PSORF 6-K
Pearson PLC (PSO)
6-K
2026-02-27
For: 2026-02-27
View Original
Added on
April 08, 2026
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 2026
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 2025 Preliminary Results (Unaudited)
|
27th
February 2026
|
Confident in outlook, guiding to mid-single digit sales growth for
2026 and beyond. Strong financial position, with £350m share
buyback well underway.
|
Financial Highlights
|
£m
|
2025
|
vs 2024
|
|
£m
|
2025
|
2024
|
|
Business performance
|
Statutory results
|
|||||
|
Sales
|
3,577
|
+4%1
|
Sales
|
3,577
|
3,552
|
|
|
Adjusted
operating profit
|
614
|
+6%1
|
Operating
profit
|
507
|
541
|
|
|
Operating
cash flow
|
571
|
-14%2
|
Profit
for the period
|
336
|
435
|
|
|
Free
cash flow
|
527
|
+8%2
|
Net
cash generated from operations
|
731
|
811
|
|
|
Adjusted
earnings per share
|
64.5p
|
+4%2
|
Basic
earnings per share
|
51.4p
|
64.5p
|
|
Highlights
|
●
|
Underlying
Group sales growth of 4% for the full year. Group adjusted operating profit of £614m, up
6% underlying with margin expansion from 16.9% to
17.2%.
|
|
|
●
|
Operating cash conversion remained strong at 93%, with an increase
in working capital given high Q4 sales growth. Free cash flow up
8%, resulting in free cash flow conversion3
of 125%.
|
|
|
●
|
Adjusted earnings per share increased 9% at constant exchange
rates4,
and 4% on a headline basis. Full year dividend per share up 5% to
25.2p. Recently announced £350m share buyback programme well
underway.
|
|
|
●
|
Significant strategic progress in delivering our 2025
priorities:
|
|
|
|
o
|
Continued
to lead with the application of innovative technologies, deepening
and scaling AI across our offering, driving measurable improvements
in learner outcomes and saving educators meaningful time, whilst
embedding AI as a foundational capability within
Pearson.
|
|
|
o
|
Advanced
our enterprise strategy, securing eight partnerships with
industry-leading firms with continued momentum into 2026,
announcing a new strategic partnership with
Salesforce.
|
|
●
|
Positive outlook for 2026: mid-single digit underlying sales
growth, adjusted operating profit of
£640m-£685m at FX rates as at the end of 2025 (£:$
1.35), including the impact of the 2025 product development
impairment, and free cash flow conversion of 90%-100%.
Medium term guidance
reiterated.
|
|
Omar Abbosh, Pearson’s Chief Executive, said:
“We delivered on our goals in 2025, making significant
progress in scaling AI across our products and services and
building tangible momentum in our enterprise offering. The
partnerships we secured with leading technology companies are a
recognition of Pearson’s unique role at the intersection of
education, skills and workforce development, underpinned by our
unrivalled strength in assessments which positions us to deliver
meaningful shareholder value over the medium term. Through our
unique competitive positioning, we look to the future with
confidence as we meet the growing and urgent need among enterprises
and learners to adapt to an AI-enabled world.”
Statutory results
|
●
|
Sales increased 1% on a headline basis to £3,577m (2024:
£3,552m) with currency movements partially offsetting
underlying business performance.
|
|
●
|
Statutory operating profit decreased 6% to £507m (2024:
£541m). Underlying operating profit growth and the reversal of
prior property provisions were more than offset by adverse currency
movements and an £87m non-cash, one-off impairment of legacy
product development assets arising from strategic platform
convergence. This convergence is expected to deliver ongoing
operational improvements and results in a c.£15m per annum
adjusted operating profit improvement, on average, over the next 6
years in Higher Education.
|
2026 priorities
|
●
|
Deliver
on 2026 guidance for Group underlying sales growth, adjusted
operating profit and free cash flow.
|
|
●
|
Lead with the application of innovative technologies, including AI
powered learning and assessment products and services, driving
better attainment outcomes and enhanced experiences.
|
|
●
|
Progress core business and enterprise power metrics.
|
2025 Financial Performance
Underlying Group sales growth of 4% for the full year
|
●
|
Assessment
& Qualifications sales grew 4% with all sub-business units
contributing to growth.
|
|
●
|
Virtual Learning delivered a strong performance with 8% sales
growth for the full year, and H2 up 18% driven by a 13% increase in
2025/26 Fall semester enrolments, as well as favourable mix and
funding.
|
|
●
|
Higher Education sales grew 2%, with US Higher Education up 3%
driven by enrolments and pricing in core Courseware with adoption
share maintained.
|
|
●
|
English
Language Learning sales increased 1%, driven by Institutional, with
Pearson Test of English (PTE) performing well against a tough
market backdrop.
|
|
●
|
Enterprise
Learning & Skills sales grew 6% with a solid performance in
Vocational Qualifications and continued quarter-on-quarter
improvement in Enterprise Solutions.
|
Adjusted operating profit up 6% on an underlying basis to
£614m
|
●
|
Underlying performance up 6% driven by sales growth and continued
cost savings, partially offset by investment and inflation.
Adjusted operating profit margin rose to 17.2% (2024:
16.9%).
|
|
●
|
Headline adjusted operating profit growth was 2% reflecting
business performance and portfolio changes partially offset by
currency movements.
|
|
●
|
Adjusted net finance costs increased to £57m (2024:
£45m). The effective tax rate on adjusted profit before tax
held broadly flat at 24.5% (2024: 24.4%).
|
|
●
|
Adjusted earnings per share increased 4% to 64.5p (2024: 62.1p)
reflecting adjusted operating profit growth and the reduction in
issued shares due to the 2025 share buyback, partially offset by
increased interest costs. Adjusted earnings per share increased 9%
at constant exchange rates.
|
Strong cash performance
|
●
|
Operating cash conversion remained strong at 93%, with an increase
in working capital given high Q4 sales growth and increased
investment spend. Operating cash inflow decreased on a headline
basis from £662m in 2024 to £571m in 2025 given these
factors as well as currency movements.
|
|
●
|
Free
cash flow increased 8%, resulting in free cash flow conversion of
125%, driven by the £0.1bn recovery of State Aid taxes. Free
cash flow conversion excluding the recovery of State Aid taxes was
98%, at the top end of guidance.
|
Strong balance sheet supporting continued investment and
shareholder returns
|
●
|
Year-end
net debt of £1.1bn (2024: £0.9bn), with free cash flow
more than offset by the share buyback, acquisition of eDynamic Learning and
dividends. Net debt / adjusted EBITDA ratio of 1.3x (2024:
1.1x).
|
|
●
|
Proposed
final dividend of 17.4p (2024: 16.6p) which equates to a full year
dividend of 25.2p (2024: 24.0p) an increase of 5% compared to
2024.
|
|
●
|
In 2025
we completed a £350m share buyback, reducing our share count
by 5%. In line with our capital allocation framework and supported
by strong free cash flow, we commenced a further £350m share
buyback in January 2026.
|
|
●
|
Secured
new three-year, $800m revolving credit facility, enhancing our
liquidity and strategic flexibility.
|
|
●
|
Return
on capital was 11.3% (2024: 10.5%).
|
Continued operational and strategic progress, strengthening our
core business while expanding into faster growth adjacent
markets
|
●
|
Assessment & Qualifications:
|
|
|
o
|
Pearson Professional Assessments continued to lead the global
market in large-scale testing services, securing several new
contracts and maintaining strong customer retention supporting
future growth.
|
|
|
o
|
US Student Assessment announced an integrated partnership with
McGraw Hill embedding formative assessments into core K12
curricula, and although we lost the contract with New Jersey we
subsequently renewed and extended several key contracts, including
Maryland and others at a late stage of contract
completion.
|
|
|
o
|
In UK & International Qualifications, we commenced the
delivery of the new UK Government Test Operations Services
contract and we expanded our digital offerings, including increased
adoption of onscreen assessment and ActiveHub, our flagship
teaching and learning platform.
|
|
|
o
|
In Clinical Assessment we have implemented the first statewide
adoption of our digital platform in Tennessee and expanded our
pharmaceutical business.
|
|
|
o
|
Key innovations included the launch in Clinical Assessment
of Revibe, a wearable device designed to support individuals
experiencing challenges with focus and attention such as those with
ADHD, alongside the integration of AI by Pearson Professional
Assessment to drive efficiencies in assessment
generation.
