REG - Pearson PLC - Pearson 2025 Interim Results
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RNS Number : 5072T Pearson PLC 01 August 2025
Pearson Interim Results for the six months to 30(th) June 2025 (Unaudited)
1(st) August 2025 Continued strategic and operational progress against medium term strategy. On
track to deliver 2025 guidance with stronger growth expected in H2.
Financial Highlights
£m H1 vs H1 £m H1 H1
2025 2024 2025 2024
Business performance Sta
tut
ory
res
ult
s
Sales 1,722 +2% (1) Sales 1,722 1,754
Adjusted operating profit 242 +2% (1) Operating profit 240 219
Operating cash flow 126 £(3)m Profit for the period 166 158
Free cash flow 156 +£129m Net cash generated from operations 188 185
Adjusted earnings per share 24.5p (4)%(2) Basic earnings per share 24.8p 23.1p
Highlights
· Group sales(1) up 2% underlying with each business unit performing broadly in
line with our expectations.
· Adjusted operating profit(1) up 2% underlying to £242m.
· Strong free cash performance up £129m to £156m, including the receipt of
£114m State Aid tax recovery.
· Interim dividend up 5% and £350m share buyback well underway, with ongoing
balance sheet strength.
· On track to deliver 2025 guidance with stronger growth expected in H2.
· Continued strategic and operational progress, including:
o Strategic partnerships with Microsoft, AWS, and most recently, Google Cloud,
progressing AI transformation agenda (link here)
(https://plc.pearson.com/en-GB/news-and-insights/news/pearson-and-google-announce-strategic-partnership-accelerate-development)
;
o Enterprise business building momentum, with new partners such as HCLTech (link
(https://plc.pearson.com/en-GB/news-and-insights/news/hcltech-and-pearson-partner-accelerate-skills-development-advance-careers)
(https://plc.pearson.com/en-GB/news-and-insights/news/hcltech-and-pearson-partner-accelerate-skills-development-advance-careers)
here
(https://plc.pearson.com/en-GB/news-and-insights/news/hcltech-and-pearson-partner-accelerate-skills-development-advance-careers)
);
o Continuing to develop product suite and apply innovative technologies
including new "Go Deeper" feature within our AI-powered study tools and launch
of Pearson English Express Test (link here)
(https://plc.pearson.com/en-GB/news-and-insights/news/pearson-advances-english-language-assessment-enhanced-pte-and-new-express)
;
o Accelerating access to adjacent markets, with a strategic collaboration with
McGraw Hill in formative assessments (link here)
(https://plc.pearson.com/en-GB/news-and-insights/news/new-collaboration-pearson-assessment-capabilities-be-integrated-mcgraw-hill)
;
o Completed the acquisition of eDynamic Learning, adding a core pillar to our
Early Careers strategy (link here)
(https://plc.pearson.com/en-GB/news-and-insights/news/pearson-acquire-career-and-technical-education-leader-edynamic-learning)
.
Omar Abbosh, Pearson's Chief Executive, said:
"We are on track to deliver the three priorities we set out for the year, with
performance to date in line with our expectations, and are confident of
stronger growth in the second half. We are making rapid progress with
bringing AI-powered products to market and are scaling and enhancing our
enterprise business with a range of new partnerships and deals. Our sharp
focus on rigorous execution and continuous innovation is driving progress
against our strategy, improving Pearson's agility, efficiency and resilience,
and positioning us to deliver consistent mid-single digit sales growth over
the medium term."
Group sales(1) up 2% underlying in H1 2025
· Assessment & Qualifications sales were up 2% with strong growth in
Clinical Assessments and UK & International Qualifications, partially
offset by declines in Pearson VUE and US Student Assessment. Pearson VUE
decline was driven by the pause in a contract delivered in 2024 which will
recommence in H2 2025, and headwinds in PDRI, which has been impacted by US
federal government hiring and spend reductions which we expect to continue in
the second half.
· Virtual Learning sales were down 1%, as expected, due to the final portion of
the impact of previously announced school losses. 2024/25 academic year
enrolments increased 5% in the Spring semester on a same school basis, with
favourable retention trends, underpinning our confidence in returning to
growth in H2.
· Higher Education sales were up 4%, benefiting from growth in Inclusive Access
of 21% and US digital subscriptions of 3%. We continued to see good
monetisation of our Study Prep tool, formerly known as Channels, and ongoing
engagement with our AI-powered study tools.
· English Language Learning sales were down 3%, in line with expectations, with
Institutional impacted by a strong comparator period in H1 2024. Pearson
Test of English (PTE) was flat against the prior period, performing well
against a tough market backdrop.
· Enterprise Learning & Skills sales were up 4%, with another solid
performance in Vocational Qualifications and Enterprise Solutions building
momentum.
Adjusted operating profit(1) up 2% on an underlying basis to £242m
· Underlying performance driven by operating leverage on sales growth partially
offset by inflation.
· On a headline basis, profit was down 3% with positive underlying performance
more than offset by translation currency headwinds. First half adjusted profit
margin was flat against the prior period at 14% (H1 2024: 14%).
· Adjusted net finance costs increased to £24m (H1 2024: £21m). The effective
tax rate on adjusted profit before tax increased to 24.5% (H1 2024: 23.6%).
· Adjusted earnings per share declined to 24.5p (H1 2024: 25.6p) with positive
underlying trading performance, and a reduction in share count due to the
share buyback programmes, more than offset by currency headwinds and increased
interest.
Good cash performance
· Operating cash flow was in line with the prior period at £126m (H1 2024:
£129m) with continued good working capital management offsetting currency
headwinds.
· Free cash flow was again strong up £129m to £156m (H1 2024: £27m) given the
operating cash performance and the receipt of £114m State Aid tax recovery,
inclusive of interest, in the period.
Strong balance sheet supporting continued investment and shareholder returns
· Net debt decreased £0.2bn to £1.0bn at 30(th) June 2025 (H1 2024: £1.2bn)
as free cash flow was partially offset by dividends and the share buyback.
· Proposed interim dividend of 7.8p (H1 2024: 7.4p), represents an increase of
5%.
· Previously announced £350m share buyback programme well underway and is
expected to complete in H2. As at 30(th) June 2025, £169m of shares had been
repurchased representing 48% of the total programme.
· Secured new three-year, $800m revolving credit facility, enhancing our
liquidity and strategic flexibility.
Statutory results
· Sales decreased 2% on a headline basis to £1,722m (H1 2024: £1,754m) with
currency movements partially offset by positive underlying business
performance.
· Statutory operating profit increased 10% on a headline basis to £240m (H1
2024: £219m) driven by operating leverage on sales growth, gains on disposals
and the reversal of impairments on property assets, partially offset by
inflation and currency headwinds.
· Net cash generated from operations of £188m (H1 2024: £185m).
· Statutory earnings per share of 24.8p (H1 2024: 23.1p).
Continued operational and strategic progress
Driving performance in the core business
· In Assessment & Qualifications, Pearson VUE won several new contracts with
continued strong customer retention supporting future growth. US Student
Assessment also successfully renewed and extended several key contracts in the
period. In UK & International Qualifications we continued to scale
internationally. In Clinical Assessments we expanded our customer set with our
first statewide adoption of our digital offering. The application of AI across
our products continued with the launch of an AI-powered GCSE Exam Practice
Assistant, as part of our collaboration with AWS.
