals. Pearson VUE is
making progress in expanding its test prep offering through
building out the Pearson Skilling Suite and expanding its go to
market capabilities in this area. We also secured several
meaningful new enterprise customer contracts and renewals relevant
to the Pearson VUE business including ServiceNow, Microsoft and
AWS. US Student Assessment performed well, securing key customer
renewals and expanding formative testing in Arizona and North
Dakota. In UK & International Qualifications we developed new
AI features within our Exam Practice Assistant to support GCSE
students preparing for their exams. In Clinical Assessment we
successfully launched the 5th edition
of Wechsler Adult Intelligence Scale and expanded our Digital
Assessment Library for Schools (DALS) platform subscription
model.
|
|
●
|
In Virtual Schools we opened 3 new schools and scaled our career
and college readiness programmes to 24 schools in 2024. We also
piloted a new enrolment portal, doubling the speed for enrolment,
helping to drive underlying enrolment growth on a same school
basis. We have also embedded AI study tools into our content to
provide high school students with step-by-step assistance -
leveraging technology piloted in Higher Education. For teachers,
we've launched AI-generated custom assessments, halving the time it
takes teachers to create an assessment.
|
|
●
|
In Higher Education we were pleased to return to growth, and grew
adoption share in US Higher Education, aided by AI study tools for
students and AI MyLab and Mastering instruction tools for
educators. A recent survey in the US found that Higher Education
students using Pearson AI study tools are 4x more likely to engage
in active and efficient studying, while educators see new
opportunities to enhance instruction. We have also rolled out our
AI study tools into global editions of leading higher education
titles to enable access for our International
students. We have
been successful in scaling and monetising our Channels
product. In
October 2024, we began to directly sell our K-12 proprietary
Advanced Placement (AP®), Dual Enrolment and Career and
Technical Education (CTE) materials. Investing in a dedicated
in-house sales team will enable us to expand and strengthen
customer relationships with US school administrators going forward
as the demand for college and career readiness programmes
grows.
|
|
●
|
In English Language Learning, we launched PTE Core, our newest test
designed to meet Canada's specific migration needs, expanded our
Wizard business in Brazil driven by its online business and new
government partnerships, and developed two new AI products. Smart
Lesson Generator, formerly named Teaching Pal, leverages Pearson's
trusted IP with generative AI to simplify educators' work and save
them time by creating customised lesson content and activities. Our
AI powered Digital Language Tutor is specifically designed to help
businesses improve English proficiency at scale and unlock employee
potential. The AI tutor offers highly realistic, personalised
training, underpinned by trusted learning science, and builds on a
successful pilot programme conducted with corporate
clients.
|
|
●
|
Our Workforce Skills business delivered a solid performance and we
continued to acquire new customers and expand existing
relationships, landing major collaborations and partnerships. We
announced a multi-year deal with ServiceNow to supercharge
workforce development and employee experiences in the age of
AI. We also expanded our partnership with Degreed which will
integrate Faethm data sets into Degreed's platform, offering
real-time insights into the most relevant skills across industries,
allowing companies to benchmark skills, identify gaps, and
prioritise key areas for upskilling. This year we have announced
further strategic partnerships with Microsoft and AWS including
joint go-to-market initiatives including AI upskilling. Credly
crossed the 100 million unique badge milestone, with credentials
representing the acquisition of skills that are critical for the
future workforce, especially as AI reshapes job roles and industry
standards. We
launched GED & Me, the GED Testing Service Mobile App, which
achieved circa 100,000 downloads in its first 6 months, with users
completing the GED programme at a 10% higher rate compared to those
not on the app.
|
Outlook
Evolution of Workforce Skills
|
●
|
From
January this year, Workforce Skills became Enterprise Learning and
Skills, bringing together Pearson's enterprise sales capabilities
globally (excluding those of Pearson VUE). In addition, sub-unit
Workforce Solutions became Enterprise Solutions. Vishaal Gupta will
continue to lead this part of the business.
|
|
●
|
The
enterprise focused business within Higher Education (IT Pro) has
been transferred into Enterprise Learning and Skills from January
this year. This business generated £45m of revenue and
£19m of adjusted operating profit in 2024.
|
2025 guidance
|
Sales
|
Group
|
In line with current market expectations6.
|
|
Assessment & Qualifications
|
Sales to grow low to mid-single digit. Growth will be H2 weighted
with new and renewed contracts and the test prep business building
during the year.
|
|
|
Virtual Learning
|
To return to growth in H2 and the full year driven
by enrolment increases, partially from new school
openings, for the 25/26 academic year. Sales to decline in H1 given
the final impact of previous school losses and the timing of
funding in the previous year.
|
|
|
Higher Education
|
Sales growth in 2025 will be higher than in 2024 as we build on the
successful results of our sales team transformation and product
innovations, particularly using AI. Growth will be relatively
stable throughout the year.
|
|
|
English Language Learning
|
Sales growth will moderate given the likely impacts of elections on
immigration rates in 2025 affecting our PTE business. Given the
growth profile of English Language Learning in 2024 we expect Q1
2025 to decline, with growth increasing in each quarter thereafter.
We remain confident in the medium term outlook given demographic
projections.
|
|
|
Enterprise Learning and Skills
|
Sales to grow high single digit with Vocational Qualifications
seeing solid growth and the addition of several new contracts for
Enterprise Solutions. Growth will increase quarter on
quarter.
|
|
|
Group Profit
|
Adjusted Operating Profit
|
In line with current market expectations6.
|
|
Interest
|
Adjusted net finance costs of c.£65m reflecting the impact of
the Education Bond and our intention to commence a £350m share
buyback.
|
|
|
Tax rate
|
We expect the effective tax rate on adjusted profit before tax to
be between 24% and 25%.
|
|
|
Cash flow
|
We expect a free cash flow conversion5 of
90-100% plus the anticipated £0.1bn State Aid repayment in
2025.
|
|
|
FX
|
Every 1c movement in GBP:USD rate equates to approximately £5m
adjusted operating profit impact.
|
|
Medium term outlook unchanged
|
●
|
Beyond 2025, Pearson is positioned to deliver a mid-single digit
underlying sales growth CAGR, sustained margin improvement that
will equate to an average increase of 40 basis points per annum and
strong free cash conversion5,
in the region of 90% to 100%, on average, across the
period.
|
Financial Calendar
|
●
|
2025 Q1
Trading Update will be announced on 2 May 2025.
|
Executive
change
Pearson announces the appointment of Sharon Hague, currently
Managing Director of our US Student Assessment and UK &
International Qualifications businesses, as the new President of
English Language Learning, effective March 2025. Sharon will become
a member of the Pearson Executive Leadership team, reporting to CEO
Omar Abbosh.
Gio Giovannelli, current President of English Language Learning,
has decided to leave Pearson following a thorough transition. Gio
has been instrumental in driving strong financial and operational
performance, including accelerated revenue growth in our English
Language Learning business unit. We thank him for his
contribution.
Contacts
|
Investor Relations
|
Alex
Shore
Steph
Crinnegan
|
+44
(0) 7720 947 853
+44
(0) 7780 555 351
|
|
|
Gemma
Terry
Brennan
Matthews
|
+44
(0) 7841 363 216
+1
(332) 238-8785
|
|
Media
Teneo
Pearson
|
Ed
Cropley
Laura
Ewart
|
+44
(0) 7492 949 346
+44
(0) 7798 846 805
|
|
Results event
|
Pearson's prelim results presentation today at 09:30 (GMT). If you
would like to attend the in-person session, please
email: amy.plavecky@pearson.com
Register to join the session virtually here: https://pearson.connectid.cloud/register
|
|
About
Pearson
At
Pearson, our purpose is simple: to help people realise the life
they imagine through learning. We believe that every learning
opportunity is a chance for a personal breakthrough. That's why our
Pearson employees are committed to creating vibrant and enriching
learning experiences designed for real-life impact. We are the
world's lifelong learning company, serving customers with digital
content, assessments, qualifications, and data. For us, learning
isn't just what we do. It's who we are. Visit us at
pearsonplc.com.
Notes
Forward looking statements: Except for the historical
information contained herein, the matters discussed in this
statement include forward-looking statements. In particular, all
statements that express forecasts, expectations and projections
with respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of interest or exchange rates, the availability of
financing, anticipated cost savings and synergies and the execution
of Pearson's strategy, are forward-looking statements. By their
nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that will
occur in future. They are based on numerous assumptions regarding
Pearson's present and future business strategies and the
environment in which it will operate in the future. There are a
number of factors which could cause actual results and developments
to differ materially from those expressed or implied by these
forward-looking statements, including a number of factors outside
Pearson's control. These include international, national and local
conditions, as well as competition. They also include other risks
detailed from time to time in Pearson's publicly-filed documents
and you are advised to read, in particular, the risk factors set
out in Pearson's latest annual report and accounts, which can be
found on its website (www.pearsonplc.com). Any forward-looking
statements speak only as of the date they are made, and Pearson
gives no undertaking to update forward-looking statements to
reflect any changes in its expectations with regard thereto or any
changes to events, conditions or circumstances on which any such
statement is based. Readers are cautioned not to place undue
reliance on such forward-looking statements.