|
|
|
●
|
Virtual Learning:
|
|
|
o
|
We completed the launch of a new enrolment portal across our school
network, helping to remove friction in the enrolment
process.
|
|
|
o
|
During the year, we made targeted marketing investments to
capitalise on strong market demand for virtual
schooling.
|
|
|
o
|
We continue to enhance our
career offering through new and extended partnerships and also
embedded our career programmes across the school network,
supporting students in their transition to the
workforce.
|
|
|
o
|
We deepened the integration of AI into our study tools,
contributing to higher course scores and end-of-semester pass
rates, and expanded our teacher AI custom assessment tool
network-wide, driving increased adoption and usage allowing
teachers to focus on meaningful student interactions by halving the
time it takes to create custom student assessments.
|
|
|
●
|
Higher Education:
|
|
|
o
|
We expanded the successful monetisation of our Study Prep tool,
extending reach into International markets.
|
|
|
o
|
Our AI powered study tools continue to deliver measurable
improvements in learning outcomes, with our latest research showing
repeat usage of our AI study tools increases the likelihood of a
student becoming an active reader by 24 times.
|
|
|
o
|
We also saw sustained momentum in our Inclusive Access offerings,
achieving another year of strong double digit sales
growth.
|
|
|
o
|
We made significant strategic progress in expanding into the fast
growing Early Careers space, broadening capabilities in
career-readiness solutions which support learners as they
transition from formal education into the workforce. We established
a dedicated direct sales force to deepen and expand our
relationships with US school administrators and completed the
acquisition of eDynamic Learning – North America’s
largest provider of digital Career and Technical
Education.
|
|
|
●
|
English Language Learning:
|
|
|
o
|
We launched the PTE Express test, addressing growing demand for
trusted online testing among US-bound learners, and renewed our
agreement with Australia’s Department of Home
Affairs.
|
|
|
o
|
Within Institutional, we continued to expand internationally,
securing customer wins in key markets including Latin America and
Asia.
|
|
|
o
|
We also continued to make progress on the application of innovative
technologies with the launch of Communications Coach
- an AI-powered learning solution integrated into
Microsoft 365, enabling professionals to enhance communication
skills seamlessly within the flow of work, marking our first
go-to-market collaboration with Microsoft.
|
|
|
●
|
Enterprise Learning & Skills:
|
|
|
o
|
Vocational Qualifications secured several new contract wins
including apprenticeship courses with the UK Ministry of Defence,
the Uzbekistan Ministry of Education, and the Kingdom of Saudi
Arabia, alongside International BTEC expansion.
|
|
|
o
|
Within Enterprise Solutions, we launched a global go to market
approach, establishing a dedicated enterprise sales team supported
by marketing and delivery.
|
|
|
o
|
We also signed strategic partnerships with eight industry-leading
firms, securing sales opportunities and collaborating on joint
go-to market initiatives across
a broad range of learning experiences.
|
|
Confident in future thanks to AI trends driving major multi-year
demand for upskilling and the validation of skills
|
● The
advancement of AI drives large scale reconfiguration of industries,
occupations, roles and educational approaches. This is proving a
major demand driver for skilling and the validation of skills.
Pearson’s core capability is assessment and verification and
we already see resultant demand from enterprises.
|
|
● Approximately
90% of 2025 adjusted operating profit was generated from
assessments, virtual schools and print. These are operationally
complex, large-scale services with very high quality requirements.
These services often need high levels of security, statistical
evidence bases while meeting regulatory outcomes, where trust in
delivery
standards is critical. We use AI
and other technologies to enhance the productivity of our
operations and improve services to customers.
|
|
● The
remaining approximately 10% of 2025 adjusted operating profit was
generated primarily from digital courseware, where AI technologies
play an important role in personalisation. We have made significant
progress in advancing the application of AI to improve learning
outcomes, and this continues to be a company priority.
We benefit from our deep integration into the
learning ecosystem, significant proprietary data, and demand for
trusted pedagogy.
|
Outlook
2026 guidance
|
Underlying Sales Growth
|
Group
|
Mid-single digit growth.
|
|
Assessment
& Qualifications
|
Low to
mid-single digit growth, driven by new contracts, products and
pricing. Q1 to decline due to the loss of the New Jersey contract
and PDRI headwinds, returning to growth in subsequent quarters
supported by new business and recently awarded
contracts.
|
|
|
Virtual
Learning
|
Stronger growth than 2025, particularly in H1, driven by a full
year of enrolment growth.
|
|
|
Higher
Education
|
Will
grow more than 2025, supported by continued product and platform
innovation, pricing and Inclusive Access in our core US courseware
business, with improvement in the K12 channel.
|
|
|
English
Language Learning
|
Higher
growth than 2025 driven by
market share gains and pricing, with PTE returning to growth.
Growth will again be Q4 weighted given the seasonality of the
business.
|
|
|
Enterprise
Learning & Skills
|
Growth
to be driven by a solid performance in Vocational Qualifications
and strategic account growth in Enterprise Solutions.
|
|
|
Group Profit
|
Adjusted
Operating Profit
|
£640m-£685m at FX rates as at the end of 2025 (£:$
1.35), which includes lower amortisation in 2026 following the 2025
product development impairment.
|
|
Interest
|
Adjusted
net finance costs of c.£80m – includes associated costs
of funding the recently announced £350m share
buyback.
|
|
|
Tax
rate
|
We
expect the effective tax rate on adjusted profit before tax to be
c.25%.
|
|
|
Cash flow
|
We
expect a free cash flow conversion of 90%-100%.
|
|
|
FX
|
Every
1c movement in £:$ rate equates to approximately £5m
adjusted operating profit impact.
|
|
|
Exchange rates
|
FY 2025
|
FY 2024
|
|
£:$
|
|
|
|
Average rate for profits
|
1.32
|
1.28
|
|
Period end rate
|
1.35
|
1.25
|
Medium term outlook
|
●
|
Over the medium term, Pearson is well 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 conversion, in the region of
90% to 100%, on average, across the period.
|
Financial Calendar
|
●
|
2026 Q1 Trading Update will be announced on 1 May
2026.
|
Executive change
Sally
Johnson, Group Chief Financial Officer (CFO), has informed the
Board of her decision to leave the company later this year to take
up the role of CFO at a large privately owned business. The Board
would like to thank Sally for her contribution and leadership
during her tenure as Group CFO.
Following
a carefully managed succession process, Simon Robson, currently CFO
at Sky, will succeed Sally as Group CFO. Simon will join Pearson on
30 March 2026 and assume the role of Group CFO and Executive
Director on 8 May 2026, ensuring a smooth and orderly
transition.
Simon
brings extensive financial leadership from Sky, one of
Europe’s largest media, technology and connectivity
businesses. Having joined Sky in 1997, he has held a number of
senior finance and strategy roles, including CFO of Sky Deutschland
from 2015 to 2018, followed by Deputy Group CFO, before being
appointed Group CFO in June 2020. A chartered certified accountant,
Simon brings a strong track record of delivering high-impact
financial strategy and operational excellence.
There
is no further information to be declared in accordance with LR
6.4.8.
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
https://plc.pearson.com/en-GB/investors
|
|
Media
Edelman
Smithfield
Pearson
|
Latika
Shah
Laura
Ewart
|
+44
(0)7950 671 948
+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: [email protected]
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
|
2025
|
20245
|
Headline
growth2
|
Underlying
growth1
|
|
Sales
|
||||
|
Assessment
& Qualifications
|
1,604
|
1,591
|
1%
|
4%
|
|
Virtual
Learning
|
511
|
489
|
4%
|
8%
|
|
Higher
Education
|
775
|
781
|
(1)%
|
2%
|
|
English
Language Learning
|
405
|
420
|
(4)%
|
1%
|
|
Enterprise
Learning & Skills
|
282
|
271
|
4%
|
6%
|
|
Total
|
3,577
|
3,552
|
1%
|
4%
|
|
|
|
|
|
|
|
Adjusted operating profit
|
||||
|
Assessment
& Qualifications
|
361
|
368
|
(2)%
|
1%
|
|
Virtual
Learning
|
81
|
66
|
23%
|
29%
|
|
Higher
Education
|
93
|
96
|
(3)%
|
0%
|
|
English
Language Learning
|
50
|
50
|
0%
|
16%
|
|
Enterprise
Learning & Skills
|
29
|
20
|
45%
|
40%
|
|
Total
|
614
|
600
|
2%
|
6%
|
1 Throughout 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 12.
2 Headline growth rates include currency movements, and
portfolio changes.