· In Virtual Learning, we completed the rollout of our new enrolment portal
which we expect to support sales growth in the second half of the year. We are
also embedding our career academies across the network ahead of fall back to
school and are on track to open two new schools in H2 taking our total number
of schools up to 42. We also successfully secured all six of our long term
school contracts being renewed in H1. We continue to apply innovative
technologies through integrating AI into our study tools, driving higher
course scores and end-of-semester pass rates.
· In Higher Education, we continued to build upon the successful monetisation of
our Study Prep tool which we expanded into international markets in the first
half of this year. We continue to rollout our AI-powered study tools across
disciplines - including our new "Go Deeper" feature, which further supports
students with engagement, new cognitive skills and higher order learning
outcomes.
· In English Language Learning, we announced a partnership with BorderPass,
expanding our PTE go-to-market reach for international students and skilled
migrants in Canada. We are also launching our new Pearson English Express Test
which expands our addressable market, responding to demand for a trusted,
accessible test for US-bound learners. Within Institutional we continue to
expand internationally with customer wins in LATAM. We continue to make
progress on the application of innovative technologies with the recent launch
of AI-powered Smart Lesson Generator and Digital Language Tutor.
· In Enterprise Learning & Skills, Vocational Qualifications delivered a
solid performance in the period with several new contract wins supporting
pipeline growth, including apprenticeship courses with the UK Ministry of
Defence, T Levels in Health and Science, and International BTEC expansion.
Within Enterprise Solutions we announced strategic partnerships with
Microsoft, AWS and Google Cloud and are building momentum in our Enterprise
approach, with new partners such as HCLTech. We have made enhancements to
our talent assessment platform, TalentLens, through combining capabilities
with PDRI's secure and scalable Palladium offering. We have also enabled third
party credential uploads onto the Credly platform, to advance our goal of
Credly becoming the most complete source of verified learning and skills data
globally.
Progress in unlocking faster growth adjacent market opportunities
· Higher Education recently completed the acquisition of eDynamic Learning, a
leading Career and Technical Education (CTE) curriculum solutions provider for
an enterprise value of $225m, enabling us to broaden capabilities and scale
our position in the fast-growing Early Careers space.
· We have operationalised our dedicated K-12 sales team within Higher Education,
enabling us to expand and strengthen customer relationships with US school
administrators as the demand for college and career readiness programmes
grows.
· Pearson VUE successfully launched the Pearson Skilling Suite and continues to
make progress building out its test prep business.
· Within US Student Assessment we announced an exclusive partnership with McGraw
Hill to integrate our leading interim assessment capabilities directly into
McGraw Hill's K-12 curriculum solutions, unlocking go-to-market opportunities
in formative assessment.
Outlook
Reaffirm 2025 guidance
· We continue to expect sales growth and adjusted operating profit in line with
market expectations(4) for 2025 with stronger sales growth in H2, in
particular in Q4. We outline our 2025 guidance later in this release.
· The acquisition of eDynamic Learning is not expected to have a material impact
to 2025 guidance given near term integration costs and the acquisition
accounting for deferred revenue.
Medium term outlook
· Beyond 2025, Pearson is positioned to deliver a mid-single digit underlying
sales growth CAGR, sustained margin improvement that will equate to an average
increase of 40 basis points per annum and strong free cash conversion(5), in
the region of 90% to 100%, on average, across the period.
Contacts
Investor Relations Alex Shore +44 (0) 7720 947 853
Steph Crinnegan +44 (0) 7780 555 351
Gemma Terry +44 (0) 7841 363 216
Brennan Matthews +1 (332) 238-8785
Media
Teneo Ed Cropley +44 (0) 7492 949 346
Pearson Laura Ewart +44 (0) 7798 846 805
Results event Pearson's Interim Results presentation will be held today at 08:30 (BST).
Register to join session virtually (link here
(https://pearson.connectid.cloud/) ).
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
Headline Underlying
£m H1 2025 H1 2024(3) growth growth(1)
Sales
Assessment & Qualifications 802 811 (1)% 2%
Virtual Learning 242 254 (5)% (1)%
Higher Education 337 336 0% 4%
English Language Learning 171 188 (9)% (3)%
Enterprise Learning & Skills 170 165 3% 4%
Total 1,722 1,754 (2)% 2%
Adjusted operating profit/(loss)
Assessment & Qualifications 170 187 (9)% (6)%
Virtual Learning 39 31 26% 32%
Higher Education (3) (7) 57% 75%
English Language Learning (7) 4 (275)% (200)%
Enterprise Learning & Skills 43 35 23% 20%
Total 242 250 (3)% 2%
(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 rate.
(3)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 £22m of sales and
£6m of adjusted operating profit being transferred from Higher Education to
Enterprise Learning & Skills for the six months ended 30 June 2024. The
full year 2024 impact is £45m of sales and £12m of adjusted operating
profit.
Assessment & Qualifications
In Assessment & Qualifications, sales increased 2% on an underlying basis
and declined 1% on a headline basis due to currency movements offsetting
trading. Adjusted operating profit decreased 6% in underlying terms due to
operating leverage on sales growth more than offset by cost phasing, and 9% in
headline terms due to this and currency movements.
Pearson VUE sales declined 3% on an underlying basis driven by the pause in a
contract delivered in 2024 which will recommence in H2 2025, and headwinds in
PDRI, which has been impacted by US federal government hiring and spend
reductions which we expect to continue in the second half.
In US Student Assessment, sales decreased 1% in underlying terms due to
changes in timing of delivery.
In Clinical Assessment, sales increased 11% in underlying terms due to the
continued traction of our products in the market, pricing and digital product
growth.
In UK and International Qualifications, sales increased 10% in underlying
terms driven by volume, pricing and strong International growth.
Virtual Learning
Virtual Learning sales were down 1% on an underlying basis, as expected, due
to the final portion of the impact of previously announced school losses. On a
headline basis sales were down 5% due to this and currency movements. 2024/25
academic year enrolments increased 5% in the Spring semester on a same school
basis and grew 7% including new school openings. We have also seen favorable
retention trends in H1. Adjusted operating profit increased 32% in underlying
terms driven by cost savings and phasing partially offset by trading, and
increased 26% in headline terms due to this and currency movements.
Higher Education
In Higher Education, sales increased 4% on an underlying basis, benefitting
from growth in Inclusive Access of 21% and US digital subscriptions of 3%. We
continued to see good monetisation of our Study Prep tool and ongoing
engagement with our AI study tools. Sales were flat on a headline basis as
underlying growth was offset by currency movements. Adjusted operating profit
increased in underlying terms driven by operating leverage on sales growth,
with the headline result also reflecting currency movements.
English Language Learning
In English Language Learning, sales were down 3% on an underlying basis, in
line with expectations, with our Institutional business performing well in Q2
but impacted by a strong comparator period in H1 last year. PTE sales were
flat, performing well against a tough market backdrop, with volumes decreasing
10%. Sales were down 9% on a headline basis due to this and currency
movements. Adjusted operating profit decreased due to the decline in trading
and decreased in headline terms due to this and currency movements.