Operational
review
|
£m
|
2024
|
2023
|
Headline
growth
|
CER
growth1
|
Underlying
growth1
|
|
Sales
|
|
|
|
|
|
|
Assessment
& Qualifications
|
1,591
|
1,559
|
2%
|
4%
|
3%
|
|
Virtual
Learning
|
489
|
616
|
(21%)
|
(19%)
|
(4%)
|
|
Higher
Education
|
826
|
855
|
(3%)
|
(1%)
|
1%
|
|
English
Language Learning
|
420
|
415
|
1%
|
8%
|
8%
|
|
Workforce
Skills
|
226
|
220
|
3%
|
4%
|
6%
|
|
Strategic
Review
|
-
|
9
|
(100%)
|
(100%)
|
(100%)
|
|
Total
|
3,552
|
3,674
|
(3%)
|
0%
|
2%
|
|
Total, excluding OPM3 and
Strategic Review4
|
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
|
|
|
|
|
|
Assessment
& Qualifications
|
368
|
350
|
5%
|
8%
|
7%
|
|
Virtual
Learning
|
66
|
76
|
(13%)
|
(9%)
|
(9%)
|
|
Higher
Education
|
108
|
110
|
(2%)
|
2%
|
12%
|
|
English
Language Learning
|
50
|
47
|
6%
|
30%
|
30%
|
|
Workforce
Skills
|
8
|
(8)
|
200%
|
188%
|
200%
|
|
Strategic
Review
|
-
|
(2)
|
100%
|
100%
|
100%
|
|
Total
|
600
|
573
|
5%
|
9%
|
10%
|
1Throughout this announcement:
a) Growth rates are stated on an underlying basis unless otherwise
stated. Underlying growth rates exclude currency movements, and
portfolio changes. b) The 'business performance' measures are
non-GAAP measures and reconciliations to the equivalent statutory
heading under IFRS are included in notes to the attached condensed
consolidated financial statements 2, 3, 4, 6, and 11. c) Constant
exchange rates are calculated by assuming the average FX in the
prior year prevailed through the current year.
2 Headline growth
rate.
3 We completed the sale of
the Pearson Online Learning Services (POLS) business in June 2023
and as such have removed it from underlying measures throughout.
Within this specific measure we exclude our entire OPM business
(POLS and ASU) to aid comparison to guidance.
4 Strategic Review is
sales in international courseware local publishing businesses which
have been wound down. As expected, there are no sales in these
businesses in 2024.
5 Free cash flow
conversion calculated as free cash flow divided by adjusted
earnings.
6 2025 consensus on the
Pearson website dated 27th January
2025; underlying sales growth 4.4%, adjusted operating profit of
£656m at £:$ 1.23.
7 Pearson VUE test volumes
include PTE and GED tests but sales for each of these tests are
reflected in the English Language Learning and Workforce Skills
business units respectively.
Assessment
& Qualifications
In Assessment & Qualifications, sales increased 3% on an
underlying basis and 2% on a headline basis. Adjusted operating
profit increased 7% in underlying terms due to operating leverage
on sales growth partially offset by inflation, and 5% in headline
terms due to this and portfolio changes partially offset by
currency movements.
Pearson VUE sales were up 3% in underlying terms driven by favourable mix, with
PDRI seeing good growth. Pearson VUE test
volumes7 remained
stable year on year and we improved upon our already high contract
renewal track record, reporting a rate of 99% across the business
for 2024.
In US Student Assessment, sales increased 1% in underlying
terms supported by several key contract
renewals.
In Clinical Assessment, sales increased 4% in underlying
terms due to pricing, digital product
growth and successful new product launches.
In UK and International Qualifications, sales increased 8% in
underlying terms benefitting from volume, pricing,
and International growth.
We expect to deliver low to mid-single digit underlying sales
growth in 2025. We will focus on maintaining our leading positions
through contract renewals and new wins, together with emerging
growth opportunities that include: monetising our test prep
capabilities; international expansion; AI scoring and proctoring;
formative assessment within US Student Assessment; pharma and
ongoing digital product expansion in Clinical
Assessment.
Virtual
Learning
In Virtual Learning, sales decreased 4% on an underlying basis
primarily due to the final portion of the OPM ASU contract in the
first half of 2023 and 21% on a headline basis due to this, the
disposal of the POLS business and currency movements. Adjusted
operating profit decreased 9% in underlying terms, with the prior
year comparator benefitting from the ASU contract. Adjusted
operating profit decreased 13% in headline terms due to this
coupled with the disposal of the POLS business and currency
movements.
Virtual Schools sales were down 1%, due
to the previously announced partner school losses. Enrolments for
the 2024/25 academic year were up 4% on
a same school basis and we also opened 3 new schools in 2024 taking
our total to 40.
We expect enrolments to increase for the 2025/26 academic year,
benefitting from new school openings and operational changes, with
the business unit returning to growth in H2 and for the full year
in 2025. We remain confident in stronger longer-term growth as we
continue to scale our career and college readiness programmes,
drive improvements in our enrolment performance and look to expand
our school footprint through new school openings.
Higher
Education
In Higher Education, sales
grew 1% on an underlying basis, in line with expectations, and
decreased 3% on a headline basis due to this, offset by currency
movements and portfolio changes. Adjusted operating profit
increased 12% in underlying terms driven primarily by cost savings
partially offset by inflation, restructuring charges and one off
investment in building a K-12 direct sales channel, and decreased
2% in headline terms due to this, portfolio changes and currency
movements.
In the US, sales grew 2% driven by continued gains in
adoption share, enrolments, and pricing, partially offset by mix
impacts. There was strong growth in Inclusive Access,
up 24%, and we delivered 3% growth
in US digital subscriptions. Pearson+ registered users increased 1%
compared to the prior Fall semester, with paid subscriptions flat
over the same period. In addition, we have been successful in
monetising our Channels product.
We expect sales growth in 2025 to be higher than in 2024. We will
focus on continuing to win adoption share through sales excellence
and ongoing product improvements, including AI powered tools,
further scaling our Channels product, driving improved
International performance and expanding market opportunity into new
collar skills. 2025 will be a transitionary year for our K-12
channel as we ramp up our direct sales team selling our proprietary
AP®, Dual Enrolment, and CTE materials into US states and
school districts.
English
Language Learning
In English Language Learning, sales were up 8% on an underlying
basis due to strong growth in Institutional and 1% on a headline
basis due to this offset by currency movements. Adjusted operating
profit increased by 30% in underlying terms due to operating
leverage on sales and increased 6% in headline terms as this was
partially offset by currency movements.
PTE performed well against a tough market backdrop of tightening
migration policies. While volumes declined 10% we grew the business
and continued to gain market share. Our Institutional business continues
to deliver a strong performance especially in the Middle East and
Latin America markets. Our Online Self-Study business,
Mondly, performed well with paid subscriptions increasing 14%
versus the prior year.
We expect sales growth to moderate in 2025, driven by strength in
Institutional and Mondly offset by PTE. We expect PTE to decline
due to a continuation of the challenging market backdrop, including
upcoming elections in Australia and Canada, but remain confident in
the medium-term outlook given demographic projections and our
competitive strength. We will focus on continued expansion in the
Middle East and Latin America markets, AI product enhancements and
proficiency assessments.
Workforce
Skills
In Workforce Skills, sales were up 6% on an underlying basis and 3%
on a headline basis. The business unit turned profitable in 2024,
delivering an adjusted operating profit of £8m, due to trading
and cost efficiencies.
Sales growth was driven by solid performances in both the
Vocational Qualifications and Workforce Solutions
businesses. The Vocational Qualifications
business grew by 5% in underlying terms. The Workforce Solutions business
grew by 6% in underlying terms with the Credly enterprise customer
net retention rate increasing to 91%.
From January 2025, Workforce Skills became Enterprise Learning and
Skills, bringing together
Pearson's enterprise sales capabilities globally (excluding those
in Pearson VUE). We expect to deliver high single digit sales
growth driven by enterprise sales momentum in Enterprise Solutions,
aided by the new business unit structure and go-to-market approach,
as well as international expansion in Vocational
Qualifications.