3 Free cash flow conversion calculated as free cash flow
divided by adjusted earnings.
4 Calculated using adjusted operating profit at constant
exchange rates. Constant exchange rates are calculated by assuming
the average FX in the prior year prevailed through the current
year.
5 In January 2025, the Group announced that Workforce Skills
would evolve to become Enterprise Learning & Skills,
incorporating our IT Pro business which was previously in Higher
Education. Comparative figures have been restated to reflect the
move between segments, resulting in £45m of sales and
£12m of adjusted operating profit being transferred from
Higher Education to Enterprise Learning & Skills in full year
2024.
Assessment & Qualifications
In Assessment & Qualifications, sales increased 4% on an
underlying basis and 1% on a headline basis with currency movements
partially offsetting trading. Adjusted operating profit increased
1% in underlying terms due to operating leverage on sales growth
partially offset by investment and inflation, and decreased 2% in
headline terms due to currency movements offsetting
trading.
Pearson Professional Assessments sales increased 1% on an
underlying basis driven by new contract launches partially offset
by the pause in a contract delivered in 2024, which resumed in Q3,
and headwinds in PDRI, which has been impacted by US federal
government hiring and spend reductions.
In US Student Assessment, sales increased 2% on an underlying basis
supported by scope increases with existing customers.
In Clinical Assessment, sales increased 8% on an underlying basis
due to the continued traction of our products in the market,
pricing and digital product growth.
In UK & International Qualifications, sales increased 9% on an
underlying basis driven by volume, pricing and strong International
growth.
For Assessment & Qualifications, we expect low to mid-single
digit underlying sales growth in 2026. This will be driven by new
contracts, products and pricing. 2026 priorities include expansion
into adjacent markets, including high stakes test prep and
formative assessments, along with key contract renewals and new
wins. We will also continue to expand internationally, enhance
operational excellence, and accelerate innovation, particularly
through AI.
Virtual Learning
Virtual Learning sales grew 8% on an underlying basis, with strong
performance in H2 driven by enrolment performance, favourable mix
and funding. On a headline basis sales were up 4% with currency
movements partially offsetting trading. Adjusted operating profit
increased 29% in underlying terms, due to operating leverage on
sales growth, and 23% in headline terms due to this partially
offset by currency movements.
Enrolments for the 2025/26 academic year increased by 13% in the
Fall semester, benefiting from targeted marketing investments to
capture demand. We also successfully opened two new
schools for
the 2025/26 academic year bringing our total number of schools to
41 across 31 states and renewed all
six of our long term school contracts.
For Virtual Learning, we expect even stronger underlying sales
growth in 2026 than 2025, driven by a full year of enrolment
growth. 2026 priorities include continuing to capture growing
demand for US virtual schooling, further strengthening of our
marketing and enrolment capabilities, targeted school expansion and
the ongoing application of AI to personalise teaching and
learning.
Higher Education
In Higher Education, sales increased 2% on an underlying basis and
decreased 1% on a headline basis due to currency movements more
than offsetting trading and portfolio changes. Adjusted operating
profit was flat in underlying terms driven by operating leverage on
sales growth offset by investment in the business and inflation,
and decreased 3% in headline terms due to currency movements more
than offsetting trading and portfolio changes.
In US Higher Education, underlying sales grew 3%, driven by
enrolment growth and pricing in our core Courseware business,
partly offset by expected declines in the K12 channel due to the
transitionary period, with adoption share maintained. We delivered
strong growth in Inclusive Access, up 19%, and achieved 2% growth
in US digital subscriptions. In addition, we continued to see
strong monetisation of our Study Prep tool and sustained engagement
with our AI-powered study tools. International Higher Education
faced ongoing challenging trading conditions in mature markets,
declining 7% for the full year.
For Higher Education, we expect underlying sales to grow more in
2026 than 2025, supported by continued product and platform
innovation, pricing and Inclusive Access in our core US courseware
business as well as improvement in the K12 channel. 2026 priorities
include building on our Early Careers offerings, continuing to
enhance access and integration across our Inclusive Access
offerings in the US, while focusing internationally on emerging
markets, digital expansion and content
localisation.
English Language Learning
In English Language Learning, sales grew 1% on an underlying basis,
driven by Institutional, and decreased 4% on a headline basis due
to currency movements more than offsetting trading. Adjusted
operating profit increased by 16% in underlying terms due to cost
savings partially offset by inflation and was flat in headline
terms due to currency movements offsetting trading.
PTE continued to perform well against a challenging market backdrop
of tightening migration policies. While volumes declined 5%, sales
remained flat and we continued to gain market share. Our
Institutional business delivered a solid performance, with strength
in key Latin American markets and Asia.
For English Language Learning, we expect higher underlying sales
growth in 2026 than 2025, driven by market share gains and pricing,
with PTE returning to growth. 2026 priorities include continued
strong operational performance, refreshing our Institutional
product suite developing next-generation solutions for
institutional and government partners, and supporting enterprise
customers with advanced upskilling capabilities.
Enterprise Learning & Skills
In Enterprise Learning & Skills, sales were up 6% on an
underlying basis and 4% on a headline basis due to currency
movements more than offsetting trading. Adjusted operating profit
increased by 40% in underlying terms due to operating leverage on
sales and increased 45% in headline terms due to trading
performance and favourable currency movements.
Vocational Qualifications delivered a solid performance while
Enterprise Solutions growth improved quarter-on-quarter as we build
momentum in our enterprise approach and related sales capability,
driven by the recently announced partnerships.
For Enterprise Learning & Skills in 2026, we expect underlying
sales growth to be driven by a solid performance in Vocational
Qualifications and strategic account growth in Enterprise
Solutions. 2026 priorities include
addressing growing demand for trusted talent solutions that help
employees work more effectively with AI, deepening value from our
strategic partners and broadening our validated skills data to
support workforce mobility at scale.
Financial Review
Operating result
Sales increased on a headline basis by £25m or 1% from
£3,552m in 2024 to £3,577m in 2025 and adjusted operating
profit increased by 2% on a headline basis to £614m in 2025
compared 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 2025
with those for 2024. 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, when relevant. Our portfolio change is
calculated by excluding sales and profits made by businesses
disposed in 2024 or 2025 and by ensuring the contribution from
acquisitions is comparable year on year. For prior year
acquisitions, the corresponding pre-acquisition period is excluded
from the current year, and for current year acquisitions, the
results for the current year are excluded. Portfolio changes mainly
relate to the acquisition of eDynamic Learning and disposal of Copp
Clark in 2025.
On an underlying basis, sales increased by 4% in 2025 compared to
2024 and adjusted operating profit increased by 6%. Currency
movements decreased sales by £112m and adjusted operating
profit by £26m, and portfolio changes increased sales by
£7m and adjusted operating profit by £2m. There were no
new accounting standards adopted in 2025 that impacted sales or
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, one off-costs
related to the UK pension scheme and certain other one-off material
items. A summary of these adjustments is included below and in note
2 to the condensed consolidated financial statements.
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
Operating
profit
|
|
507
|
541
|
|
Add
back: Cost of major reorganisation
|
|
-
|
(2)
|
|
Add
back: Product development impairment
|
|
87
|
-
|
|
Add
back: Intangible charges
|
|
42
|
41
|
|
Add
back: UK pension discretionary increase
|
|
-
|
13
|
|
Add
back: Other net gains and losses
|
|
3
|
7
|
|
Add
back: Property charges
|
|
(25)
|
-
|
|
Adjusted
operating profit
|
|
614
|
600
|
Costs of major reorganisation – In 2025, there are no costs
of major reorganisation. In 2024, there was a release of £2m
relating to amounts previously accrued.
Product development impairment charges in 2025 relate to the
impairment of product development assets as a result of courseware
platform convergence. There were no such amounts in
2024.
Intangible amortisation charges in 2025 were £42m compared to
a charge of £41m in 2024. This is due to increased
amortisation from recent acquisitions partially offset by decreased
amortisation from assets reaching the end of their useful economic
lives.
UK pension discretionary increases in 2024 related to one-off
pension increases awarded to certain cohorts of pensioners in
response to the cost of living crisis. There were no such amounts
in 2025.
