REG - Pearson PLC - Pearson 2023 Trading Update

PearsonAnnouncement

17/01/2024 07:00

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RNS Number : 9132Z  Pearson PLC  17 January 2024

Pearson 2023 Trading Update (Unaudited)

 17(th) January 2024  Strong execution delivers financial performance in line with upgraded
                      guidance. Pearson well positioned for 2024 and beyond

 

Highlights

 ·             Underlying Group sales growth(1) of 5% for the full year, excluding OPM(2) and
               the Strategic Review(3) businesses.
 ·             Group adjusted operating profit of c.£570-575m at £:$ of 1.25 for the full
               year, up more than 30% on an underlying basis compared to 2022, resulting in a
               margin of c.15.5%.
 ·             Strong full year performance driven by Assessment & Qualifications and
               English Language Learning.
 ·             Cost efficiency programme successfully delivered £120m of savings.
 ·             We're encouraged by how students are engaging with our generative AI study
               tools and will be expanding the current beta to many more MyLab and Mastering
               titles by Fall semester 2024. Higher Education platform units also delivered
               encouraging growth.
 ·             Pearson+ passed the milestone of 1 million cumulative paid subscriptions for
               the calendar year.

 

Omar Abbosh, Pearson's Chief Executive, said:

"I am excited to be leading this high quality, purpose-driven company and I
would like to thank Andy for the strong progress made under his leadership.

 

Pearson saw strong strategic and operational progress in 2023 leading to
financial performance ahead of our initial expectations. The Group is well
positioned to seize growth opportunities and deliver long-term future value
for all of our stakeholders. I look forward to leading the next phase in
Pearson's ongoing evolution."

 

Underlying sales growth(1) of 5% for 2023, excluding OPM(2) and Strategic
Review(3) businesses; 1% in aggregate

 ·             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 volumes(4)
               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.
 ·             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.
 ·             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.
 ·             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.
 ·             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.

 

Share buyback

 ·             The previously announced buyback to repurchase £300m of shares continued,
               with £188m of shares repurchased as at 31(st) December 2023.
 ·             As at 15(th) January 2024 £206m of shares had been repurchased at an average
               price of 918p per share, representing 69% of the total programme.

 

Strong financial position

 ·             Pearson's financial position remains robust, with a strong balance sheet, net
               debt of less than £0.8bn and a strong 2023 cash performance.

 

Financial calendar

 ·             Full year results will be announced on 1(st) March 2024. We will hold a
               virtual presentation and Q&A session, during which we will outline the
               2024 outlook.
 ·             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 31(st)
 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 Review(3)                              (125)%  (74)%
 Total                                            0%      1%
 Total, excluding OPM(2) and Strategic Review(3)  6%      5%

 

 For an accompanying data sheet providing 2023 metrics relating to sales across
 select key businesses as well as a breakdown of US Higher Education Courseware
 college units and Pearson+ metrics, please follow this link
 (https://plc.pearson.com/en-GB/investors/performance/results-reports-presentations)
 .

 

 

For an accompanying data sheet providing 2023 metrics relating to sales across
select key businesses as well as a breakdown of US Higher Education Courseware
college units and Pearson+ metrics, please follow this link
(https://plc.pearson.com/en-GB/investors/performance/results-reports-presentations)
.

 

(1)Throughout this announcement growth rates are stated on an underlying basis
unless otherwise stated. Underlying growth rates exclude currency movements,
and portfolio changes.

(2)We have completed the sale of the Pearson Online Learning Services (POLS)
business and as such have removed from underlying measures throughout. Within
this specific measure we exclude our entire OPM business (POLS and ASU) to aid
comparison to guidance.

(3)Strategic Review is sales in international courseware local publishing
businesses being wound down, which will continue to be reported separately
until dissipated.

(4)VUE test volumes include GED tests but sales for GED are reflected in the
Workforce Skills division. PDRI test volumes are not currently included in
this metric.

 

Contacts

 Investor Relations  Jo Russell            +44 (0) 7785 451 266

                     James Caddy           +44 (0) 7825 948 218
                     Gemma Terry           +44 (0) 7841 363 216

                     Brennan Matthews      +1 (332) 238-8785
 Media

 Teneo               Charles Armitstead    +44 (0) 7703 330 269

 Pearson             Laura Ewart           +44 (0) 7798 846 805

 

 

About Pearson

At Pearson, our purpose is simple: to add life to a lifetime of 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 leading 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.

 

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