Enterprise Learning & Skills
In Enterprise Learning & Skills, sales were up 4% on an underlying basis
and 3% on a headline basis. Adjusted operating profit increased by 20% in
underlying terms due to operating leverage on sales and increased 23% in
headline terms due to this and currency movements.
Vocational Qualifications delivered solid growth while Enterprise Solutions
improved quarter on quarter as we build momentum in our Enterprise approach
and related sales capability, including new wins such as HCLTech.
2025 guidance summary
Underlying Sales growth Group In line with market expectations(4) with stronger sales growth in H2, in
particular in Q4.
Assessment & Qualifications Sales to grow low to mid-single digit. Growth will be H2 weighed, in
particular to Q4, due to new and renewed contracts and the new test prep
business.
Virtual Learning Return to growth in H2, and for the full year, driven by enrolment increases,
partially from new school openings, for the 25/26 academic year.
Higher Education Sales growth in 2025 will be higher than in 2024 as we build on the successful
results of our sales team transformation and product innovations, particularly
using AI.
English Language Learning Sales growth will moderate given the impacts of elections on immigration rates
in 2025 affecting our PTE business, which is expected to decline in the year.
We expect growth to be H2 weighted, in particular to Q4. We remain confident
in the medium term outlook given demographic projections.
Enterprise Learning & Skills Sales to grow high single digit with Vocational Qualifications seeing solid
growth and the addition of several new contracts for Enterprise Solutions.
Growth will increase quarter on quarter supported by recent customer
annoucements and pipeline activity.
Group Profit Adjusted Operating Profit In line with market expectations(4).
Interest Adjusted net finance costs of c.£65m.
Tax rate We expect the effective tax rate on adjusted profit before tax to be between
24% and 25%.
Cash flow We expect a free cash flow conversion(5) of 90-100% plus the £0.1bn State Aid
repayment which was received in full during Q1 2025.
FX Every 1c movement in GBP:USD rate equates to approximately £5m adjusted
operating profit impact.
(4)2025 consensus on the Pearson website dated 27(th) January 2025; underlying
sales growth 4.4%, adjusted operating profit of £656m at £:$ 1.23. Taking
the average FX rate for H1 2025 (£:$1.31) and assuming the July 2025 month
end rate of (£:$1.32) for the rest of the year, results in an implied FX rate
for the full year of £:$1.32. This results in an updated adjusted operating
profit of c.£611m. ( )
(5)Free cash flow conversion calculated as free cash flow divided by adjusted
earnings.
Exchange rates H1 2025 H1 2024 FY 2024
£:$
Average rate for profits 1.31 1.26 1.28
Period end rate 1.37 1.26 1.25
FINANCIAL REVIEW
Operating result
Sales for the six months to 30 June 2025 decreased on a headline basis by
£32m or 2% from £1,754m for the six months to 30 June 2024 to £1,722m for
the same period in 2025 and adjusted operating profit decreased by 3% on a
headline basis to £242m in the first half of 2025 compared to £250m in the
first half of 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 the six months to
30 June 2025 with those for the equivalent period in the prior year. 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. Portfolio changes mainly relate to the disposal of Copp
Clark in 2025.
On an underlying basis, sales increased by 2% in the first six months of 2025
compared to the equivalent period in 2024 and adjusted operating profit
increased by 2%. Currency movements decreased sales by £58m and adjusted
operating profit by £11m, and portfolio changes had no impact on sales and
decreased adjusted operating profit by £1m. There were no new accounting
standards adopted in the first half of 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, when relevant, property charges
and one off-costs related to the UK pension scheme. A summary of these
adjustments is included below and in note 2 to the condensed consolidated
financial statements.
all figures in £ millions 2025 2024 2024
half year half year full year
Operating profit 240 219 541
Add back: Cost of major reorganisation - - (2)
Add back: Intangible charges 20 20 41
Add back: UK pension discretionary increase - 5 13
Add back: Other net gains and losses (7) 6 7
Add back: Property charges (11) - -
Adjusted operating profit 242 250 600
Costs of major reorganisation - In the first half of 2025 and 2024, there were
no costs of major reorganisation. In the second half of 2024, there was a
release of £2m relating to amounts previously accrued.
Intangible amortisation charges to the end of June 2025 were £20m compared to
a charge of £20m in the equivalent period in 2024.
UK pension discretionary increases in 2024 relate to one-off pension increases
awarded to certain cohorts of pensioners in response to the cost of living
crisis. There were no such amounts in 2025.
Other net gains and losses in 2025 relate to the gain on disposal of a
business in our Higher Education division, a fair value gain relating to a
previous disposal and costs relating to prior year acquisitions and disposals.
Other net gains and losses in 2024 relate 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 £11m, relating to reversals of
impairments of property assets that were previously impaired through property
charges. There are no such amounts in 2024.
The reported operating profit of £240m in the first half of 2025 compares to
a profit of £219m in the first half of 2024. The increase has been driven by
operating leverage on sales growth, gains on disposals and the reversal of
impairments on property assets, partially offset by inflation and
unfavourable foreign exchange movements.
Due to seasonal bias in some of the Group's businesses, Pearson typically
makes a higher proportion of its profits and operating cash flows in the
second half of the year.
Net finance costs
Net finance costs increased on a headline basis from a net cost of £7m in the
first half of 2024 to a net cost of £22m in the same period in 2025. The
increase is primarily due to increased borrowing costs as a result of the bond
issued in September 2024 and losses on derivatives held at fair value through
profit and loss (FVTPL) compared to gains in 2024, offset by reduced fees
related to drawings on the revolving credit facility and an increase in
returns on cash deposits.
Adjusted net finance costs reflected in adjusted earnings to 30 June 2025 was
£24m, compared to a net cost of £21m in the first half of 2024. The increase
is primarily due to increased borrowing costs as a result of the bond issued
in September 2024, offset by reduced fees related to drawings on the revolving
credit facility and an increase in returns on cash deposits.
In the period to 30 June 2025, the total of items excluded from adjusted
earnings was net income of £2m compared to net income of £14m in the first
half of 2024. For a reconciliation of the adjusted measure see note 3 to the
condensed consolidated financial statements.
Taxation
The reported tax on statutory earnings for the six months to 30 June 2025 was
a charge of £52m compared to a charge of £54m in the period to 30 June 2024.
This equates to an effective tax rate of 23.9% (2024: 25.5%), with the
reduction from prior year principally being due to an impairment reversal
which is not taxable.
The total adjusted tax charge for the period was £54m (2024: £54m),
corresponding to an effective tax rate on adjusted profit before tax of 24.5%
(2024: 23.6%). For a reconciliation of the adjusted measure see note 4 to the
condensed consolidated financial statements.
In the first half of 2025, there was a net tax receipt of £35m (2024: £69m
net tax payment). This includes a £97m repayment from HMRC in respect of the
State Aid matter, with an additional £17m of associated interest also
received in the period, classified within interest received in the cash flow
statement. This repayment is a result of the Court of Justice of the European
Union ('CJEU') handing down its decision on 19 September 2024 determining that
the United Kingdom controlled foreign company group financing partial
exemption ('FCPE') 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.