Other net gains and losses in 2025 relate to the gain on disposal
of Copp Clark, a business in our Higher Education division, a fair
value gain relating to a previous disposal and costs relating to
current and prior year acquisitions and disposals. Other net gains
and losses in 2024 related to costs related to prior year
acquisitions and disposals, partially offset by a gain on the
partial disposal of our investment in an associate.
Property charges in 2025 are a gain of £25m relating to
reversals of impairments of property assets that were previously
impaired through property charges. Impairment reversals have arisen
from new sublets on previously vacant space in corporate
properties. There were no such amounts in 2024.
The reported operating profit of £507m in 2025 compares to a
profit of £541m in 2024. The decrease has been driven by
unfavourable foreign exchange movements, the product development
impairment, investment and inflation, partially offset by operating
leverage on sales growth and cost savings, as well as a reduction
in one-off pension charges and property related impairment
reversals.
Net finance costs
Net finance costs increased on a headline basis from a net cost of
£31m in 2024 to a net cost of £50m in 2025. The increase
is primarily due to increased net borrowing costs given increased
average net debt following last year’s share buy back and
movements on derivatives.
Adjusted net finance costs reflected in adjusted earnings in 2025
was £57m, compared to a net cost of £45m in 2024. The
increase is primarily due to increased net borrowing costs given
increased average net debt following last year’s share buy
back and movements on derivatives.
In 2025, the total of items excluded from adjusted earnings was net
income of £7m compared to net income of £14m in 2024. For
a reconciliation of the adjusted measure see note 3 to the
condensed consolidated financial statements.
Taxation
The reported tax on statutory earnings in 2025 was a charge of
£121m compared to a charge of £75m in 2024. This equates
to an effective tax rate of 26.5% (2024: 14.7%), with the increase
from prior year principally due to the release of the State Aid
uncertain tax provision in the prior year.
The total adjusted tax charge in 2025 was £136m (2024:
£136m), corresponding to an effective tax rate on adjusted
profit before tax of 24.5% (2024: 24.4%). For a reconciliation of
the adjusted measure see note 4 to the condensed consolidated
financial statements.
In 2025, there was a net tax payment of £2m (2024: £119m
net tax payment). This includes a £97m receipt from HMRC in
respect of the State Aid matter, with an additional £17m of
associated interest also received in the period. The interest
element is classified within interest received in the cash flow
statement. This repayment is a result of the Court of Justice of
the European Union handing down its decision on 19 September 2024
determining that the United Kingdom controlled foreign company
group financing partial exemption did not constitute State Aid,
thereby resulting in a refund of the £97m of tax paid (plus
£17m of interest) under the Charging Notices issued by HMRC in
2021. The balance excluding the State Aid repayment, principally
relates to tax payments in the US and the UK, and decreased due to
lower tax liabilities and installment payments for
2025.
A net deferred tax liability of £31m is recognised in 2025
compared to a net deferred tax liability of £11m in 2024. The
overall amount increased mainly due to the ongoing utilisation of
tax losses and other tax attributes. 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 £193m in 2025 compares to a loss in 2024 of
£35m. The loss in 2025 arises from an overall weakening of the
majority of currencies to which the Group is exposed, in particular
the US dollar. A significant proportion of the Group’s
operations are based in the US and the US dollar closing rate at 31
December 2025 was £1:$1.35 compared to the opening rate of
£1:$1.25. At the end of 2024, the US dollar rate was
£1:$1.25 compared to the opening rate of
£1:$1.27.
Also included in other comprehensive income at 31 December 2025 is
an actuarial gain of £10m in relation to retirement benefit
obligations. The gain arises largely from a decrease in liabilities
driven by lower long-term inflation assumptions and updates to
commutation factors. The gain in 2025 compares to an actuarial gain
in 2024 of £5m.
Fair value losses of £7m (2024: losses of £2m) have been
recognised in other comprehensive income and relate to movements in
the value of investments in unlisted securities held at fair value
through other comprehensive income (FVOCI).
Cash flow and working capital
Our operating cash flow measure is used to align cash flows with
our adjusted profit measures (see note 12 to the condensed
consolidated financial statements). Operating cash flow decreased
on a headline basis by £91m from an inflow of £662m in
2024 to an inflow of £571m in 2025 due to an increase in
working capital given high Q4 sales growth.
The equivalent statutory measure, net cash generated from
operations, was an inflow of £731m in 2025 compared to an
inflow of £811m in 2024. Compared to operating cash flow, this
measure includes reorganisation 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 2025,
reorganisation cash outflow was £nil compared to £8m in
2024.
Free cash flow increased on a headline basis by £37m from
£490m in 2024 to £527m in 2025. When compared to
operating cash flow, free cash flow includes tax paid/received, net
finance costs paid and net costs paid for major reorganisation. The
increase year on year is mainly due to the receipt of monies in
respect of the State Aid tax matter offset by the reduction in
operating cash flow.
In 2025, there was an overall decrease of £210m in cash and
cash equivalents from £543m at the end of 2024 to £333m
at 31 December 2025. The decrease in 2025 is primarily due to the
net cash generated from operations of £731m being more than
offset by dividends paid of £160m, share buyback programme
payments of £352m, own share purchases of £72m, capital
expenditure on property, plant, equipment and software of
£134m, payments for the acquisition of subsidiaries of
£167m, and payments of lease liabilities of
£77m.
Liquidity and capital resources
The Group’s net debt increased from £853m at the end of
2024 to £1,069m at the end of 2025. The increase is largely
due to free cash flow of £527m being more than offset by the
share buyback programme, dividend payments and cash outflows
related to acquisitions. In May 2025, the Group repaid its
€300m bond and closed out various related derivatives. In
June 2025, the Group secured a new three-year, $800 million
revolving credit facility (RCF). This facility can be utilised for
general corporate purposes, enhancing our liquidity, and is in
addition to the Group’s existing RCF. At 31 December 2025,
the Group had drawn £0.3bn on its Revolving Credit
Facilities.
At 31 December 2025, the Group had approximately £1.3bn in
total liquidity immediately available from cash and its RCFs
maturing June 2028 and February 2029. In assessing the
Group’s ability to continue as a going concern for the period
until 30 June 2027, the Board analysed a variety of downside
scenarios, including a severe but plausible scenario, where the
Group is impacted by a combination of all principal risks from H1
2026, 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 operating cash flow from risks continuing
throughout 2026 and 2027. In all scenarios, the Group would
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 concluded that the likelihood of the
reverse stress test scenario was remote.
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. This plan has a strong funding position and a surplus with
a very substantially de-risked investment portfolio including
approximately 50% of the assets in buy-in contracts. We have 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
retirement benefits amounted to £43m in 2025 (2024: £60m)
of which a charge of £68m (2024: £81m) was reported in
operating profit and income of £25m (2024: £21m) was
reported against other net finance costs. In 2024, a charge of
£13m related to one-off discretionary pension increases was
excluded from adjusted operating profit, with no such amounts in
2025.
The overall surplus on UK Group pension plans of £484m at the
end of 2024 has increased to a surplus of £514m at the end of
2025. The increase has arisen principally due to asset returns
being higher than expected and inflation over the period being
slightly lower than was expected at the beginning of the year. In
total, our worldwide net position in respect of pensions and other
post-retirement benefits increased from a net asset of £450m
at the end of 2024 to a net asset of £482m at the end of
2025.
Businesses acquired and disposed
On 24 July 2025, the Group completed the acquisition of 100% of
eDynamic Holdings LP (‘eDynamic Learning’), a leading
Career and Technical Education (CTE) curriculum solutions provider
for cash consideration of £168m. For further details, see note
10 to the condensed consolidated financial statements.
The cash outflow in 2025 relating to the acquisition of
subsidiaries of £167m includes £4m arising from the
payment of deferred consideration in respect of the prior year. 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. In addition, there was a cash outflow
relating to investments of £5m (2024: £7m).
The Group disposed of Copp Clark in 2025 for consideration of
£9m, resulting in a gain on disposal of £8m, which has
been recorded within other net gains and losses. There were no
disposals of subsidiaries in 2024 with cash outflows relating
primarily to prior year disposals. In 2025, the cash inflow
relating to the disposal of businesses was £8m (2024: outflow
of £7m).