2024 KPIs
|
KPI
|
Objective
|
KPI Measure
|
2024 Actual
|
2023 Actual
|
|
Digital Growth
|
Drive
digital sales growth
|
Underlying
growth* in Group digital and digital-enabled sales
|
4%
|
8%
|
|
Virtual
Schools US enrolments**
|
96k
|
100k
|
||
|
OnVUE
volumes
|
2.3m
|
2.7m
|
||
|
Higher
Education US digital subscriptions
|
10.1m
|
9.8m
|
||
|
PTE
volume
|
1,108k
|
1,231k
|
||
|
Consumer Engagement
|
Create
engaging and personalised consumer experiences
|
NPS for
Connections Academy
|
+67
|
+67
|
|
NPS for
PTE
|
+60
|
+55
|
||
|
Pearson+
registered users
|
3.06m
|
3.03m
|
||
|
Mondly
paid subscriptions
|
495k
|
432k
|
||
|
Credly
new registered users
|
6.0m
|
5.3m
|
||
|
Product Effectiveness
|
Improve
the effectiveness of our products to deliver better
outcomes
|
PTE
speed of score return
|
1.3
days
|
1.0
days
|
|
VUE
test volumes***
|
20.7m
|
20.7m
|
||
|
VUE
Partner retention
|
99.2%
|
93.6%
|
||
|
Workforce
Skills number of enterprise customers
|
1,509
|
1,547
|
||
|
Credly
enterprise customer net retention rate****
|
91%
|
88%
|
||
|
Higher
Education product usage - text units
|
4.7m
|
4.5m
|
||
|
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
|
4.16
Grand
Mean on a 5 point Likert scale
|
4.09
Grand
Mean 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
= 78%
|
In the
last six months, someone at work has talked to me about my progress
= 73%
|
||
|
This
last year, I have had opportunities at work to learn and grow =
77%
|
This
last year, I have had opportunities at work to learn and grow =
76%
|
|||
|
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
|
4.24
GrandMean
on a 5
point Likert scale
|
4.21
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 =
23%
|
Representation
of BIPOC/BAME employees at Manager level and above =
22%
|
||
|
Global
% of female
employees
= 59%
|
Global
% of female employees = 59%
|
|||
|
Sustainability Strategy
|
Reduce
emissions by 50% by 2030 vs 2018
|
Progress
against achieving Net Zero Carbon by 2050 as measured through
percent carbon reduction*****
|
41%
reduction in total tCO2 vs 2018
|
38%
reduction in total tCO2 vs 2018
|
* Excluding OPM and Strategic Review businesses.
** Measure definition has changed to number of government-funded
student enrolments at partner schools within the US as of 30
September 2023. Excludes private-pay students at Pearson Online
Academy and district partnerships. This is more closely aligned
to
business processes.
*** From 2024 Pearson VUE test volumes now include PDRI
tests.
**** Previously reported 'Workforce Skills enterprise customer net
retention rate' which combined Credly and Faethm. Methodology
change to only include Credly customer retention going forward as
Faethm is not a retention based business.
***** The net emissions reduction figures have been assured by an
independent third-party, SLR Consulting Ltd. % reduction in total
tCO2 above is calculated using a location methodology. In 2024, we
updated our 2018 and 2023 GHG emissions baselines to reflect recent
acquisitions and disposals, and to align with changes in data
methodology as a result of transitioning to a new emissions data
management system. Annual reductions include a 5% reduction in
total tCO2e in 2024 vs 2023.
For a full list of KPI measure definitions, please refer
to: https://plc.pearson.com/en-GB/company/our-targets-kpis
FINANCIAL REVIEW
Operating
result
Sales decreased on a headline basis by £122m or 3% from
£3,674m in 2023 to £3,552m in 2024 and adjusted operating
profit increased by £27m or 5% from £573m in 2023 to
£600m in 2024 (for a reconciliation of this measure see note 2
to the condensed consolidated financial statements).
The
headline basis simply compares the reported results for 2024 with
those for 2023. We also present sales and profits on an underlying
basis which excludes the effects of exchange, the effect of
portfolio changes arising from acquisitions and disposals and the
impact of adopting new accounting standards that are not
retrospectively applied. Our portfolio change is calculated by
excluding sales and profits made by businesses disposed in either
2024 or 2023 and by ensuring the contribution from acquisitions is
comparable year on year. Portfolio changes mainly relate to the
disposals of the Group's interests in Pearson Online Learning
Services ('POLS'), Pearson College, our international courseware
local publishing business in India and businesses within Higher
Education in 2023, and the acquisition of PDRI in
2023.
On an underlying basis, sales increased by 2% in 2024 compared to
2023 and adjusted operating profit increased by 10%. Currency
movements decreased sales by £104m and decreased adjusted
operating profit by £26m. Portfolio changes decreased sales by
£97m and decreased adjusted operating profit by £6m.
There were no new accounting standards adopted in 2024 that
impacted sales or statutory or adjusted operating
profits.
Adjusted
operating profit includes the results from discontinued operations
when relevant but excludes charges for acquired intangible
amortisation and impairment, acquisition related costs, gains and
losses arising from disposals, the cost of major reorganisation and
associated property charges and one-off costs related to the UK
pension scheme. A summary of these adjustments is included below
and in more detail in note 2 to the condensed consolidated
financial statements.
|
|
|
|
|
|
All figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
541
|
498
|
|
Add
back: Cost of major reorganisation
|
|
(2)
|
-
|
|
Add
back: Property charges
|
|
-
|
11
|
|
Add
back: Intangible charges
|
|
41
|
48
|
|
Add
back: UK pension discretionary increases
|
|
13
|
-
|
|
Add
back: Other net gains and losses
|
|
7
|
16
|
|
Adjusted
operating profit
|
|
600
|
573
|
In
2024, the costs of major reorganisation relate to a release of
£2m for amounts previously accrued that are no longer
required.
In
2024, there are no property charges. In 2023, charges of £11m
relate to impairments of property assets arising from the impact of
updates in 2023 to assumptions initially made during the 2022 and
2021 reorganisation programmes.
Intangible
amortisation charges in 2024 were £41m compared to a charge of
£48m in 2023. This is due to decreased amortisation from
recent disposals partially offset by additional amortisation from
recent acquisitions.
UK
pension discretionary increases in 2024 relate to one-off pension
increases awarded to certain cohorts of pensioners in response to
the cost of living crisis.
Other
net gains and losses in 2024 relate to costs arising from prior
year acquisitions and disposals, partially offset by a gain on the
partial disposal of an investment in an associate. In 2023, other
net gains and losses relate largely to the gain on disposal of the
POLS business and gains relating to the releases of accruals and a
provision related to previous acquisitions and disposals, which
were more than offset by losses on the disposal of Pearson College
and costs related to disposals and acquisitions.
The
reported operating profit of £541m in 2024 compares to an
operating profit of £498m in 2023 due primarily to
unfavourable FX movements, investment and inflation costs being
offset by operating leverage on sales growth and cost
efficiencies.
Net
finance
costs
Net finance costs increased on a headline basis from a net cost of
£5m in 2023 to a net cost of £31m in 2024. The increase
is primarily due to increased borrowings and losses on investments
held at fair value through profit and loss (FVTPL) compared to
gains in 2023, partially offset by gains arising from mark to
market movements on derivatives compared to losses in 2023 and the
recognition of interest related to the favorable decision on the
State Aid matter (see Taxation section and note 4 for further
details).
Adjusted net finance costs reflected in adjusted earnings in 2024
are £45m, compared to £33m in 2023. The difference is
primarily due to increased interest costs on borrowings, partially
offset by interest recognised in relation to the State Aid matter
(see Taxation section and note 4 for further details).
Net finance income in respect of retirement benefits has been
excluded from our adjusted earnings as we believe the income
statement presentation does not reflect the economic substance of
the underlying assets and liabilities. Also included in the net
finance costs (but not in our adjusted measure) are interest costs
relating to acquisition or disposal transactions as it is
considered part of the acquisition cost or disposal proceeds rather
than being reflective of the underlying financing costs of the
Group. Foreign exchange, fair value movements on investments
classified as FVTPL and other gains and losses on derivatives are
excluded from adjusted earnings as they represent short-term
fluctuations in market value and are subject to significant
volatility. Other gains and losses may not be realised in due
course as it is normally the intention to hold the related
instruments to maturity. Interest on certain tax provisions is
excluded from our adjusted measure in order to mirror the treatment
of the underlying tax item. In 2024, the total of these items
excluded from adjusted earnings was income of £14m compared to
income of £28m in 2023. For a reconciliation of the adjusted
measure see note 3 to the condensed consolidated financial
statements.
Taxation
The
reported tax charge on a statutory basis in 2024 was £75m
(14.7%) compared to a £113m charge (23.0%) in 2023.