Other comprehensive income
Included in other comprehensive income are the net exchange differences on
translation of foreign operations. The loss on translation of £263m at 30
June 2025 compares to a loss at 30 June 2024 of £9m. 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 30 June 2025
was £1:$1.37 compared to the opening rate of £1:$1.25. At the end of June
2024, the US dollar rate was £1:$1.26 compared to the opening rate of
£1:$1.27.
Also included in other comprehensive income at 30 June 2025 is an actuarial
loss of £12m in relation to retirement benefit obligations. The loss arises
largely from losses on assets and experience losses, offset by a decrease in
liabilities driven by lower long-term inflation rates. The loss in 2025
compares to an actuarial gain at 30 June 2024 of £1m.
Fair value losses of £6m (2024: losses of £4m) 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 £3m from an
inflow of £129m in the first half of 2024 to an inflow of £126m in the first
half of 2025. The decrease is largely explained by good working capital
management offset by unfavourable FX movements.
The equivalent statutory measure, net cash generated from operations, was an
inflow of £188m in 2025 compared to an inflow of £185m 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 the first half of 2025,
reorganisation cash outflow was £nil compared to £5m in the same period in
2024.
Free cash flow increased on a headline basis by £129m from £27m in 2024 to
£156m 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.
In the first half of 2025, there was an overall decrease of £196m in cash and
cash equivalents from £543m at the end of 2024 to £347m at 30 June 2025. The
decrease in 2025 is primarily due to the cash inflow from operations of
£188m, net tax received of £35m and net proceeds from borrowings of £46m,
offset by dividends paid of £110m, share buyback programme payments of
£158m, own share purchases of £72m, capital expenditure on property, plant,
equipment and software of £62m and payments of lease liabilities of £38m.
Liquidity and capital resources
The Group's net debt increased from £853m at the end of 2024 to £1,027m at
the end of June 2025. The increase is largely due to free cash flow of £156m
including the State Aid repayment which are more than offset by the share
buyback programme, other own share purchases and dividend payments. 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 30 June 2025, the Group had drawn £300m on its Revolving
Credit Facilities.
At 30 June 2025, the Group had approximately £1.2bn in total liquidity
immediately available from cash and its RCFs maturing February and June 2028.
In assessing the Group's ability to continue as a going concern for the period
until 31 December 2026, 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 H2 2025, 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. 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 £21m in the period to 30 June 2025 (30 June 2024: £30m) of which
a charge of £33m (30 June 2024: £41m) was reported in operating profit and
income of £12m (30 June 2024: £11m) was reported against other net finance
costs. In the period to 30 June 2024, a charge of £5m 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
decreased to a surplus of £482m at the end of June 2025. The decrease has
arisen principally due to asset returns being lower than expected and
inflation over the period being slightly higher 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 £453m at the end of June 2025.
Businesses acquired and disposed
The Group made no acquisitions of subsidiaries in the first half of 2025 or
2024. The cash outflow in the first half of 2025 relating to acquisition of
subsidiaries was £4m arising from the payment of deferred consideration in
respect of prior year acquisitions. The cash outflow in the first half of 2024
relating to acquisitions of subsidiaries was £38m, 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 the first half of 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
the first half of 2024. In 2025, the cash inflow relating to the disposal of
businesses was £9m (2024: outflow of £6m).
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, having obtained all necessary approvals.
Since the acquisition closed subsequent to the half year date, it has not been
reflected in the interim financial statements. For further details, see note
15 to the condensed consolidated financial statements.
Dividends
The dividend accounted for in the six months to 30 June 2025 is the final
dividend in respect of 2024 of 16.6p. An interim dividend for 2025 of 7.8p was
declared by the Board in July 2025 and will be accounted for in the second
half of 2025. The interim dividend will be paid on 15 September 2025 to
shareholders who are on the register of members at close of business on 15
August 2025 (the Record Date). Shareholders may elect to reinvest their
dividend in the Dividend Reinvestment Plan (DRIP). The last date for receipt
of DRIP elections and revocations will be 22 August 2025. 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. In the first half of 2025, c15m
shares have been bought back at a cash cost of £158m. A £18m liability for
the remainder of the first tranche of the programme plus related costs has
been accrued as at 30 June 2025. The nominal value of the cancelled shares of
£3m has been transferred to the capital redemption reserve. In the period
from 1 to 30 July 2025, an additional c4m of shares have been repurchased.
Principal risks and uncertainties
In the 2024 Annual Report and Accounts, we set out our assessment of the
principal risk issues that face the business under the categories:
accreditation risk, artificial intelligence, content and channel risks,
capability risk, competitive marketplace, customer expectations, portfolio
change, and reputation and responsibility. We also noted in our 2024 Annual
Report and Accounts that the Group continues to closely monitor significant
near-term and emerging risks which have been identified as climate transition,
economic changes, tax, sanctions and geopolitics.
The principal risks and uncertainties are summarised below. The selection of
principal risks will be reviewed in the second half of the year alongside the
Group's long-term strategic planning process. However, these risks have not
changed materially from those detailed in the 2024 Annual Report.
Accreditation Risk
Termination or modification of accreditation due to policy changes or failure
to maintain the accreditation of our courses and assessments by states,
countries, and professional associations, reducing their eligibility for
funding or attractiveness to learners. Awarding bodies may also require
modification of tests to continue to receive accreditation which may reduce
the convenience to learners or increase the cost of delivery.
Artificial Intelligence, Content and Channel Risk
The risk that our intellectual property is harder to protect as a result of
increased content generation through artificial intelligence and that our
content and method of delivery (channel) is, or is perceived to be,
insufficiently differentiated in terms of outcomes or learner experience.
Capability Risk
Inability to meet our contractual obligations or to transform as required by
our strategy, due to infrastructure, systems or organisational challenges.
Competitive Marketplace
Significant changes in our target markets could make those markets less
attractive. This could be due to significant changes in demand or in supply,
which impact the addressable market, market share and margins (e.g. changes in
enrolments, in-sourcing of learning and assessment by customers, open
educational resources, a shift from in-person to virtual learning or vice
versa, or innovations in areas such as generative AI).
Customer Expectations
Rising end-user expectations increase the need to offer differentiated value
propositions, risking margin pressure to meet these expectations and potential
loss of sales if not successful.
Portfolio Change
Failure to effectively execute desired or required portfolio changes to
promote scale or capability and increase focus on key business units and
geographic markets, due to either execution failures or inability to secure
transactions at appropriate valuations.