Dividends
The dividend accounted for in the 2025 financial statements
totalling £160m represents the final dividend in respect of
2024 of 16.6p and the interim dividend for 2025 of 7.8p. We are
proposing a final dividend for 2025 of 17.4p bringing the total
paid and payable in respect of 2025 to 25.2p.This final 2025
dividend, which was approved by the Board in February 2026, is
subject to approval at the forthcoming AGM. For 2025, the dividend
is covered 2.6 times by adjusted earnings.
The final dividend will be paid on 8 May 2026 to shareholders who
are on the register of members at close of business on 20 March
2026 (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 16 April
2026. A Dividend Reinvestment Plan (DRIP) is provided by our
Registrar, 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 27 February 2025, the Board approved a £350m share buyback
programme in order to return capital to shareholders. The programme
completed in 2025. During 2025, c32m shares have been bought back
at a cash cost of £352m. The nominal value of the cancelled
shares of £8m has been transferred to the capital redemption
reserve.
On 21 January 2026, a further £350m share buyback programme
was announced. The programme commenced on 21 January 2026. In the
period from 21 January to 25 February 2026, an additional c7m of
shares have been repurchased.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2025
|
|
|
|
|
|
all figures in £ millions
|
note
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
Sales
|
2
|
3,577
|
3,552
|
|
Cost of
goods sold
|
|
(1,717)
|
(1,741)
|
|
Gross
profit
|
|
1,860
|
1,811
|
|
|
|
|
|
|
Operating
expenses
|
|
(1,351)
|
(1,265)
|
|
Other
net gains and losses
|
2
|
(3)
|
(7)
|
|
Share
of results of joint ventures and associates
|
|
1
|
2
|
|
Operating
profit
|
2
|
507
|
541
|
|
|
|
|
|
|
Finance
costs
|
3
|
(98)
|
(112)
|
|
Finance
income
|
3
|
48
|
81
|
|
Profit
before tax
|
|
457
|
510
|
|
Income
tax
|
4
|
(121)
|
(75)
|
|
Profit
for the period
|
|
336
|
435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
Equity
holders of the company
|
|
335
|
434
|
|
Non-controlling
interest
|
|
1
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing
operations (in pence per share)
|
|
|
|
|
Basic
|
5
|
51.4p
|
64.5p
|
|
Diluted
|
5
|
50.7p
|
63.5p
|
|
|
|
|
|
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 2025
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
336
|
435
|
|
|
|
|
|
|
Items
that may be reclassified to the income statement
|
|
|
|
|
Net
exchange differences on translation of foreign
operations
|
|
(193)
|
(35)
|
|
Attributable
tax
|
|
-
|
2
|
|
|
|
|
|
|
Items
that are not reclassified to the income statement
|
|
|
|
|
Fair
value loss on other financial assets
|
|
(7)
|
(2)
|
|
Attributable
tax
|
|
-
|
-
|
|
|
|
|
|
|
Remeasurement of
retirement benefit obligations
|
|
10
|
5
|
|
Attributable
tax
|
|
(3)
|
(2)
|
|
Other
comprehensive expense
|
|
(193)
|
(32)
|
|
Total
comprehensive income
|
|
143
|
403
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
Equity
holders of the company
|
|
143
|
402
|
|
Non-controlling
interest
|
|
-
|
1
|
CONDENSED CONSOLIDATED BALANCE SHEET
as at 31 December 2025
|
|
|
|
|
|
all figures in £ millions
|
note
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
210
|
216
|
|
Investment
property
|
|
91
|
77
|
|
Intangible
assets
|
9
|
3,009
|
3,026
|
|
Investments in
joint ventures and associates
|
|
8
|
12
|
|
Deferred income tax
assets
|
|
58
|
52
|
|
Financial assets
– derivative financial instruments
|
|
14
|
20
|
|
Retirement benefit
assets
|
|
518
|
491
|
|
Other financial
assets
|
|
125
|
141
|
|
Income tax
assets
|
|
-
|
4
|
|
Trade and other
receivables
|
|
105
|
125
|
|
Non-current
assets
|
|
4,138
|
4,164
|
|
Intangible assets
– product development
|
9
|
822
|
947
|
|
Inventories
|
|
66
|
74
|
|
Trade and other
receivables
|
|
1,082
|
1,030
|
|
Financial assets
– derivative financial instruments
|
|
2
|
31
|
|
Current income tax
assets
|
|
15
|
103
|
|
Cash and cash
equivalents (excluding overdrafts)
|
|
333
|
543
|
|
Current
assets
|
|
2,320
|
2,728
|
|
Assets classified
as held for sale
|
|
-
|
-
|
|
Total
assets
|
|
6,458
|
6,892
|
|
Financial
liabilities – borrowings
|
|
(1,419)
|
(1,157)
|
|
Financial
liabilities – derivative financial instruments
|
|
(2)
|
(4)
|
|
Deferred income tax
liabilities
|
|
(89)
|
(63)
|
|
Retirement benefit
obligations
|
|
(36)
|
(41)
|
|
Provisions for
other liabilities and charges
|
|
(12)
|
(13)
|
|
Other
liabilities
|
|
(76)
|
(83)
|
|
Non-current
liabilities
|
|
(1,634)
|
(1,361)
|
|
Trade and other
liabilities
|
|
(1,043)
|
(1,054)
|
|
Financial
liabilities – borrowings
|
|
(62)
|
(315)
|
|
Financial
liabilities – derivative financial instruments
|
|
(1)
|
(54)
|
|
Current income tax
liabilities
|
|
(47)
|
(32)
|
|
Provisions for
other liabilities and charges
|
|
(8)
|
(23)
|
|
Current
liabilities
|
|
(1,161)
|
(1,478)
|
|
Liabilities
classified as held for sale
|
|
-
|
-
|
|
Total
liabilities
|
|
(2,795)
|
(2,839)
|
|
Net
assets
|
|
3,663
|
4,053
|
|
Share
capital
|
|
158
|
166
|
|
Share
premium
|
|
2,658
|
2,649
|
|
Treasury
shares
|
|
(9)
|
(7)
|
|
Reserves
|
|
841
|
1,230
|
|
Total equity
attributable to equity holders of the company
|
|
3,648
|
4,038
|
|
Non-controlling
interest
|
|
15
|
15
|
|
Total
equity
|
|
3,663
|
4,053
|
The
condensed consolidated financial statements were approved by the
Board on 26 February 2026.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2025
|
|
|
|
|
||||||||
|
|
Equity
attributable to equity holders of the company
|
|
|
||||||||
|
all figures in £ millions
|
Share
capital
|
Share
premium
|
Treasury
shares
|
Capital
redemption reserve
|
Fair
value reserve
|
Translation
reserve
|
Retained
earnings
|
Total
|
Non-controlling
interest
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
||||||||||
|
At
1 January 2025
|
166
|
2,649
|
(7)
|
41
|
(14)
|
376
|
827
|
4,038
|
15
|
4,053
|
|
|
Profit
for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
335
|
335
|
1
|
336
|
|
|
Other
comprehensive income / (expense)
|
-
|
-
|
-
|
-
|
(7)
|
(192)
|
7
|
(192)
|
(1)
|
(193)
|
|
|
Total
comprehensive income / (expense)
|
-
|
-
|
-
|
-
|
(7)
|
(192)
|
342
|
143
|
-
|
143
|
|
|
Equity-settled
transactions1
|
-
|
-
|
-
|
-
|
-
|
-
|
29
|
29
|
-
|
29
|
|
|
Taxation on
equity-settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
(1)
|
-
|
(1)
|
|
|
Issue
of ordinary shares
|
-
|
9
|
-
|
-
|
-
|
-
|
-
|
9
|
-
|
9
|
|
|
Buyback
of equity
|
(8)
|
-
|
-
|
8
|
-
|
-
|
(347)
|
(347)
|
-
|
(347)
|
|
|
Purchase of
treasury shares
|
-
|
-
|
(63)
|
-
|
-
|
-
|
-
|
(63)
|
-
|
(63)
|
|
|
Release
of treasury shares
|
-
|
-
|
61
|
-
|
-
|
-
|
(61)
|
-
|
-
|
-
|
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(160)
|
(160)
|
-
|
(160)
|
|
|
At
31 December 2025
|
158
|
2,658
|
(9)
|
49
|
(21)
|
184
|
629
|
3,648
|
15
|
3,663
|
|
|
2024
|
|||||||||||
|
At 1
January 2024
|
174
|
2,642
|
(19)
|
33
|
(12)
|
411
|
745
|
3,974
|
14
|
3,988
|
|
|
Profit
for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
434
|
434
|
1
|
435
|
|
|
Other
comprehensive income / (expense)
|
-
|
-
|
-
|
-
|
(2)
|
(35)
|
5
|
(32)
|
-
|
(32)
|
|
|
Total
comprehensive income / (expense)
|
-
|
-
|
-
|
-
|
(2)
|
(35)
|
439
|
402
|
1
|
403
|
|
|
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
|
827
|
4,038
|
15
|
4,053
|
|
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 2025
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
Profit
before tax
|
|
457
|
510
|
|
Net
finance costs
|
|
50
|
31
|
|
Depreciation and
impairment – PPE, investment property and assets held for
sale
|
|
54
|
77
|
|
Amortisation and
impairment – software
|
|
112
|
117
|
|
Amortisation and
impairment – acquired intangible assets
|
|
41
|
41
|
|
Other
net gains and losses
|
|
3
|
5
|
|
Product
development capital expenditure
|
|
(285)
|
(284)
|
|
Product
development amortisation and impairment
|
|
364
|
291
|
|
Share-based payment
costs
|
|
39
|
44
|
|
Change
in inventories