The reduction in the statutory rate of tax in 2024 is principally
due to the release of provisions held in relation to the State Aid
matter. In September 2024, the Court of Justice of the European
Union ('CJEU') handed down its decision, finding that no State Aid
had been provided and as a consequence annulling the European
Commission's previous decision in full and setting aside the
judgment of the EU General Court. In light of the CJEU decision,
the Group has now fully released the £63m provision for tax
and £5m provision for interest on tax held in relation to this
matter, leaving on the balance sheet a receivable for the £97m
tax and £8m interest on tax paid under the Charging Notices
issued by HMRC in 2021. These receivables have now been
reclassified as current assets. In addition, HMRC Guidance issued
to facilitate these pending repayments confirms that interest will
be paid on the tax element of the amounts previously collected and
a £9m interest accrual has also therefore been recorded as
mentioned in net finance costs sections above.
The tax on adjusted earnings in 2024 was a charge of £136m
(2023: £124m), corresponding to an adjusted effective tax rate
on adjusted profit before tax of 24.4% (2023: 23.0%). The increase
in the effective rate from the prior year is primarily due to
reduced availability of tax credits in key jurisdictions. For a
reconciliation of the adjusted measure see note 4 to the condensed
consolidated financial statements.
In 2024, there was a net tax payment of £119m (2023: £97m). The
overall amount increased due to an increase in profits and a
reduction in the level of tax credits available in key
territories.
A net deferred tax liability of £6m is recognised in
2024 compared to a net deferred tax liability of £11m in 2023.
The overall amount decreased mainly due to the ongoing utilisation
of tax losses. The current tax creditor principally consists of
provisions for tax uncertainties.
Other
comprehensive income
Included
in other comprehensive income are the net exchange differences on
translation of foreign operations. The loss on translation of
£35m in 2024 compares to a loss in 2023 of £177m. The
loss in 2024 arises from an overall weakening of the majority of
currencies to which the Group is exposed, partially offset by a
slight strengthening of the US dollar. A significant proportion of
the Group's operations are based in the US and the US dollar
strengthened in 2024 from an opening rate of £1:$1.27 to a
closing rate at the end of 2024 of £1:$1.25. At the end of
2023, the US dollar had weakened from an opening rate of
£1:$1.21 to a closing rate of £1:$1.27. The loss in 2023
was driven by this movement in the US dollar.
Also
included in other comprehensive income in 2024 is an actuarial gain
of £5m in relation to the retirement benefit obligations of
the Group. The gain arises mainly from a decrease in liabilities
driven by higher discount rates, largely offset by losses on assets
and experience losses. The actuarial gain in 2024 of £5m
compares to an actuarial loss in 2023 of £85m.
Fair
value losses of £2m (2023: gain of £1m) have been
recognised in other comprehensive income and relate to movements in
the value of investments in listed and unlisted securities held at
fair value through other comprehensive income (FVOCI).
In
2023, a gain of £122m was recycled from the currency
translation reserve to the income statement in relation to the
disposal of the POLS business.
Cash
flow and working capital
Our
operating cash flow measure is an adjusted measure used to align
cash flows with our adjusted profit measures (see note 11 to the
condensed consolidated financial statements). Operating cash flow
increased on a headline basis by £75m from £587m in 2023
to £662m in 2024. The increase is largely explained by the
drop-through of increased trading profits and favourable working
capital.
The
equivalent statutory measure, net cash generated from operations,
was £811m in 2024 compared to £682m in 2023. Compared to
operating cash flow, this measure includes reorganisation costs and
acquisition costs but does not include regular dividends from
associates. It also excludes capital expenditure on property,
plant, equipment and software, and additions to right-of-use
assets, as well as disposal proceeds from the sale of property,
plant, equipment and right-of-use assets (including the impacts of
transfers to/from investment in finance lease receivable). In 2024,
reorganisation cash outflow was £8m compared to £63m in
2023.
Free
cash flow increased on a headline basis by £103m from
£387m in 2023 to £490m in 2024. When compared to
operating cash flow, free cash flow includes tax paid, net finance
costs paid and net costs paid for major
reorganisation.
In
2024, there was an overall £234m increase in cash and cash
equivalents compared to a decrease of £234m in 2023. The
increase in 2024 is primarily due to the cash inflow from
operations of £811m and net proceeds from borrowings of
£344m, offset by payments for acquisitions of subsidiaries of
£39m, dividends paid of £156m, share buyback programme
payments of £318m, other own share purchases of £40m, tax
paid of £119m, net interest payments of £45m, capital
expenditure on property, plant and equipment and intangibles of
£124m, and repayments of lease liabilities of £78m.
The
movement on trade and other liabilities is driven by the payment of
deferred consideration relating to previous acquisitions, the
movement on the accrual for share buyback programmes as well as
movements in working capital balances.
Liquidity
and capital resources
The
Group's net debt increased from £744m at the end of 2023 to
£853m at the end of 2024. The increase is largely due to free
cash flow being more than offset by the share buy back programme
and dividend payments. Refer to note 10 to the condensed
consolidated financial statements for details of the composition of
net debt.
In
2024, the Group issued a new £350m 5.375% GBP denominated 10
year Education Bond. The bond was admitted to trading on the London
Stock Exchange. The proceeds from the bond will be used to finance
or refinance projects or expenditure that meets the Eligible
categories set out in the Group's Social Bond
Framework.
At 31 December 2024, the Group
had available liquidity of £1.2bn comprising central cash
balances and its undrawn $1bn Revolving Credit Facility (RCF) which
matures in February 2028, but which has options to extend the
maturity to February 2030. In assessing the Group's
liquidity and viability, the Board analysed a variety of downside
scenarios including a severe but plausible downside scenario, where
the Group is impacted by a combination of all principal risks, as
well as reverse stress testing to identify what would be required
to either breach covenants or run out of liquidity. The Group would
maintain comfortable liquidity headroom and sufficient headroom
against covenant requirements during the period under assessment in
the severe but plausible scenario, even before modelling the
mitigating effect of actions that management would take in the
event that these downside risks were to crystallise. In all
scenarios it is assumed that the Revolving Credit Facility is
available.
At 31 December 2024, the Group was rated BBB (stable outlook) with
Fitch and Baa2 (stable outlook) with Moody's.
Post-retirement
benefits
Pearson
operates a variety of pension and post-retirement plans. The UK
Group pension plan has by far the largest defined benefit section.
The Group has some smaller defined benefit sections in the US and
Canada but, outside the UK, most of the companies operate defined
contribution plans.
The
charge to profit in respect of worldwide pensions and
post-retirement benefits amounted to £60m in 2024 (2023:
£45m), of which a charge of £81m (2023: £71m) was
reported in operating profit and income of £21m (2023:
£26m) was reported in other net finance costs. In 2024, a
charge of £13m related to one-off discretionary pension
increases has been excluded from adjusted operating
profit.
The
overall surplus on UK Group pension plans of £491m at the end
of 2023 has decreased to a surplus of £484m at the end of
2024. The decrease has arisen principally due to the one-off
discretionary pension increases granted in the year, partially
offset by the actuarial gain noted in the other comprehensive
income section above. In total, the worldwide net position in
respect of pensions and other post-retirement benefits decreased
from a net asset of £455m at the end of 2023 to a net asset of
£450m at the end of 2024.
Businesses
acquired and disposed
There
were no material acquisitions of subsidiaries in 2024. In March
2023, the Group completed the acquisition of 100% of the share
capital of Personnel Decisions Research Institutes, LLC ('PDRI')
for cash consideration of £152m ($187m).
The
cash outflow in 2024 relating to acquisitions of subsidiaries was
£39m, arising from the payment of deferred consideration in
respect of prior year acquisitions, mainly Credly and Mondly, which
were acquired in 2022. There were also £5m of acquisition
related costs. In addition, there were £7m of cash outflows
relating to the acquisition of investments. The cash outflow in
2023 relating to acquisitions of subsidiaries was £171m plus
£4m of acquisition costs. In addition, there were cash
outflows relating to the acquisition of associates of £5m and
investments of £8m.
There
were no disposals of subsidiaries in 2024. In 2023, the Group
disposed of its interests in its POLS businesses in the US, UK,
Australia and India, Pearson College and the international
courseware local publishing business in India. In 2024 and 2023,
the cash outflow from the disposal of businesses of £7m (2023:
£38m) mainly relates to the businesses disposed in
2023.
Dividends
The dividend accounted for in our
2024 financial statements totalling £156m represents the final
dividend in respect of 2023 (15.7p) and the interim dividend for
2024 (7.4p). We are proposing a final dividend for 2024 of 16.6p
bringing the total paid and payable in respect of 2024
to 24.0p.This final 2024 dividend,
which was approved by the Board in February 2025, is subject to
approval at the forthcoming AGM. For 2024, the dividend is
covered 2.6 times
by adjusted earnings.