Reputation and Responsibility
Reputational and responsibility risks involve failing to meet obligations and
demands of key stakeholders, including legal, regulatory, ethical and
behavioural expectations. These risks extend beyond direct consequences to
include broader societal and cultural perceptions.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the period ended 30 June 2025
all figures in £ millions note 2025 2024 2024
half year half year full year
Continuing operations
Sales 2 1,722 1,754 3,552
Cost of goods sold (843) (875) (1,741)
Gross profit 879 879 1,811
Operating expenses (645) (654) (1,265)
Other net gains and losses 2 7 (6) (7)
Share of results of joint ventures and associates (1) - 2
Operating profit 2 240 219 541
Finance costs 3 (47) (57) (112)
Finance income 3 25 50 81
Profit before tax 218 212 510
Income tax 4 (52) (54) (75)
Profit for the period 166 158 435
Attributable to:
Equity holders of the company 164 157 434
Non-controlling interest 2 1 1
Earnings per share from continuing operations (in pence per share)
Basic 5 24.8p 23.1p 64.5p
Diluted 5 24.5p 22.8p 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 period ended 30 June 2025
all figures in £ millions 2025 2024 2024
half year half year full year
Profit for the period 166 158 435
Items that may be reclassified to the income statement
Net exchange differences on translation of foreign operations (263) (9) (35)
Attributable tax (1) - 2
Items that are not reclassified to the income statement
Fair value loss on other financial assets (6) (4) (2)
Attributable tax - - -
Remeasurement of retirement benefit obligations (12) 1 5
Attributable tax 3 - (2)
Other comprehensive expense (279) (12) (32)
Total comprehensive (expense) / income (113) 146 403
Attributable to:
Equity holders of the company (114) 145 402
Non-controlling interest 1 1 1
CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 June 2025
all figures in £ millions note 2025 2024 2024
half year half year full year
Property, plant and equipment 203 207 216
Investment property 74 75 77
Intangible assets 9 2,809 3,050 3,026
Investments in joint ventures and associates 11 11 12
Deferred income tax assets 48 34 52
Financial assets - derivative financial instruments 16 4 20
Retirement benefit assets 488 491 491
Other financial assets 126 141 141
Income tax assets - 41 4
Trade and other receivables 108 134 125
Non-current assets 3,883 4,188 4,164
Intangible assets - product development 873 941 947
Inventories 71 89 74
Trade and other receivables 999 1,081 1,030
Financial assets - derivative financial instruments 38 55 31
Current income tax assets 14 23 103
Cash and cash equivalents (excluding overdrafts) 347 332 543
Current assets 2,342 2,521 2,728
Assets classified as held for sale - - -
Total assets 6,225 6,709 6,892
Financial liabilities - borrowings 10 (1,426) (1,300) (1,157)
Financial liabilities - derivative financial instruments (3) (3) (4)
Deferred income tax liabilities (68) (56) (63)
Retirement benefit obligations (35) (42) (41)
Provisions for other liabilities and charges (11) (14) (13)
Other liabilities (64) (65) (83)
Non-current liabilities (1,607) (1,480) (1,361)
Trade and other liabilities (902) (1,036) (1,054)
Financial liabilities - borrowings 10 (62) (313) (315)
Financial liabilities - derivative financial instruments (11) (44) (54)
Current income tax liabilities (13) (15) (32)
Provisions for other liabilities and charges (25) (10) (23)
Current liabilities (1,013) (1,418) (1,478)
Liabilities classified as held for sale - - -
Total liabilities (2,620) (2,898) (2,839)
Net assets 3,605 3,811 4,053
Share capital 163 167 166
Share premium 2,652 2,644 2,649
Treasury shares (22) (15) (7)
Reserves 796 1,000 1,230
Total equity attributable to equity holders of the company 3,589 3,796 4,038
Non-controlling interest 16 15 15
Total equity 3,605 3,811 4,053
The condensed consolidated financial statements were approved by the Board on
31 July 2025.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 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 half year
At 1 January 2025 166 2,649 (7) 41 (14) 376 827 4,038 15 4,053
Profit for the period - - - - - - 164 164 2 166
Other comprehensive income / (expense) - - - - (6) (262) (10) (278) (1) (279)
Total comprehensive income / (expense) - - - - (6) (262) 154 (114) 1 (113)
Equity-settled transactions(1) - - - - - - 14 14 - 14
Issue of ordinary shares - 3 - - - - - 3 - 3
Buyback of equity (3) - - 3 - - (178) (178) - (178)
Purchase of treasury shares - - (64) - - - - (64) - (64)
Release of treasury shares - - 49 - - - (49) - - -
Dividends - - - - - - (110) (110) - (110)
At 30 June 2025 163 2,652 (22) 44 (20) 114 658 3,589 16 3,605
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 STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 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
2024 half year
At 1 January 2024 174 2,642 (19) 33 (12) 411 745 3,974 14 3,988
Profit for the period - - - - - - 157 157 1 158
Other comprehensive income / (expense) - - - - (4) (9) 1 (12) - (12)
Total comprehensive income / (expense) - - - - (4) (9) 158 145 1 146
Equity-settled transactions(1) - - - - - - 16 16 - 16
Issue of ordinary shares - 2 - - - - - 2 - 2
Buyback of equity (7) - - 7 - - (204) (204) - (204)
Purchase of treasury shares - - (30) - - - - (30) - (30)
Release of treasury shares - - 34 - - - (34) - - -
Dividends - - - - - - (107) (107) - (107)
At 30 June 2024 167 2,644 (15) 40 (16) 402 574 3,796 15 3,811
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 STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 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
2024 full year
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 transactions(1) - - - - - - 37 37 - 37
Tax 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 period ended 30 June 2025
all figures in £ millions 2025 2024 2024
half year half year full year
Cash flows from operating activities
Profit before tax 218 212 510
Net finance costs 22 7 31
Depreciation and impairment - PPE, investment property and assets held for 28 40 77
sale
Amortisation and impairment - software 57 61 117
Amortisation and impairment - acquired intangible assets 20 20 41
Other net gains and losses (7) 5 5
Product development capital expenditure (125) (130) (284)
Product development amortisation 139 144 291
Share-based payment costs 22 23 44
Change in inventories (1) 1 15
Change in trade and other receivables (37) (34) 32
Change in trade and other liabilities (122) (164) (99)
Change in provisions for other liabilities and charges 2 (12) (1)
Other movements (28) 12 32
Net cash generated from operations 188 185 811
Interest paid (31) (41) (65)
Tax received / (paid) 35 (69) (119)
Net cash generated from operating activities 192 75 627
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (4) (38) (39)
Purchase of investments (5) (7) (7)
Purchase of property, plant and equipment (14) (18) (33)
Purchase of intangible assets (48) (40) (91)
Disposal of subsidiaries, net of cash disposed 9 (6) (7)
Proceeds from sale of property, plant and equipment 3 6 6
Lease receivables repaid including disposals 9 9 18
Interest received 26 13 20
Dividends received - - 2
Net cash used in investing activities (24) (81) (131)
Cash flows from financing activities
Proceeds from issue of ordinary shares 3 2 7
Buyback of equity (158) (278) (318)
Settlement of share based payments (72) (37) (40)
Repayment of borrowings (304) - (921)
Proceeds from borrowings 350 495 1,265
Repayment of lease liabilities (38) (39) (78)
Dividends paid to company's shareholders (110) (107) (156)
Net cash (used in) / generated from financing activities (329) 36 (241)
Effects of exchange rate changes on cash and cash equivalents (35) (7) (21)
Net (decrease) / increase in cash and cash equivalents (196) 23 234
Cash and cash equivalents at beginning of period 543 309 309
Cash and cash equivalents at end of period 347 332 543
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
1. Basis of preparation
The condensed consolidated financial statements have been prepared in
accordance with the Disclosure Guidance and Transparency Rules sourcebook of
the UK's Financial Conduct Authority and in accordance with UK-adopted IAS 34
'Interim Financial Reporting'. The condensed consolidated financial statements
should be read in conjunction with the annual financial statements for the
year ended 31 December 2024, which were prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies
Act 2006 and in accordance with IFRS accounting standards as issued by the
International Accounting Standards Board (IASB). In respect of accounting
standards applicable to the Group, there is no difference between UK-adopted
IASs and IFRS accounting standards as issued by the IASB.