|
|
5
|
15
|
|
Change
in trade and other receivables
|
|
(104)
|
32
|
|
Change
in trade and other liabilities
|
|
35
|
(99)
|
|
Change
in provisions for other liabilities and charges
|
|
(19)
|
(1)
|
|
Other
movements
|
|
(21)
|
32
|
|
Net
cash generated from operations
|
|
731
|
811
|
|
Interest
paid
|
|
(73)
|
(65)
|
|
Tax
paid
|
|
(2)
|
(119)
|
|
Net
cash generated from operating activities
|
|
656
|
627
|
|
Cash
flows from investing activities
|
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
|
(167)
|
(39)
|
|
Purchase of
investments
|
|
(5)
|
(7)
|
|
Purchase of
property, plant and equipment
|
|
(29)
|
(33)
|
|
Purchase of
intangible assets
|
|
(105)
|
(91)
|
|
Disposal of
subsidiaries, net of cash disposed
|
|
8
|
(7)
|
|
Proceeds from sale
of property, plant and equipment
|
|
3
|
6
|
|
Lease
receivables repaid including disposals
|
|
18
|
18
|
|
Interest
received
|
|
33
|
20
|
|
Dividends
received
|
|
1
|
2
|
|
Net
cash used in investing activities
|
|
(243)
|
(131)
|
|
Cash
flows from financing activities
|
|
|
|
|
Proceeds from issue
of ordinary shares
|
|
9
|
7
|
|
Buyback
of equity
|
|
(352)
|
(318)
|
|
Settlement of share
based payments
|
|
(72)
|
(40)
|
|
Repayment of
borrowings
|
|
(974)
|
(921)
|
|
Proceeds from
borrowings
|
|
1,017
|
1,265
|
|
Repayment of lease
liabilities
|
|
(77)
|
(78)
|
|
Dividends paid to
company’s shareholders
|
|
(160)
|
(156)
|
|
Net
cash used in financing activities
|
|
(609)
|
(241)
|
|
Effects
of exchange rate changes on cash and cash equivalents
|
|
(14)
|
(21)
|
|
Net
(decrease) / increase in cash and cash equivalents
|
|
(210)
|
234
|
|
Cash
and cash equivalents at beginning of period
|
|
543
|
309
|
|
Cash
and cash equivalents at end of period
|
|
333
|
543
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
1. Basis of preparation
|
|
|
|
|
|
The condensed consolidated financial statements have been prepared
in accordance with the accounting policies set out in the 2024
Annual Report, which has been prepared in accordance with
UK-adopted International Accounting Standards and have also been
prepared in accordance with IFRS Accounting Standards as issued by
the International Accounting Standards Board (IASB). There are no
changes to accounting standards that have a material impact on the
condensed consolidated financial statements for the year ended 31
December 2025. 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.
In assessing the Group’s ability to continue as a going
concern for the period to 30 June 2027, the Board analysed a
variety of downside scenarios, including a severe but plausible
scenario, where the Group is impacted by a combination of all
principal risks from by all principal risks in both 2026 and 2027,
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 net impact of the risks
modelled in the severe but plausible scenario was to reduce free
cashflow during the period under assessment by c41%.
At 31 December 2025, the Group had available liquidity of
c£1.3bn, comprising central cash balances and the undrawn
element of its $1.8bn Revolving Credit Facilities maturing June
2028 and February 2029, but which have options to extend the
maturities until 2030. Even under a severe downside case, the Group
would maintain comfortable liquidity headroom and sufficient
headroom against covenant requirements during the period under
assessment. That is, even before modelling the mitigating effect of
actions that management would take in the event that these downside
risks were to crystallise. The directors concluded that the
likelihood of the reverse stress test scenario was
remote.
The directors have confirmed that they have a reasonable
expectation that the Group has adequate resources to continue in
operational existence and to meet its liabilities as they fall due
for the assessment period to 30 June 2027. 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 2024
Annual Report. In 2025, the valuation of acquired intangible assets
recognised on the acquisition of a business is also determined to
be a key area 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 2025. The Group has assessed the impacts of climate
change on the condensed consolidated 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 2025 or
the assessment of going concern for the period to 30 June 2027. 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 2024 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 2024 was unqualified and did not contain
an emphasis of matter paragraph or any statement under section 498
of the Companies Act 2006.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
1. Basis of preparation continued
|
|
|
|
|
|
This preliminary announcement does not constitute the Group’s
full consolidated financial statements for the year ended 31
December 2025. The Group’s full consolidated financial
statements will be approved by the Board of Directors and reported
on by the auditors in March 2026. Accordingly, the financial
information for 2025 is presented unaudited in the preliminary
announcement.
Operating segments – In January 2025, the Group announced
that Workforce Skills would evolve to become Enterprise Learning
and Skills, incorporating our IT Pro business which was previously
within Higher Education. Comparative figures for 2024 segment
information have been restated to reflect this move between
segments (see note 2).
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 Enterprise Learning and Skills. In January 2025, the
Group announced that Workforce Skills would evolve to become
Enterprise Learning and Skills, incorporating our IT Pro business
which was previously within Higher Education. Comparative figures
have been restated to reflect the move between segments, resulting
in £45m of sales and £12m of adjusted operating profit
being transferred from Higher Education to Enterprise Learning and
Skills for the year ended 31 December 2024.
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
20241
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
Assessment &
Qualifications
|
|
1,604
|
1,591
|
|
Virtual
Learning
|
|
511
|
489
|
|
English
Language Learning
|
|
405
|
420
|
|
Enterprise Learning
and Skills
|
|
282
|
271
|
|
Higher
Education
|
|
775
|
781
|
|
Total
sales
|
|
3,577
|
3,552
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
|
|
|
Assessment &
Qualifications
|
|
361
|
368
|
|
Virtual
Learning
|
|
81
|
66
|
|
English
Language Learning
|
|
50
|
50
|
|
Enterprise Learning
and Skills
|
|
29
|
20
|
|
Higher
Education
|
|
93
|
96
|
|
Total
adjusted operating profit
|
614
|
600
|
|
1 Comparative amounts
have been restated to reflect the move between operating
segments.
There were no material inter-segment sales.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
2. Segment information continued
|
|
|
|
|
|
The following table reconciles the Group’s measure of
segmental performance, adjusted operating profit, to statutory
operating profit:
|
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
614
|
600
|
|
|
Cost of
major reorganisation
|
|
-
|
2
|
|
|
Product
development impairment
|
|
(87)
|
-
|
|
|
Intangible
charges
|
|
(42)
|
(41)
|
|
|
UK
pension discretionary increases
|
|
-
|
(13)
|
|
|
Other
net gains and losses
|
|
(3)
|
(7)
|
|
|
Property
charges
|
|
25
|
-
|
|
|
Operating
profit
|
507
|
541
|
||
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 charges for acquired
intangibles amortisation and impairment, acquisition related costs,
gains and losses arising from disposals, the cost of major
reorganisation and associated property charges, one off-costs
related to the UK pension scheme and certain other one-off material
items.
Costs of major reorganisation – In 2025, there are no costs
of major reorganisation. In 2024, there was a release of £2m
relating to amounts previously accrued.
Product development impairment charges in 2025 relate to the
impairment of product development assets as a result of courseware
platform convergence. There were no such amounts in
2024.