The final dividend will be paid
on 9 May 2025 to shareholders who are on the register of members at
close of business on 21 March 2025 (the Record Date). Shareholders
may elect to reinvest their dividend in the Dividend Reinvestment
Plan (DRIP). The last date for receipt of DRIP elections and
revocations will be 15 April 2025. A Dividend Reinvestment Plan
(DRIP) is provided by Computershare Investor Services. The DRIP
enables the Company's shareholders to elect to have their cash
dividend payments used to purchase the Company's shares. More
information can be found at www.computershare.com/investor
Share
buyback
On
20 September 2023, the Board approved a £300m share buyback
programme in order to return capital to shareholders, with a
£200m extension being announced by the Group on 1 March 2024.
This programme and the extension completed in 2024. During 2024,
approximately 32m (2023: 20m) shares were bought back and cancelled
at a cost of £318m (2023: £186m). The nominal value of
these shares, £8m (2023: £5m), was transferred to the
capital redemption reserve, and the remainder of the purchase price
was recorded within retained earnings. At 31 December 2024, no
further liability remains (2023: £118m) for shares contracted
to be repurchased but where the repurchases were still outstanding
and associated costs.
On
27 February 2025, the Board approved a £350m share buyback
programme in order to return capital to shareholders.
CONDENSED
CONSOLIDATED INCOME STATEMENT
for
the year ended 31 December 2024
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
Sales
|
2
|
3,552
|
3,674
|
|
Cost of
goods sold
|
|
(1,741)
|
(1,839)
|
|
Gross
profit
|
|
1,811
|
1,835
|
|
|
|
|
|
|
Operating
expenses
|
|
(1,265)
|
(1,322)
|
|
Other
net gains and losses
|
2
|
(7)
|
(16)
|
|
Share
of results of joint ventures and associates
|
|
2
|
1
|
|
Operating
profit
|
2
|
541
|
498
|
|
|
|
|
|
|
Finance
costs
|
3
|
(112)
|
(81)
|
|
Finance
income
|
3
|
81
|
76
|
|
Profit
before tax
|
|
510
|
493
|
|
Income
tax
|
4
|
(75)
|
(113)
|
|
Profit
for the year
|
|
435
|
380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
Equity
holders of the company
|
|
434
|
378
|
|
Non-controlling
interest
|
|
1
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (in pence per share)
|
|
|
|
|
Basic
|
5
|
64.5p
|
53.1p
|
|
Diluted
|
5
|
63.5p
|
52.7p
|
The
accompanying notes to the condensed consolidated financial
statements form an integral part of the financial
information.
CONDENSED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for
the year ended 31 December 2024
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
435
|
380
|
|
|
|
|
|
|
Items
that may be reclassified to the income statement
|
|
|
|
|
Net
exchange differences on translation of foreign
operations
|
|
(35)
|
(177)
|
|
Currency
translation adjustment disposed
|
|
-
|
(122)
|
|
Attributable
tax
|
|
12
|
-
|
|
|
|
|
|
|
Items
that are not reclassified to the income statement
|
|
|
|
|
Fair
value (loss) / gain on other financial assets
|
|
(2)
|
1
|
|
Attributable
tax
|
|
-
|
-
|
|
Remeasurement of
retirement benefit obligations
|
|
5
|
(85)
|
|
Attributable
tax
|
|
(2)
|
20
|
|
Other
comprehensive expense for the year
|
|
(22)
|
(363)
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
|
413
|
17
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
Equity
holders of the company
|
|
412
|
16
|
|
Non-controlling
interest
|
|
1
|
1
|
CONDENSED
CONSOLIDATED BALANCE SHEET
as
at 31 December 2024
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
216
|
217
|
|
Investment
property
|
|
77
|
79
|
|
Intangible
assets
|
9
|
3,026
|
3,091
|
|
Investments
in joint ventures and associates
|
|
12
|
22
|
|
Deferred
income tax assets
|
|
52
|
35
|
|
Financial
assets - derivative financial instruments
|
|
20
|
32
|
|
Retirement
benefit assets
|
|
491
|
499
|
|
Other
financial assets
|
|
141
|
143
|
|
Income
tax assets
|
|
4
|
41
|
|
Trade
and other receivables
|
|
125
|
135
|
|
Non-current assets
|
|
4,164
|
4,294
|
|
|
|
|
|
|
Intangible
assets - product development
|
|
947
|
947
|
|
Inventories
|
|
74
|
91
|
|
Trade
and other receivables
|
|
1,030
|
1,050
|
|
Financial
assets - derivative financial instruments
|
|
31
|
16
|
|
Income
tax assets
|
|
103
|
15
|
|
Cash
and cash equivalents (excluding overdrafts)
|
|
543
|
312
|
|
Current assets
|
|
2,728
|
2,431
|
|
|
|
|
|
|
Assets
classified as held for sale
|
|
-
|
2
|
|
Total assets
|
|
6,892
|
6,727
|
|
|
|
|
|
|
Financial
liabilities - borrowings
|
|
(1,157)
|
(1,094)
|
|
Financial
liabilities - derivative financial instruments
|
|
(4)
|
(38)
|
|
Deferred
income tax liabilities
|
|
(58)
|
(46)
|
|
Retirement
benefit obligations
|
|
(41)
|
(44)
|
|
Provisions
for other liabilities and charges
|
|
(13)
|
(15)
|
|
Other
liabilities
|
|
(83)
|
(98)
|
|
Non-current liabilities
|
|
(1,356)
|
(1,335)
|
|
|
|
|
|
|
Trade
and other liabilities
|
|
(1,054)
|
(1,275)
|
|
Financial
liabilities - borrowings
|
|
(315)
|
(67)
|
|
Financial
liabilities - derivative financial instruments
|
|
(54)
|
(5)
|
|
Income
tax liabilities
|
|
(27)
|
(32)
|
|
Provisions
for other liabilities and charges
|
|
(23)
|
(25)
|
|
Current liabilities
|
|
(1,473)
|
(1,404)
|
|
|
|
|
|
|
Liabilities
classified as held for sale
|
|
-
|
-
|
|
Total liabilities
|
|
(2,829)
|
(2,739)
|
|
|
|
|
|
|
Net assets
|
|
4,063
|
3,988
|
|
|
|
|
|
|
Share
capital
|
|
166
|
174
|
|
Share
premium
|
|
2,649
|
2,642
|
|
Treasury
shares
|
|
(7)
|
(19)
|
|
Reserves
|
|
1,240
|
1,177
|
|
Total
equity attributable to equity holders of the company
|
|
4,048
|
3,974
|
|
Non-controlling
interest
|
|
15
|
14
|
|
Total equity
|
|
4,063
|
3,988
|
The
condensed consolidated financial statements were approved by the
Board on 27 February 2025.
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for
the year ended 31 December 2024
|
|
|
|
|
|||||||
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
||||||||||
|
At
1 January 2024
|
174
|
2,642
|
(19)
|
33
|
(12)
|
411
|
745
|
3,974
|
14
|
3,988
|
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
434
|
434
|
1
|
435
|
|
Other
comprehensive (expense) / income
|
-
|
-
|
-
|
-
|
(2)
|
(35)
|
15
|
(22)
|
-
|
(22)
|
|
Total
comprehensive (expense) / income
|
-
|
-
|
-
|
-
|
(2)
|
(35)
|
449
|
412
|
1
|
413
|
|
Equity-settled
transactions1
|
-
|
-
|
-
|
-
|
-
|
-
|
37
|
37
|
-
|
37
|
|
Taxation on
equity-settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
11
|
11
|
-
|
11
|
|
Issue
of ordinary shares
|
-
|
7
|
-
|
-
|
-
|
-
|
-
|
7
|
-
|
7
|
|
Buyback
of equity
|
(8)
|
-
|
-
|
8
|
-
|
-
|
(204)
|
(204)
|
-
|
(204)
|
|
Purchase of
treasury shares
|
-
|
-
|
(33)
|
-
|
-
|
-
|
-
|
(33)
|
-
|
(33)
|
|
Release
of treasury shares
|
-
|
-
|
45
|
-
|
-
|
-
|
(45)
|
-
|
-
|
-
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(156)
|
(156)
|
-
|
(156)
|
|
At
31 December 2024
|
166
|
2,649
|
(7)
|
41
|
(14)
|
376
|
837
|
4,048
|
15
|
4,063
|
|
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
|
|
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
|
|
1.