The condensed consolidated financial statements have also been prepared in
accordance with the accounting policies set out in the 2024 Annual Report and
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. No new standards and interpretations
that apply to annual reporting periods beginning on or after 1 January 2025
have had a material impact on the financial position of the Group.
In assessing the Group's ability to continue as a going concern for the period
until 31 December 2026, 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 H2 2024, 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. At 30 June 2025, the Group had available liquidity of
c£1.2bn, comprising central cash balances and the undrawn element of its
$1.8bn Revolving Credit Facilities (RCFs) maturing February and June 2028, 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 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 31 December
2026. The condensed consolidated financial statements have therefore been
prepared on a going concern basis.
The preparation of condensed consolidated financial statements requires the
use of certain critical accounting assumptions. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas requiring a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the condensed
consolidated financial statements, have been set out in the 2024 Annual
Report.
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 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. The condensed consolidated financial statements and
related notes for the six months to 30 June 2025 are unaudited but have been
reviewed by the auditors and their independent review opinion is included at
the end of these condensed consolidated financial statements.
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 have been restated to reflect this move between segments.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
1. Basis of preparation continued
Share buy back - On 27 February 2025, the Board approved a £350m share
buyback programme in order to return capital to shareholders. Refer to the
financial review for an update on the amounts bought back during the period.
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 £22m of sales and £6m of
adjusted operating profit being transferred from Higher Education to
Enterprise Learning and Skills for the six months ended 30 June 2024 and £45m
of sales and £12m of adjusted operating profit for the year ended 31 December
2024.
all figures in £ millions 2025 2024(1) 2024(1)
half year half year full year
Sales
Assessment & Qualifications 802 811 1,591
Virtual Learning 242 254 489
English Language Learning 171 188 420
Enterprise Learning and Skills 170 165 271
Higher Education 337 336 781
Total sales 1,722 1,754 3,552
Adjusted operating profit
Assessment & Qualifications 170 187 368
Virtual Learning 39 31 66
English Language Learning (7) 4 50
Enterprise Learning and Skills 43 35 20
Higher Education (3) (7) 96
Total adjusted operating profit 242 250 600
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 period ended 30 June 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 2024
half year half year full year
Adjusted operating profit 242 250 600
Cost of major reorganisation - - 2
Intangible charges (20) (20) (41)
UK pension discretionary increases - (5) (13)
Other net gains and losses 7 (6) (7)
Property charges 11 - -
Operating profit 240 219 541
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 where relevant, property charges and one-off costs
related to the UK pension scheme.
Cost of major reorganisation - In the first half of 2025 and 2024, there were
no costs of major reorganisation. In the second half of 2024, there was a
release of £2m relating to amounts previously accrued.
Intangible amortisation - 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. Intangible amortisation charges in the first
half of 2025 were £20m compared to a charge of £20m in the equivalent period
in 2024.
UK pension discretionary increases - Charges in 2024 relate to one-off pension
increases awarded to certain cohorts of pensioners in response to the cost of
living crisis. 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 the first half of 2025 relate to the gain on disposal of a
business in our Higher Education division, a fair value gain relating to a
previous disposal and costs relating to prior year acquisitions and
disposals. Other net gains and losses in 2024 relate 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 £11m relates to reversals of
impairments of property assets that were previously impaired through property
charges. There are no such charges in the first half of 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 period ended 30 June 2025
2. Segment information continued
The Group derived revenue from the transfer of goods and services over time
and at a point in time in the following major product lines:
all figures in £ millions Assessment & Qualifications Virtual Learning English Language Learning Enterprise Learning and Skills Higher Education Total
2025 half year
Courseware
Products transferred at a point in time 24 - 55 18 75 172
Products and services transferred over time 12 - 4 - 262 278
36 - 59 18 337 450
Assessments
Products transferred at a point in time 86 - 4 2 - 92
Products and services transferred over time 680 - 91 129 - 900
766 - 95 131 - 992
Services
Products transferred at a point in time - - 8 - - 8
Products and services transferred over time - 242 9 21 - 272
- 242 17 21 - 280
Total sales 802 242 171 170 337 1,722
2024 half year(1)
Courseware
Products transferred at a point in time 28 - 60 22 69 179
Products and services transferred over time 9 - 6 - 267 282
37 - 66 22 336 461
Assessments
Products transferred at a point in time 93 - 3 3 - 99
Products and services transferred over time 681 - 97 120 - 898
774 - 100 123 - 997
Services
Products transferred at a point in time - - 12 - - 12
Products and services transferred over time - 254 10 20 - 284
- 254 22 20 - 296
Total sales 811 254 188 165 336 1,754
1. Comparative amounts have been restated to reflect the move between
operating segments.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
2. Segment information continued
all figures in £ millions Assessment & Qualifications Virtual Learning English Language Learning Enterprise Learning and Skills Higher Education Total
2024 full year(1)
Courseware
Products transferred at a point in time 56 - 142 46 185 429
Products and services transferred over time 17 - 13 - 596 626
73 - 155 46 781 1,055
Assessments
Products transferred at a point in time 184 - 11 5 - 200
Products and services transferred over time 1,334 - 198 179 - 1,711
1,518 - 209 184 - 1,911
Services
Products transferred at a point in time - - 35 - - 35
Products and services transferred over time - 489 21 41 - 551
- 489 56 41 - 586
Total sales 1,591 489 420 271 781 3,552
1. Comparative amounts have been restated to reflect the move between
operating segments.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
3. Net finance income / costs
all figures in £ millions 2025 2024 2024
half year half year full year
Net finance costs (22) (7) (31)
Net finance income in respect of retirement benefits (12) (11) (21)
Interest on deferred and contingent consideration - 1 2
Fair value movements on investments held at FVTPL 4 8 11
Net foreign exchange gains 3 - 3
Fair value movements on derivatives 3 (12) (7)
Interest on provisions for uncertain tax positions - - (2)
Adjusted net finance costs (24) (21) (45)
Analysed as:
Finance costs (47) (57) (112)
Finance income 25 50 81
Net finance costs (22) (7) (31)
Adjusted net finance costs is the finance cost measure used in calculating
adjusted earnings. Adjusted net finance costs primarily consists of interest
costs related to bonds, the RCF and lease liabilities, partially offset by
interest income on cash deposits and lease receivables.
The above table reconciles net finance income to adjusted net finance costs.