Intangible charges – These represent charges 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.
UK pension discretionary increases – Charges in 2024 related
to one-off pension increases awarded to certain cohorts of
pensioners in response to the cost of living crisis. There were no
such amounts in 2025.
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 in order to show the performance of the Group on a more
comparable basis year on year. Other net gains and losses also
includes costs related to business closures and acquisitions. Other
net gains and losses in 2025 relate to the gain on disposal of Copp
Clark, a business in our Higher Education division, a fair value
gain relating to a previous disposal and costs relating to current
and prior year acquisitions and disposals. Other net gains and
losses in 2024 related to costs related to prior year acquisitions
and disposals, partially offset by a gain on the partial disposal
of our investment in an associate.
Property charges – In 2025, a gain of £25m relates to
reversals of impairments of property assets that were previously
impaired through property charges. Impairment reversals have arisen
from new sublets on previously vacant space in corporate
properties. There are no such charges in 2024.
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 2025
3.
Net finance income / costs
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Interest payable on
financial liabilities at amortised cost and associated
derivatives
|
|
(51)
|
(48)
|
|
Interest on lease
liabilities
|
|
(20)
|
(22)
|
|
Interest on
deferred and contingent consideration
|
|
(1)
|
(2)
|
|
Fair
value movements on investments held at FVTPL
|
|
(7)
|
(11)
|
|
Net
foreign exchange losses
|
|
(7)
|
(3)
|
|
Fair
value movements on derivatives
|
|
(9)
|
(19)
|
|
Interest on
provisions for uncertain tax positions
|
|
(3)
|
(7)
|
|
Finance
costs
|
|
(98)
|
(112)
|
|
Interest receivable
on financial assets at amortised cost
|
|
14
|
25
|
|
Interest on lease
receivables
|
|
3
|
4
|
|
Net
finance income in respect of retirement benefits
|
|
25
|
21
|
|
Fair
value movements on derivatives
|
|
6
|
26
|
|
Interest on
provisions for uncertain tax positions
|
|
-
|
5
|
|
Finance
income
|
|
48
|
81
|
|
Analysed
as:
|
|
|
|
|
Net
interest payable reflected in adjusted earnings
|
|
(57)
|
(45)
|
|
Other
net finance income
|
|
7
|
14
|
|
Net
finance costs
|
|
(50)
|
(31)
|
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
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
|
(50)
|
(31)
|
|
Net
finance income in respect of retirement benefits
|
|
(25)
|
(21)
|
|
Interest on
deferred and contingent consideration
|
|
1
|
2
|
|
Fair
value movements on investments held at FVTPL
|
|
7
|
11
|
|
Net
foreign exchange losses
|
|
7
|
3
|
|
Fair
value movements on derivatives
|
|
3
|
(7)
|
|
Interest on
provisions for uncertain tax positions
|
|
-
|
(2)
|
|
Adjusted
net finance costs
|
|
(57)
|
(45)
|
Net finance income relating to 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 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 2025
4. Income tax
|
|
|
|
|
||||
|
all figures in £ millions
|
|
2025
|
2024
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
Profit
before tax
|
|
457
|
510
|
|
|||
|
Tax
calculated at UK rate of 25% (2024: 25%)
|
|
(114)
|
(127)
|
|
|||
|
Effect
of overseas tax rate
|
|
(3)
|
(1)
|
|
|||
|
Non-deductible
expenses
|
|
(5)
|
3
|
|
|||
|
State
Aid provision release
|
|
-
|
63
|
|
|||
|
Other
tax items
|
|
1
|
(13)
|
|
|||
|
Income
tax charge
|
|
(121)
|
(75)
|
|
|||
|
|
|
|
|
|
|||
|
Tax
rate reflected in statutory earnings
|
|
26.5%
|
14.7%
|
|
|||
The increase in the statutory rate of tax in 2025 is principally
due to the release of the State Aid uncertain tax provision in the
prior year.
In 2025, other tax items of £1m consists primarily of
movements in provisions for tax uncertainties and the recognition
of previously unrecognised tax losses. In 2024, other tax items of
£13m consists primarily of movements in provisions for tax
uncertainties.
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
|
note
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax charge
|
|
(121)
|
(75)
|
|
Tax on
cost of major reorganisation
|
|
-
|
1
|
|
Tax on
product development impairment
|
|
(22)
|
-
|
|
Tax on
intangible charges
|
|
(10)
|
(10)
|
|
Tax on
UK pension discretionary increases
|
|
-
|
(3)
|
|
Tax on
other net gains and losses
|
|
(1)
|
-
|
|
Tax on
property charges
|
|
7
|
-
|
|
Tax on
other net finance income
|
|
2
|
5
|
|
Tax
amortisation benefit on goodwill and intangibles
|
|
4
|
4
|
|
State
Aid provision release
|
|
-
|
(63)
|
|
Movement in
provision for tax uncertainties
|
|
3
|
6
|
|
Other
tax items
|
|
2
|
(1)
|
|
Adjusted
income tax charge
|
|
(136)
|
(136)
|
|
|
|
|
|
|
Adjusted profit
before tax
|
6
|
557
|
555
|
|
|
|
|
|
|
Tax
rate reflected in statutory earnings
|
|
26.5%
|
14.7%
|
|
Tax
rate reflected in adjusted earnings
|
|
24.5%
|
24.4%
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
4. Income tax continued
|
|
|
|
|
The adjusted income tax charge excludes the tax benefit or charge
on items that are excluded from the profit or loss before tax (see
notes 2 and 3).
The 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.
The Group is within the scope of the UK legislation in relation to
Pillar Two which was effective from 1 January 2024. Based on the
most recent financial information available for the constituent
entities in the Group, the Pillar Two effective tax rates in most
of the jurisdictions in which the Group operates are above 15%.
There are a limited number of jurisdictions where the transitional
safe harbour relief does not apply, including jurisdictions that
may not meet the 16% effective tax rate threshold required to
qualify for the effective tax rate safe harbour test in FY25.
However, the Group does not expect a material exposure to Pillar
Two income taxes in those jurisdictions.
In 2025, a repayment of £97m was received from HMRC in respect
of State Aid. This repayment is a result of the Court of Justice of
the European Union handing down its decision on 19 September 2024
determining that the United Kingdom controlled foreign company
group financing partial exemption did not constitute State Aid,
thereby resulting in a refund of the £97m of tax paid (plus
interest) under the Charging Notices issued by HMRC in
2021.
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 period, 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
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Earnings for the
period
|
|
336
|
435
|
|
Non-controlling
interest
|
|
(1)
|
(1)
|
|
Earnings
attributable to equity shareholders
|
|
335
|
434
|
|
|
|
|
|
|
Weighted average
number of shares (millions)
|
|
651.3
|
673.0
|
|
Effect
of dilutive share options (millions)
|
|
9.0
|
11.0
|
|
Weighted average
number of shares (millions) for diluted earnings
|
|
660.3
|
684.0
|
|
|
|
|
|
|
Earnings per share (in pence per
share)
|
|
|
|
|
Basic
|
|
51.4p
|
64.5p
|
|
Diluted
|
|
50.7p
|
63.5p
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
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 users of the accounts 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 on an undiluted basis when relevant. The company’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
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
profit
|
2
|
614
|
600
|
|
Adjusted net
finance costs
|
3
|
(57)
|
(45)
|
|
Adjusted
profit before tax
|
|
557
|
555
|
|
Adjusted income
tax
|
4
|
(136)
|
(136)
|
|
Non-controlling
interest
|
|
(1)
|
(1)
|
|
Adjusted
earnings
|
|
420
|
418
|
|
|
|
|
|
|
Weighted average
number of shares (millions)
|
|
651.3
|
673.0
|
|
Weighted average
number of shares (millions) for diluted earnings
|
|
660.3
|
684.0
|
|
|
|
|
|
|
Adjusted earnings per share (in pence
per share)
|
|
|
|
|
Basic
|
|
64.5p
|
62.1p
|
|
Diluted
|
|
63.6p
|
61.1p
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
7. Dividends
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
recognised as distributions to equity shareholders in the
period
|
|
160
|
156
|
The
directors are declaring a final dividend of 17.4p per equity share,
payable on 8 May 2026 to shareholders on the register at the close
of business on 20 March 2026. This final dividend, which will
absorb an estimated £109m of shareholders’ funds, has
not been included as a liability as at 31 December
2025.