Equity-settled transactions are presented net of withholding taxes
that the Group is obligated to pay on behalf of employees. The
payments to the tax authorities are accounted for as a deduction
from equity for the shares withheld.
|
||||||||||
CONDENSED
CONSOLIDATED CASH FLOW STATEMENT
for
the year ended 31 December 2024
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
Profit
before tax
|
|
510
|
493
|
|
Net
finance costs
|
3
|
31
|
5
|
|
Depreciation &
impairment - PPE, investment property & assets held for
sale
|
|
77
|
90
|
|
Amortisation and
impairment - software
|
|
117
|
123
|
|
Amortisation and
impairment - acquired intangible assets
|
|
41
|
46
|
|
Other
net gains and losses
|
|
5
|
13
|
|
Product
development capital expenditure
|
|
(284)
|
(300)
|
|
Product
development amortisation
|
|
291
|
284
|
|
Share-based payment
costs
|
|
44
|
40
|
|
Change
in inventories
|
|
15
|
9
|
|
Change
in trade and other receivables
|
|
32
|
(24)
|
|
Change
in trade and other liabilities
|
|
(99)
|
(20)
|
|
Change
in provisions for other liabilities and charges
|
|
(1)
|
(61)
|
|
Other
movements
|
|
32
|
(16)
|
|
Net
cash generated from operations
|
|
811
|
682
|
|
Interest
paid
|
|
(65)
|
(60)
|
|
Tax
paid
|
|
(119)
|
(97)
|
|
Net
cash generated from operating activities
|
|
627
|
525
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
|
(39)
|
(171)
|
|
Acquisition of
joint ventures and associates
|
|
-
|
(5)
|
|
Purchase of
investments
|
|
(7)
|
(8)
|
|
Purchase of
property, plant and equipment
|
|
(33)
|
(30)
|
|
Purchase of
intangible assets
|
|
(91)
|
(96)
|
|
Disposal of
subsidiaries, net of cash disposed
|
|
(7)
|
(38)
|
|
Proceeds from sale
of investments
|
|
-
|
7
|
|
Proceeds from sale
of property, plant and equipment
|
|
6
|
5
|
|
Lease
receivables repaid including disposals
|
|
18
|
15
|
|
Interest
received
|
|
20
|
20
|
|
Dividends
received
|
|
2
|
-
|
|
Net
cash used in from investing activities
|
|
(131)
|
(301)
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
Proceeds from issue
of ordinary shares
|
|
7
|
9
|
|
Buyback
of equity
|
|
(318)
|
(186)
|
|
Settlement of
share-based payments
|
|
(40)
|
(35)
|
|
Proceeds from
borrowings
|
|
1,265
|
285
|
|
Repayment of
borrowings
|
|
(921)
|
(285)
|
|
Repayment of lease
liabilities
|
|
(78)
|
(84)
|
|
Dividends paid to
company's shareholders
|
|
(156)
|
(154)
|
|
Net
cash used in financing activities
|
|
(241)
|
(450)
|
|
Effects
of exchange rate changes on cash and cash equivalents
|
|
(21)
|
(8)
|
|
Net
increase / (decrease) in cash and cash equivalents
|
|
234
|
(234)
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
309
|
543
|
|
Cash
and cash equivalents at end of year
|
|
543
|
309
|
For the purposes of the cash flow statement, cash and cash
equivalents are presented net of overdrafts repayable on
demand.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2024
1. Basis of preparation
The condensed consolidated financial statements have been prepared
in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and in accordance with UK-adopted
International Accounting Standards. The condensed consolidated
financial statements have also been prepared in accordance with
IFRS Accounting Standards as issued by the International Accounting
Standards Board (IASB).
The condensed consolidated financial statements have been prepared
under the historical cost convention as modified by the revaluation
of certain financial assets and liabilities (including derivative
financial instruments) at fair value. They have also been prepared
in accordance with the accounting policies set out in the 2023
Annual Report. There are no changes to accounting standards that
have a material impact on the condensed consolidated financial
statements for the year ended 31 December 2024.
In assessing the Group's ability to continue as a going concern for
the period to 30 June 2026, the Board analysed a variety of
downside scenarios including a severe but plausible scenario where
the Group is impacted by all principal risks in both 2025 and 2026,
adjusted for probability weighting, as well as reverse stress
testing to identify what would be required to either breach
covenants or run out of liquidity. The severe but plausible
scenario modelled a severe reduction in revenue, profit and free
cash flow throughout 2025 to 2026.
At 31 December 2024, the Group had available liquidity of
£1.2bn comprising central cash balances and its undrawn $1bn
Revolving Credit Facility (RCF) which matures in February 2028, but
which has options to extend the maturity to February
2030. Under a severe downside scenario,
the Group would still maintain comfortable liquidity headroom and
sufficient headroom against covenant requirements during the period
under assessment, even before modelling the mitigating effect of
actions that management would take in the event that these downside
risks were to crystallise.
The Directors have concluded that there are no material
uncertainties that cast doubt on the Group's ability to continue as
a going concern and that they have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the assessment period to 30 June 2026. The condensed
consolidated financial statements have therefore been prepared on a
going concern basis.
The preparation of condensed consolidated financial statements
requires the use of certain critical accounting assumptions. It
also requires management to exercise its judgement in the process
of applying the Group's accounting policies. The areas requiring a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the condensed
consolidated financial statements, have been set out in the 2023
Annual Report. In 2024, the classification of the results and cash
flows of disposed businesses as discontinued operations is no
longer considered to be a key judgement, and the valuation of
acquired intangible assets recognised on the acquisition of a
business and the recoverability of right-of-use assets are no
longer considered to be key areas of estimation.
The Group has also assessed the impact of the uncertainty presented
by the volatile macro-economic and geo-political environment on the
condensed consolidated financial statements, specifically
considering the impact on key judgements and significant estimates
along with other areas of increased risk including financial
instruments, hedge accounting and translation methodologies. No
material accounting impacts relating to the areas assessed were
recognised in 2024. The Group has assessed the impacts of climate
change on the Group's financial statements. The assessment did not
identify any material impact on the Group's significant judgements
or estimates, the recoverability of the Group's assets at 31
December 2024 or the assessment of going concern for the period to
30 June 2026. The Group will continue to monitor these areas of
increased judgement, estimation and risk for material
changes.
The financial information for the year ended 31 December 2023 does
not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The independent
auditors' report on the full consolidated financial statements for
the year ended 31 December 2023 was unqualified and did not contain
an emphasis of matter paragraph or any statement under section 498
of the Companies Act 2006.
This preliminary announcement does not constitute the Group's full
consolidated financial statements for the year ended 31 December
2024. The Group's full consolidated financial statements will be
approved by the Board of Directors and reported on by the auditors
in March 2025. Accordingly, the financial information for 2024
is presented unaudited in the preliminary
announcement.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2024
2. Segment information
The Group has five main global business units, which are each
considered separate operating segments for management and reporting
purposes. These five business units are Assessment &
Qualifications, Virtual Learning, English Language Learning, Higher
Education and Workforce Skills. In addition, the International
Courseware local publishing businesses, most of which were disposed
in 2022 with the remainder being wound down in 2023, were being
managed as a separate business unit, known as Strategic Review.
There are no longer any reported results for the Strategic Review
business unit.
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
Assessments &
Qualifications
|
|
1,591
|
1,559
|
|
Virtual
Learning
|
|
489
|
616
|
|
English
Language Learning
|
|
420
|
415
|
|
Workforce
Skills
|
|
226
|
220
|
|
Higher
Education
|
|
826
|
855
|
|
Strategic
Review
|
|
-
|
9
|
|
Total
sales
|
|
3,552
|
3,674
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
|
|
|
Assessments &
Qualifications
|
|
368
|
350
|
|
Virtual
Learning
|
|
66
|
76
|
|
English
Language Learning
|
|
50
|
47
|
|
Workforce
Skills
|
|
8
|
(8)
|
|
Higher
Education
|
|
108
|
110
|
|
Strategic
Review
|
|
-
|
(2)
|
|
Total
adjusted operating profit
|
|
600
|
573
|
There were no material inter-segment sales. The following table
reconciles the Group's measure of segmental performance, adjusted
operating profit, to statutory operating profit:
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
600
|
573
|
|
Cost of
major reorganisation
|
|
2
|
-
|
|
Property
charges
|
|
-
|
(11)
|
|
Intangible
charges
|
|
(41)
|
(48)
|
|
UK
Pension discretionary increases
|
|
(13)
|
-
|
|
Other
net gains and losses
|
|
(7)
|
(16)
|
|
Operating
profit
|
|
541
|
498
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2024
2. Segment information continued
|
|
|
|
|
|
|
Adjusted
operating profit is one of the Group's key business performance
measures. The measure includes the operating profit from the total
business but excludes intangible charges for amortisation and
impairment, acquisition related costs, gains and losses arising
from disposals, property charges and one-off costs related to the
UK pension scheme.
Costs
of major reorganisation - In 2024, there is a release of £2m
relating to amounts previously accrued. In 2023, there were no
costs of major reorganisation.
Property
charges - In 2024, there were no property charges. Charges of
£11m relate to impairments of property assets arising from the
impact of updates in 2023 to assumptions initially made during the
2022 and 2021 reorganisation programmes.
