17th January
2024
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Strong execution delivers financial performance in line with
upgraded guidance. Pearson well positioned for 2024 and
beyond
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Underlying Group sales growth1 of
5% for the full year, excluding OPM2 and
the Strategic Review3 businesses.
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Group adjusted operating profit of c.£570-575m at £:$ of
1.25 for the full year, up more than 30% on an underlying basis
compared to 2022, resulting in a margin of c.15.5%.
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Strong full year performance driven by Assessment &
Qualifications and English Language Learning.
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Cost efficiency programme successfully delivered £120m of
savings.
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We're encouraged by how students are engaging with our generative
AI study tools and will be expanding the current beta to many more
MyLab and Mastering titles by Fall semester 2024. Higher Education
platform units also delivered encouraging growth.
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Pearson+ passed the milestone of 1 million cumulative paid
subscriptions for the calendar year.
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Assessment
& Qualifications sales were up 7% for the full year largely
driven by a strong performance in Pearson VUE with good progress in
IT and healthcare alongside the commencement of new contracts. VUE
test volumes4 grew 6% to
20.7m. There was also good growth across US Student Assessments,
Clinical and UK & International Qualifications, due to new
contract wins, good government funding and price increases. As
anticipated, Q4 sales growth of 3% was slower than in prior
quarters due to contract phasing.
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Virtual Learning sales decreased 20% for the full year, primarily
due to an 87% expected decrease in the OPM business given the
previously announced ASU contract loss. Virtual Schools sales
declined 2% for the full year, with enrolments for the 2023/24
academic year lower due to the previously announced loss of a
larger partner school. Excluding this impact, enrolments were up
1%. Virtual Schools sales grew 5% in Q4, primarily driven by
improvements in funding, as well as growth associated with the
launch of Connections Academy Career Pathways.
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Higher
Education sales were down 3% for the full year, in line with
expectations, driven by loss of adoptions to non-mainstream
publishers in the first half of the year, as well as pricing mix.
We saw strong growth in Inclusive Access sales to not-for-profit
institutions, which were up 22% for the year, and delivered 2%
growth in platform units. We're encouraged by how students are
engaging with our generative AI study tools and will be expanding
the current beta to many more MyLab and Mastering titles by Fall
semester 2024. Q4 sales were flat. Pearson+ performed well with
3.03m registered users and 516k paid subscriptions, representing
27% growth compared to the prior year Fall semester. Pearson+
passed the milestone of 1 million cumulative paid subscriptions for
the calendar year.
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English
Language Learning sales increased 30% for the full year with all
three segments contributing to this growth. Pearson Test of English
(PTE) was the outstanding contributor, delivering volume growth of
49% against a backdrop of favourable migration policy in Australia
and market share gains in India. Q4 sales grew 22% largely driven
by PTE and Institutional. We launched PTE for Canadian Student
Direct Stream visa applications in the second half of 2023 and
expect to begin delivering PTE for Canadian economic immigration
visa applications in the first quarter of 2024. We are continuing
to invest in building our brand awareness and testing capacity in
the competitive Canadian market.
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Workforce
Skills sales grew 11% for the full year, with a solid performance
in both Vocational Qualifications and Workforce Solutions. Sales
grew 28% in Q4, driven by strong growth in BTECs, both in the UK
and internationally.
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The
previously announced buyback to repurchase £300m of shares
continued, with £188m of shares repurchased as at
31st December
2023.
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As at
15th January 2024
£206m of shares had been repurchased at an average price of
918p per share, representing 69% of the total
programme.
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Pearson's
financial position remains robust, with a strong balance sheet, net
debt of less than £0.8bn and a strong 2023 cash
performance.
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Full year results will be announced on 1st March
2024. We will hold a virtual presentation and Q&A session,
during which we will outline the 2024 outlook.
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A business and strategic update will be provided at our Interim
results in July.
|
Financial
summary
Underlying growth
for the fourth quarter and financial year ended 31st December 2023
compared to the equivalent period in 2022.
|
Sales
|
Q4
|
Full Year
|
Assessment
& Qualifications
|
3%
|
7%
|
Virtual
Learning
|
(22)%
|
(20)%
|
Higher
Education
|
0%
|
(3)%
|
English
Language Learning
|
22%
|
30%
|
Workforce
Skills
|
28%
|
11%
|
Strategic
Review3
|
(125)%
|
(74)%
|
Total
|
0%
|
1%
|
Total, excluding OPM2 and
Strategic Review3
|
6%
|
5%
|
Investor Relations
|
Jo
Russell
James
Caddy
|
+44
(0) 7785 451 266
+44
(0) 7825 948 218
|
|
Gemma
Terry
Brennan
Matthews
|
+44
(0) 7841 363 216
+1
(332) 238-8785
|
Media
Teneo
Pearson
|
Charles
Armitstead
Laura
Ewart
|
+44
(0) 7703 330 269
+44
(0) 7798 846 805
|
|
PEARSON
plc
|
|
|
Date: 17
January 2024
|
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By: /s/
NATALIE WHITE
|
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------------------------------------
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Natalie
White
|
|
Deputy
Company Secretary
|