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 period ended 30 June 2025
4. Income tax
all figures in £ millions 2025 2024 2024
half year half year full year
Income tax charge (52) (54) (75)
Tax on cost of major reorganisation - - 1
Tax on other net gains and losses 1 - -
Tax on intangible charges (5) (5) (10)
Tax on UK pension discretionary increases - (1) (3)
Tax on other net finance income 1 4 5
Tax amortisation benefit on goodwill and intangibles 1 2 4
State Aid provision release - - (63)
Movement in provision for tax uncertainties - - 6
Other tax items - - (1)
Adjusted income tax charge (54) (54) (136)
Adjusted profit before tax 218 229 555
Tax rate reflected in statutory earnings 23.9% 25.5% 14.7%
Tax rate reflected in adjusted earnings 24.5% 23.6% 24.4%
The adjusted income tax charge excludes the tax benefit or charge on items
that are excluded from the profit or loss before tax (see note 2). The
adjusted tax charged in the period ended 30 June 2025 has been calculated by
applying management's best estimate of the weighted average annual effective
rate of tax which is expected to apply to the Group for the year ended 31
December 2025 to the adjusted profit before tax for the period ended 30 June
2025. Adjusting items have been tax effected on an item by item basis based on
the applicable statutory tax rate in the country to which the item relates.
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 statutory tax charge in the period ended 30 June 2025 is lower than the
period ended 30 June 2024 due to an impairment reversal which is not taxable.
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 forecast
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%. However, 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. In these
jurisdictions, the Pillar Two effective tax rate is close to 15%. The Group
does not expect a material exposure to Pillar Two income taxes in those
jurisdictions.
In the first half of 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 ('CJEU') handing down its decision on 19 September 2024
determining that the United Kingdom controlled foreign company group financing
partial exemption ('FCPE') 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.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
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 2024
half year half year full year
Earnings for the period 166 158 435
Non-controlling interest (2) (1) (1)
Earnings attributable to equity shareholders 164 157 434
Weighted average number of shares (millions) 661.5 680.5 673.0
Effect of dilutive share options (millions) 9.2 6.9 11.0
Weighted average number of shares (millions) for diluted earnings 670.7 687.4 684.0
Earnings per share (in pence per share)
Basic 24.8p 23.1p 64.5p
Diluted 24.5p 22.8p 63.5p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 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 2024
half year half year full year
Adjusted operating profit 2 242 250 600
Adjusted net finance costs 3 (24) (21) (45)
Adjusted income tax 4 (54) (54) (136)
Non-controlling interest (2) (1) (1)
Adjusted earnings 162 174 418
Weighted average number of shares (millions) 661.5 680.5 673.0
Weighted average number of shares (millions) for diluted earnings 670.7 687.4 684.0
Adjusted earnings per share - basic 24.5p 25.6p 62.1p
Adjusted earnings per share - diluted 24.2p 25.3p 61.1p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
7. Dividends
all figures in £ millions 2025 2024 2024
half year half year full year
Amounts recognised as distributions to equity shareholders in the period 110 107 156
The directors are declaring an interim dividend of 7.8p per equity share,
payable on 15 September 2025 to shareholders on the register at the close of
business on 15 August 2025. This interim dividend, which will absorb an
estimated £51m of shareholders' funds, has not been included as a liability
as at 30 June 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 2024
half year half year full year
Average rate for profits 1.31 1.26 1.28
Period end rate 1.37 1.26 1.25
9. Non-current intangible assets
all figures in £ millions 2025 2024 2024
half year half year full year
Goodwill 2,285 2,436 2,437
Other intangibles 524 614 589
Non-current intangible assets 2,809 3,050 3,026
There were no significant acquisitions or disposals in the first half of 2025
or 2024.
Other movements in the goodwill balance relate to foreign exchange
differences. Other movements in the intangibles balance relate to additions,
amortisation and foreign exchange differences.
The Group has assessed its remaining goodwill and intangibles for impairment
triggers and concluded that a full goodwill impairment review is not required
at 30 June 2025.
The 2024 Annual Report sets out the key assumptions by segment. The discount
rate, perpetuity growth rate and other assumptions used in the impairment
review, and the sensitivity to changes in those assumptions remain broadly the
same as the position outlined in the 2024 Annual Report.
There were no impairments to acquisition related or other intangibles in the
first half of 2025 or 2024.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
10. Net debt
all figures in £ millions 2025 2024 2024
half year half year full year
Non-current assets
Derivative financial instruments 16 4 20
Trade and other receivables - investment in finance lease 55 73 64
Current assets
Derivative financial instruments 38 55 31
Trade and other receivables - investment in finance lease 19 19 19
Cash and cash equivalents (excluding overdrafts) 347 332 543
Non-current liabilities
Borrowings (1,426) (1,300) (1,157)
Derivative financial instruments (3) (3) (4)
Current liabilities
Borrowings (62) (313) (315)
Derivative financial instruments (11) (44) (54)
Net debt (1,027) (1,177) (853)
Included in borrowings at 30 June 2025 are lease liabilities of £481m
(non-current £419m, current £62m). This compares to lease liabilities of
£521m (non-current £458m, current £63m) at 30 June 2024 and £517m
(non-current £452m, current £65m) at 31 December 2024. The net lease
liability at 30 June 2025 after including the investment in finance leases
noted above was £407m (2024 half year: £429m, 2024 full year: £434m). Net
debt excluding net lease liabilities is £620m (2024 half year: £748m, 2024
full year: £419m).
In 2025, the movement on borrowings from 31 December 2024 primarily reflects
the repayment of the €300m bond offset by the drawdown of £300m on the RCF.
For the purposes of the cash flow statement, cash and cash equivalents are
presented net of overdrafts of £nil (at 30 June 2024: £nil; 31 December
2024: £nil) which are repayable on demand. These overdrafts are excluded from
cash and cash equivalents disclosed on the balance sheet.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
11. Classification of assets and liabilities measured at fair value
---Level 1--- Level 2 ---Level 3---
Total fair value
all figures in £ millions FVOCI FVTPL - Cash and cash equivalents Derivatives FVOCI FVTPL- Investments and Other
Investments Investments
2025 half year
Investments in listed and unlisted securities 1 - - 23 102 126
Cash and cash equivalents - 37 - - - 37
Derivative financial instruments - - 54 - - 54
Deferred and contingent consideration - - - - 12 12
Total financial assets held at fair value 1 37 54 23 114 229
Derivative financial instruments - - (14) - - (14)
Deferred and contingent consideration - - - - (1) (1)
Total financial liabilities held at fair value - - (14) - (1) (15)
2024 half year
Investments in listed and unlisted securities - - - 26 115 141
Cash and cash equivalents - 42 - - - 42
Derivative financial instruments - - 59 - - 59
Deferred and contingent consideration - - - - 12 12
Total financial assets held at fair value - 42 59 26 127 254
Derivative financial instruments - - (47) - - (47)
Deferred and contingent consideration - - - - (21) (21)
Total financial liabilities held at fair value - (47) - (21) (68)
2024 full year
Investments in listed and unlisted securities 6 - - 22 113 141
Cash and cash equivalents - 62 - - - 62
Derivative financial instruments - - 51 - - 51
Deferred and contingent consideration - - - - 12 12
Total financial assets held at fair value 6 62 51 22 125 266
Derivative financial instruments - - (58) - - (58)
Deferred and contingent consideration - - - - (1) (1)
Total financial liabilities held at fair value - - (58) - (1) (59)
Level 1 valuations are based on unadjusted quoted prices in active markets for
identical financial instruments. Cash and cash equivalents include money
market funds which are treated as FVTPL under IFRS 9 with the fair value
movements recognised as finance income or cost.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
11. Classification of assets and liabilities measured at fair value
continued
The fair values of level 2 assets and liabilities are determined by reference
to market data and established estimation techniques such as discounted cash
flow and option valuation models. Within level 3 assets, the fair value of our
investments in unlisted securities are determined by reference to the
financial performance of the underlying asset and amounts realised on the sale
of similar assets. Individually these assets are immaterial and therefore no
sensitivities have been disclosed.