Intangible
charges - These represent amortisation relating to intangibles
acquired through business combinations. These charges are excluded
as they reflect past acquisition activity and do not necessarily
reflect the current year performance of the Group. Intangible
amortisation charges in 2024 were £41m compared to a charge of
£48m in 2023. This is due to decreased amortisation from
recent disposals partially offset by additional amortisation from
recent acquisitions.
UK
pension discretionary increases - Charges in 2024 relate to one-off
pension increases awarded to certain cohorts of pensioners in
response to the cost of living crisis.
Other
net gains and losses - These represent profits and losses on the
sale of subsidiaries, joint ventures, associates and other
financial assets and are excluded from adjusted operating profit as
they distort the performance of the Group as reported on a
statutory basis. Other net gains and losses also includes costs
related to business closures and acquisitions. Other net gains and
losses in 2024 are costs related to prior year acquisitions and
disposals, partially offset by a gain on the partial disposal of
our investment in an associate. In 2023, other net gains and losses
relate largely to the gain on disposal of the POLS business and
gains relating to the releases of accruals and a provision related
to previous acquisitions and disposals, which were more than offset
by losses on the disposal of Pearson College and costs related to
current and prior year disposals and acquisitions.
Adjusted
operating profit should not be regarded as a complete picture of
the Group's financial performance. For example, adjusted operating
profit includes the benefits of major reorganisation programmes but
excludes the significant associated costs, and adjusted operating
profit excludes costs related to acquisitions, and the amortisation
of intangibles acquired in business combinations, but does not
exclude the associated revenues. The Group's definition of adjusted
operating profit may not be comparable to other similarly titled
measures reported by other companies.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2024
3. Net finance costs
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Interest payable on
financial liabilities at amortised cost and associated
derivatives
|
|
(48)
|
(34)
|
|
Interest on lease
liabilities
|
|
(22)
|
(23)
|
|
Interest on
deferred and contingent consideration
|
|
(2)
|
(4)
|
|
Fair
value movements on investments held at FVTPL
|
|
(11)
|
-
|
|
Net
foreign exchange losses
|
|
(3)
|
-
|
|
Fair
value movements on derivatives
|
|
(19)
|
(20)
|
|
Interest on
provisions for uncertain tax positions
|
|
(7)
|
-
|
|
Finance
costs
|
|
(112)
|
(81)
|
|
Interest receivable
on financial assets at amortised cost
|
|
25
|
16
|
|
Interest on lease
receivables
|
|
4
|
4
|
|
Net
finance income in respect of retirement benefits
|
|
21
|
26
|
|
Fair
value movements on investments held at FVTPL
|
|
-
|
13
|
|
Net
foreign exchange gains
|
|
-
|
3
|
|
Fair
value movements on derivatives
|
|
26
|
10
|
|
Interest on
provisions for uncertain tax positions
|
|
5
|
4
|
|
Finance
income
|
|
81
|
76
|
|
Analysed
as:
|
|
|
|
|
Net
interest payable reflected in adjusted earnings
|
|
(45)
|
(33)
|
|
Other
net finance income
|
|
14
|
28
|
|
Net
finance costs
|
|
(31)
|
(5)
|
Net interest payable is the finance cost measure used in
calculating adjusted earnings. The table below reconciles statutory
net finance costs to net interest payable.
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
|
(31)
|
(5)
|
|
Net
finance income in respect of retirement benefits
|
|
(21)
|
(26)
|
|
Interest on
deferred and contingent consideration
|
|
2
|
4
|
|
Fair
value movements on investments held at FVTPL
|
|
11
|
(13)
|
|
Net
foreign exchange losses / (gains)
|
|
3
|
(3)
|
|
Fair
value movements on derivatives
|
|
(7)
|
10
|
|
Interest on
provisions for uncertain tax positions
|
|
(2)
|
-
|
|
Adjusted
net finance costs
|
|
(45)
|
(33)
|
Net finance income relating to retirement benefits has been
excluded from adjusted earnings as we believe the income statement
presentation does not reflect the economic substance of the
underlying assets and liabilities. Also excluded are interest costs
relating to acquisition or disposal transactions as it is
considered part of the acquisition cost or disposal proceeds rather
than being reflective of the underlying financing costs of the
Group. Foreign exchange, fair value movements on investments
classified as FVTPL and other gains and losses on derivatives are
excluded from adjusted earnings as they represent short-term
fluctuations in market value and are subject to significant
volatility. Other gains and losses may not be realised in due
course as it is normally the intention to hold the related
instruments to maturity. Interest on certain tax provisions is
excluded from our adjusted measure in order to mirror the treatment
of the underlying tax item.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
4. Income tax
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before tax
|
|
510
|
493
|
|
Tax
calculated at UK rate of 25% (2023: 23.5%)
|
|
(127)
|
(116)
|
|
Effect
of overseas tax rate
|
|
(1)
|
(1)
|
|
Non-deductible
expenses
|
|
3
|
(6)
|
|
Impact
of UK rate change
|
|
-
|
(1)
|
|
State
Aid provision release
|
|
63
|
-
|
|
Other
tax items
|
|
(13)
|
11
|
|
Income
tax charge
|
|
(75)
|
(113)
|
|
Tax
rate reflected in statutory earnings
|
|
14.7%
|
23.0%
|
The
reduction in the statutory rate of tax in 2024 is principally due
to the impact of the favourable State Aid decision in September
2024 and subsequent release of the provision held in relation to
this issue.
On
25 April 2019, the European Commission published its final decision
that the United Kingdom controlled foreign company group financing
partial exemption ('FCPE') partially constituted State Aid. This
decision was appealed by the UK Government, and other parties.
Notwithstanding these appeals the UK was obliged to recover the
deemed unlawful State Aid with Charging Notices issued in 2021. On
8 June 2022, the EU General Court found in the Commission's favour
resulting in a further appeal to the Court of Justice of the
European Union ('CJEU') by the UK Government and other parties. The
CJEU handed down its decision on 19 September 2024, finding that no
State Aid had been provided and as a consequence annulling the
Commission's decision in full and setting aside the judgment of the
EU General Court. In light of the CJEU decision, the Group has now
fully released the £63m provision for tax and £5m
provision for interest on tax held in relation to this matter,
leaving on the balance sheet a receivable for the £97m tax and
£8m interest in tax paid under the Charging Notices. These
receivables have now been reclassified as current assets. In
addition, HMRC Guidance issued to facilitate these pending
repayments confirms that interest will be paid on the tax element
of the amounts previously collected and a £9m interest accrual
has also therefore been recorded.
In
2024, other tax items of £13m consists primarily of movements
in provisions for tax uncertainties. In 2023, other tax items of
£11m consisted primarily of a £5m gain on sale of
business not subject to tax and £3m of adjustments in respect
of prior years.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
4.
Income tax continued
|
|
|
|
|
Adjusted income tax is the tax measure used in calculating adjusted
earnings. The table below reconciles the statutory income tax
charge to the adjusted income tax charge.
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax charge
|
|
(75)
|
(113)
|
|
Tax on
cost of major reorganisation
|
|
1
|
-
|
|
Tax on
property charges
|
|
-
|
(3)
|
|
Tax on
other net gains and losses
|
|
-
|
(10)
|
|
Tax on
intangible charges
|
|
(10)
|
(11)
|
|
Tax on
UK pension discretionary increase
|
|
(3)
|
-
|
|
Tax on
other net finance costs
|
|
5
|
7
|
|
Tax on
goodwill and intangibles
|
|
4
|
4
|
|
Tax on
UK tax rate change
|
|
-
|
1
|
|
State
Aid provision release
|
|
(63)
|
-
|
|
Movement in
provision for tax uncertainties
|
|
6
|
-
|
|
Other
tax items
|
|
(1)
|
1
|
|
Adjusted
income tax charge
|
|
(136)
|
(124)
|
|
Adjusted profit
before tax
|
|
555
|
540
|
|
Tax
rate reflected in adjusted earnings
|
|
24.4%
|
23.0%
|
The
adjusted income tax charge excludes the tax benefit or charge on
items excluded from adjusted profit before tax (see notes 2 and
3).
The
current tax benefit from tax deductible goodwill and intangibles is
added to the adjusted income tax charge as this benefit more
accurately aligns the adjusted tax charge with the expected rate of
cash tax payments.
UK
legislation in relation to Pillar Two was substantively enacted on
20 June 2023 and is effective from 1 January 2024. The Group is in
scope of this legislation and has performed an assessment of the
Group's potential exposure to Pillar Two income taxes based on the
most recent financial information available for the constituent
entities in the Group. Based on this assessment, the Pillar Two
effective tax rates in most of the jurisdictions in which the Group
operates are above 15%. However, there are a limited number of
jurisdictions where the transitional safe harbour relief does not
apply, and the Pillar Two effective tax rate is close to 15%. The
Group has concluded that it does not have a material exposure to
Pillar Two income taxes in those jurisdictions. In addition, we
note US President Trump's Executive Order of January 20th 2025
withdrawing the US from the Pillar Two agreement; this development
does not impact our assessment of Pillar Two for 2024.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
5. Earnings per share
Basic
earnings per share is calculated by dividing the profit or loss
attributable to equity shareholders of the company (earnings) by
the weighted average number of ordinary shares in issue during the
year, excluding ordinary shares purchased by the company and held
as treasury shares. Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares to take
account of all dilutive potential ordinary shares and adjusting the
profit attributable, if applicable, to account for any tax
consequences that might arise from conversion of those
shares.