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:
|
|
|
|
|
|
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Average
rate for profits
|
|
1.32
|
1.28
|
|
Year
end rate
|
|
1.35
|
1.25
|
9.
Intangible assets
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
2,425
|
2,437
|
|
Other
intangibles
|
|
584
|
589
|
|
Non-current
intangible assets
|
|
3,009
|
3,026
|
|
|
|
|
|
|
Intangible assets
– product development
|
|
822
|
947
|
|
Current
intangible assets
|
|
822
|
947
|
Acquisitions resulted in the recognition of additional goodwill of
£102m (2024: £1m) and intangible assets of £71m
(2024: £1m) (see note 10 for further details).
There were no significant impairments to acquisition related or
other non-current intangibles in 2025 or 2024.
In 2025, impairment charges of £87m were recorded (2024:
£nil) related to the impairment of product development assets
as a result of courseware platform convergence.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
10. Acquisitions
|
|
|
|
|
|
On 24 July 2025, the Group completed the acquisition of 100% of
eDynamic Holdings LP (‘eDynamic Learning’), a leading
Career and Technical Education curriculum solutions provider, for
cash consideration of £168m, with a further £3m paid into
an escrow account in relation to a provision provided for on the
opening balance sheet. The acquired business will form part of the
Higher Education division. Net assets acquired of £66m were
recognised on the Group’s balance sheet including £71m
of intangible assets, comprising customer relationships,
technology, content and the brand, that will be amortised over
periods up to 16 years.
This transaction has resulted in the recognition of £102m of
goodwill, which represents the expected growth of the business, the
workforce and know-how acquired and the anticipated synergies, none
of which can be recognised as separate intangible assets. The
goodwill is not deductible for tax purposes. Details of the fair
values of the assets and liabilities recognised at the acquisition
date and the related consideration is shown in the table
below.
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
71
|
1
|
|
Trade
and other receivables
|
|
7
|
-
|
|
Cash
and cash equivalents
|
|
8
|
-
|
|
Trade
and other liabilities
|
|
(4)
|
-
|
|
Deferred
revenue
|
|
(10)
|
-
|
|
Provisions for
other liabilities and charges
|
|
(5)
|
-
|
|
Deferred
tax
|
|
(1)
|
-
|
|
Net
assets acquired
|
|
66
|
1
|
|
Goodwill
|
|
102
|
1
|
|
Total
|
|
168
|
2
|
|
|
|
|
|
|
Satisfied
by:
|
|
|
|
|
Cash
consideration
|
|
168
|
1
|
|
Contingent or
deferred consideration
|
|
-
|
1
|
|
Total
consideration
|
|
168
|
2
|
|
|
|
|
|
|
Cash
flow from acquisitions
|
|
|
|
|
Cash
– current year acquisitions
|
|
(168)
|
(1)
|
|
Cash
paid into escrow account
|
|
(3)
|
-
|
|
Cash
and cash equivalents acquired
|
|
8
|
-
|
|
Deferred payments
for prior year acquisitions
|
|
(4)
|
(38)
|
|
Net
cash outflow
|
|
(167)
|
(39)
|
eDynamic Learning generated revenues of £10m and a loss after
tax of £1m for the period from acquisition date to 31 December
2025. If the acquisition of eDynamic Learning had occurred on 1
January 2025, the Group’s revenue and profit after tax would
have been £18m higher and £1m higher, respectively. The
quoted profit numbers include the impact of purchase price
adjustments made on acquisition, including the amortisation of
acquired intangibles and reduced revenue and profit following fair
value adjustments to the acquired deferred revenue
balance.
Total acquisition-related costs of £7m (2024: £5m; 2023:
£12m) were recognised within other net gains and
losses.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
11. Net debt
|
|
|
|
|
|
all figures in £ millions
|
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Derivative
financial instruments
|
|
14
|
20
|
|
Trade
and other receivables – investment in finance
lease
|
|
45
|
64
|
|
Current
assets
|
|
|
|
|
Derivative
financial instruments
|
|
2
|
31
|
|
Trade
and other receivables – investment in finance
lease
|
|
21
|
19
|
|
Cash
and cash equivalents (excluding overdrafts)
|
|
333
|
543
|
|
Non-current
liabilities
|
|
|
|
|
Borrowings
|
|
(1,419)
|
(1,157)
|
|
Derivative
financial instruments
|
|
(2)
|
(4)
|
|
Current
liabilities
|
|
|
|
|
Borrowings
|
|
(62)
|
(315)
|
|
Derivative
financial instruments
|
|
(1)
|
(54)
|
|
Net
debt
|
|
(1,069)
|
(853)
|
Included in borrowings at 31 December 2025 are lease liabilities of
£478m (non-current £416m, current £62m). This
compares to lease liabilities of £517m (non-current
£452m, current £65m) at 31 December 2024. The net lease
liability at 31 December 2025 after including the investment in
finance leases noted above was £412m (2024: £434m). Net debt excluding
net lease liabilities is £657m (2024:
£419m).
In 2025, the movement on borrowings from 31 December 2024 primarily
reflects the repayment of the €300m bond offset by the
drawdown of £0.3bn on the RCF.
For the purposes of the cash flow statement, cash and cash
equivalents are presented net of overdrafts of £nil (2024:
£nil) which are repayable on demand. When relevant, these
overdrafts are excluded from cash and cash equivalents disclosed on
the balance sheet.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
12. 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. The table on the next page
reconciles operating cash flow to free cash flow to net
debt.
|
all figures in £ millions
|
Statutory
measure
|
Cost of
major reorg-anisation
|
Product
develop-ment impairment
|
Property
charges
|
Other
net gains and losses
|
Pensions
|
Intangible
charges
|
Purchase/
disposal of PPE and software
|
Net
addition of right of use assets
|
Dividends
from joint ventures and associates
|
Adjusted
measure
|
|
|
|
|
|
||||||||||||
|
|
2025
|
||||||||||||
|
Operating
profit
|
507
|
-
|
87
|
(25)
|
3
|
-
|
42
|
-
|
-
|
-
|
614
|
Adjusted
operating profit
|
|
|
Net
cash generated from operations
|
731
|
-
|
-
|
-
|
13
|
2
|
-
|
(131)
|
(45)
|
1
|
571
|
Operating
cash flow
|
|
|
|
|
||||||||||||
|
|
|
||||||||||||
|
|
2024
|
||||||||||||
|
Operating
profit
|
541
|
(2)
|
-
|
-
|
7
|
13
|
41
|
-
|
-
|
-
|
600
|
Adjusted
operating profit
|
|
|
Net
cash generated from operations
|
811
|
8
|
-
|
-
|
5
|
-
|
-
|
(118)
|
(46)
|
2
|
662
|
Operating
cash flow
|
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2025
12. Cash flows continued
|
|
|
|
|
|
all figures in £ millions
|
note
|
2025
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
Operating
cash flow
|
|
571
|
662
|
|
Tax
paid
|
|
(2)
|
(119)
|
|
Net
finance costs paid
|
|
(40)
|
(45)
|
|
Special
pension contributions
|
|
(2)
|
-
|
|
Cost
paid for major reorganisation
|
|
-
|
(8)
|
|
Free
cash flow
|
|
527
|
490
|
|
Dividends paid
(including to non-controlling interest)
|
|
(160)
|
(156)
|
|
Net
movement of funds from operations
|
|
367
|
334
|
|
Acquisitions and
disposals
|
|
(177)
|
(58)
|
|
Net
equity transactions
|
|
(415)
|
(351)
|
|
Other
movements on financial instruments
|
|
9
|
(34)
|
|
Movement
in net debt
|
|
(216)
|
(109)
|
|
Opening
net debt
|
|
(853)
|
(744)
|
|
Closing
net debt
|
|
(1,069)
|
(853)
|
13. Contingencies, tax uncertainties 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 1,423m (£193m) for periods
up to 31 December 2025, with additional potential exposure of BRL
92m (£12m) 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.
14. 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.
15. Events after the balance sheet date
|
|
|
|
|
|
On 21 January 2026, a £350m share buyback programme in order
to return capital to shareholders was announced. The programme
commenced on 21 January 2026.
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.
|
|
PEARSON
plc
|
|
|
|
|
Date: 27 February
2026
|
|
|
|
By: /s/
NATALIE WHITE
|
|
|
|
|
|
------------------------------------
|
|
|
Natalie
White
|
|
|
Deputy
Company Secretary
|