Level 3 assets also include the contingent consideration receivable in respect
of the sale of the POLS business, which comprises a 27.5% share of positive
adjusted EBITDA in each calendar year for 6 years from the disposal date and
27.5% of the proceeds received by the purchaser in relation to any future
monetisation event. The valuation of the contingent consideration has been
determined on the basis of a discounted cash flow model, and valued by a
third-party specialist. The key inputs into the discounted cash flow model are
the estimates of adjusted EBITDA for the 6 year period and the estimate of the
valuation of the business thereafter. Reasonably possible changes in
assumptions for the inputs into the model would not have a material impact on
the carrying value of the contingent consideration, and therefore
sensitivities have not been disclosed. The contingent consideration payable in
respect of prior year acquisitions is measured as the net present value of the
expected cashflows.
The movements in fair values of level 3 financial assets measured at fair
value, being principally the investments in unlisted securities and contingent
consideration receivable, are shown in the table below. There have been no
transfers in classification during 2025. In the second half of 2024, one of
the investments held was listed, and therefore the investment of £6m was
reclassified out of level 3 and into level 1.
all figures in £ millions 2025 2024 2024
half year half year full year
At beginning of period 147 155 155
Exchange differences - OCI (9) 1 2
Additions 5 9 9
Disposals and repayments (1) - -
Reclassification out of level 3 - - (6)
Fair value movements - Finance costs (4) (8) (11)
Fair value movements - Other net gain and losses 2 - -
Fair value movements - OCI (3) (4) (2)
At end of period 137 153 147
The movement in the total fair value of the total deferred and contingent
consideration payable measured at fair value or amortised cost is shown in the
table below. At 30 June 2025, this comprised £16m of consideration measured
at amortised cost and £1m measured at fair value.
all figures in £ millions 2025 2024 2024
half year half year full year
At beginning of period (22) (57) (57)
Exchange differences 1 (1) -
Acquisitions - - (1)
Fair value movements - Income Statement - (1) (2)
Repayments 4 38 38
At end of period (17) (21) (22)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
11. Classification of assets and liabilities measured at fair value
continued
The market value of the Group's bonds is £683m (30 June 2024: £570m; 31
December 2024: £918m) compared to their carrying value of £708m (30 June
2024: £597m; 31 December 2024: £955m). For all other financial assets and
liabilities, fair value is not materially different to carrying value.
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 reorganisation Property charges Other net gains and losses UK pension discretionary increases Intangible charges Purchase / disposal of PPE and software Net addition of right of use assets Dividends from joint ventures and associates Adjusted measure
2025 half year
Operating profit 240 - (11) (7) - 20 - - - 242 Adjusted operating profit
Net cash generated from operations 188 - - 9 - - (59) (12) - 126 Operating cash flow
2024 half year
Operating profit 219 - - 6 5 20 - - - 250 Adjusted operating profit
Net cash generated from operations 185 5 - 3 - - (52) (12) - 129 Operating cash flow
2024 full year
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 period ended 30 June 2025
12. Cash flows continued
all figures in £ millions note 2025 2024 2024
half year half year full year
Reconciliation of operating cash flow to closing net debt
Operating cash flow 126 129 662
Tax received / (paid) 35 (69) (119)
Net finance costs paid (5) (28) (45)
Cost paid for major reorganisation - (5) (8)
Free cash flow 156 27 490
Dividends paid (including to non-controlling interest) (110) (107) (156)
Net movement of funds from operations 46 (80) 334
Acquisitions and disposals (9) (54) (58)
Net equity transactions (227) (313) (351)
Other movements on financial instruments 16 14 (34)
Movement in net debt (174) (433) (109)
Opening net debt (853) (744) (744)
Closing net debt 10 (1,027) (1,177) (853)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 June 2025
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 1,372m
(£183m) for periods up to 30 June 2025, with additional potential exposure of
BRL 46m (£6m) in relation to deductions expected to be taken in future
periods. Such assessments are common in Brazil. The Group believes that the
likelihood that the tax authorities will ultimately prevail is low and that
the Group's position is strong. At present, the Group believes no provision is
required.
14. Related parties
Related party transactions in the six months ended 30 June 2025 were
substantially the same in nature to those disclosed in note 36 of the Annual
Report and Accounts for the year ended 31 December 2024. All related party
transactions are on an arm's length basis. There were no other 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 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, having obtained all necessary approvals.
This acquisition is aligned to Pearson's strategy, enabling Pearson to scale
its position in the fast-growing Early Careers space and broaden capabilities
in career-readiness solutions. The total consideration paid is £167m ($225m),
plus net working capital adjustments. The net assets acquired will mainly
comprise goodwill and intangible assets, expected principally to be customer
contracts and content and technology recognised on acquisition. Since the
acquisition closed subsequent to the half year date, it has not been reflected
in the interim financial statements. Given the proximity of the acquisition to
the publication of the half year results, the full valuation exercise has not
been completed, and therefore, the financial impact on the Group's balance
sheet has not been disclosed, but a provisional purchase price allocation will
be included in the financial statements for the year ending 31 December 2025.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that these condensed consolidated financial statements
have been prepared in accordance with UK-adopted International Accounting
Standard 34 'Interim Financial Reporting' and that the interim management
report includes a fair review of the information required by DTR 4.2.7 and DTR
4.2.8 namely:
· An indication of important events that have occurred during
the first six months and their impact on the condensed consolidated financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· Material related party transactions in the first six months
and any material changes in related party transactions described in the 2024
Annual Report.
The directors of Pearson plc are listed in the 2024 Annual Report. There have
been the following changes to the Board since the publication of the Annual
Report.
Arden Hoffman - appointed 1 June 2025
A list of current directors is maintained on the Pearson plc website:
www.pearsonplc.com.
By order of the Board
Omar Abbosh
Chief Executive
31 July 2025
Sally Johnson
Chief Financial Officer
31 July 2025
INDEPENDENT REVIEW REPORT TO PEARSON PLC
Independent Review Report on the condensed consolidated interim financial
statements
Conclusion
We have been engaged by Pearson plc (the Company) to review the condensed set
of financial statements in the half-yearly financial report for the six months
ended 30 June 2025 which comprises the condensed consolidated income
statement, the condensed consolidated statement of comprehensive income, the
condensed consolidated balance sheet, the condensed consolidated statement of
changes in equity, the condensed consolidate cash flow statement and the
explanatory notes. We have read the other information contained in the half
yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2025 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
31 July 2025
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