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Earnings for the
year
|
|
435
|
380
|
|
Non-controlling
interest
|
|
(1)
|
(2)
|
|
Earnings
attributable to equity holders
|
|
434
|
378
|
|
|
|
|
|
|
Weighted average
number of shares (millions)
|
|
673.0
|
711.5
|
|
Effect
of dilutive share options (millions)
|
|
11.0
|
5.8
|
|
Weighted average
number of shares (millions) for diluted earnings
|
|
684.0
|
717.3
|
|
|
|
|
|
|
Earnings per share (in pence per share)
|
|
|
|
|
Basic
|
|
64.5p
|
53.1p
|
|
Diluted
|
|
63.5p
|
52.7p
|
6. Adjusted earnings per share
In order to show results from operating activities on a consistent
basis, an adjusted earnings per share is presented which excludes
certain items as set out below.
Adjusted earnings is a non-GAAP financial measure and is included
as it is a key financial measure used by management to evaluate
performance and allocate resources to business segments. The
measure also enables our investors to more easily, and
consistently, track the underlying operational performance of the
Group and its business segments over time by separating out those
items of income and expenditure relating to acquisition and
disposal transactions, major reorganisation programmes and certain other
items that are also not representative of underlying performance
(see notes 2, 3 and 4 for further information and reconciliation to
equivalent statutory measures). The adjusted earnings per share
includes both continuing and discontinued businesses when relevant.
The Group's definition of adjusted earnings per share may not be
comparable to other similarly titled measures reported by other
companies.
|
all figures in £ millions
|
note
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
profit
|
2
|
600
|
573
|
|
Adjusted net
finance costs
|
3
|
(45)
|
(33)
|
|
Adjusted income
tax
|
4
|
(136)
|
(124)
|
|
Non-controlling
interest
|
|
(1)
|
(2)
|
|
Adjusted
earnings
|
|
418
|
414
|
|
Weighted average
number of shares (millions)
|
|
673.0
|
711.5
|
|
Weighted average
number of shares (millions) for diluted earnings
|
|
684.0
|
717.3
|
|
Adjusted
earnings per share - basic
|
|
62.1p
|
58.2p
|
|
Adjusted
earnings per share - diluted
|
|
61.1p
|
57.7p
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2024
7. Dividends
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
recognised as distributions to equity shareholders in the
year
|
|
156
|
155
|
The
Directors are proposing a final dividend of 16.6p per equity share,
payable on 9 May 2025 to shareholders on the register at the close
of business on 21 March 2025. This final dividend, which will
absorb an estimated £111m of shareholders' funds, has not been
included as a liability as at 31 December 2024.
8. Exchange rates
Pearson
earns a significant proportion of its sales and profits in overseas
currencies, the most important being the US dollar. The relevant
rates are as follows:
|
|
|
|
|
|
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Average
rate for profits
|
|
1.28
|
1.25
|
|
Year
end rate
|
|
1.25
|
1.27
|
9. Non-current intangible
assets
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
2,437
|
2,434
|
|
Other
intangibles
|
|
589
|
657
|
|
Non-current
intangible assets
|
|
3,026
|
3,091
|
There
were no significant acquisitions in 2024. In 2023, acquisitions
resulted in the recognition of additional goodwill of £61m and
intangible assets of £117m.
There
were no significant impairments to acquisition related or other
intangibles in 2024 or 2023.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2024
10. Net debt
|
|
|
|
|
|
all figures in £ millions
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Derivative
financial instruments
|
|
20
|
32
|
|
Trade
and other receivables - investment in finance lease
|
|
64
|
82
|
|
Current
assets
|
|
|
|
|
Derivative
financial instruments
|
|
31
|
16
|
|
Trade
and other receivables - investment in finance lease
|
|
19
|
18
|
|
Cash
and cash equivalents (excluding overdrafts)
|
|
543
|
312
|
|
Non-current
liabilities
|
|
|
|
|
Borrowings
|
|
(1,157)
|
(1,094)
|
|
Derivative
financial instruments
|
|
(4)
|
(38)
|
|
Current
liabilities
|
|
|
|
|
Borrowings
(including overdrafts)
|
|
(315)
|
(67)
|
|
Derivative
financial instruments
|
|
(54)
|
(5)
|
|
Net
debt
|
|
(853)
|
(744)
|
Included
in borrowings at 31 December 2024 are lease liabilities of
£517m (non-current £452m, current £65m). This
compares to lease liabilities of £547m (non-current
£483m, current £64m) at 31 December 2023. The net lease
liability at 31 December 2024 after including the investment in
finance leases noted above was £434m (2023: £447m). Net
debt excluding net lease liabilities is £419m (2023:
£297m).
In
2024, the Group issued a new £350m 5.375% GBP denominated 10
year Education Bond. The bond was admitted to trading on the London
Stock Exchange. The proceeds from the bond will be used to finance
or refinance projects or expenditure that meets the Eligible
categories set out in the Group's Social Bond
Framework.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2024
11. Cash flows
Operating
cash flow and free cash flow are non-GAAP measures and have been
disclosed as they are part of the Group's corporate and operating
measures. These measures are presented in order to align the cash
flows with corresponding adjusted profit measures. The table below
reconciles the statutory profit and cash flow measures to the
corresponding adjusted measures.
|
all figures in £ millions
|
Statutory
measure
|
Cost of
major reorganisation
|
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
received
|
Adjusted
measure
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
2024
|
|
|||||||||||||||||
|
Operating
profit
|
541
|
(2)
|
-
|
7
|
41
|
13
|
-
|
-
|
-
|
600
|
Adjusted operating profit
|
|
||||||||
|
Net
cash generated from operations
|
811
|
8
|
-
|
5
|
-
|
-
|
(118)
|
(46)
|
2
|
662
|
Operating cash flow
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
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
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below reconciles operating cash flow to net
debt.
|
all figures in £ millions
|
note
|
2024
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Operating
cash flow
|
|
662
|
587
|
|
Tax
paid
|
|
(119)
|
(97)
|
|
Net
finance costs paid
|
|
(45)
|
(40)
|
|
Net
cost paid for major reorganisation
|
|
(8)
|
(63)
|
|
Free
cash flow
|
|
490
|
387
|
|
Dividends paid
(including to non-controlling interest)
|
|
(156)
|
(154)
|
|
Net
movement of funds from operations
|
|
334
|
233
|
|
Acquisitions and
disposals
|
|
(58)
|
(219)
|
|
Net
equity transactions
|
|
(351)
|
(212)
|
|
Other
movements on financial instruments
|
|
(34)
|
11
|
|
Movement
in net debt
|
|
(109)
|
(187)
|
|
Opening
net debt
|
|
(744)
|
(557)
|
|
Closing
net debt
|
10
|
(853)
|
(744)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2024
12. Contingencies and other
liabilities
There are Group contingent liabilities that arise in the normal
course of business in respect of indemnities, warranties and
guarantees in relation to former subsidiaries and in respect of
guarantees in relation to subsidiaries, joint ventures and
associates. In addition, there are contingent liabilities of the
Group in respect of unsettled or disputed tax liabilities, legal
claims, contract disputes, royalties, copyright fees, permissions
and other rights. None of these claims are expected to result in a
material gain or loss to the Group.
The Group is under assessment from the tax authorities in Brazil
challenging the deduction for tax purposes of goodwill amortisation
for the years 2012 to 2020. Similar assessments may be raised for
other years. Potential total exposure (including possible interest
and penalties) could be up to BRL 1,314m (£169m) for the
period up to 31 December 2024, with additional potential exposure
of BRL 46m (£6m) in relation to deductions expected to be
taken in future periods. Such assessments are common in Brazil. The
Group believes that the likelihood that the tax authorities will
ultimately prevail is low and that the Group's position is strong.
At present, the Group believes no provision is
required.
13. Related parties
There were no material related party transactions in the period
that have materially affected the financial position or performance
of the Group and no guarantees have been provided to related
parties in the year.
14. Events after the balance sheet
date
On 27 February 2025, the Board approved a £350m share buyback
programme in order to return capital to shareholders. The programme
will commence as soon as is practicable.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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PEARSON
plc
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Date:
28 February 2025
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By: /s/
NATALIE WHITE
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Natalie
White
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Deputy
Company Secretary
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