REG - Pearson PLC - Pearson Q1 2022 Trading Update

PearsonAnnouncement

29/04/2022 07:00

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RNS Number : 7867J  Pearson PLC  29 April 2022

Pearson 2022 Q1 Trading Update (Unaudited)
 29(th) April 2022  Continued momentum with underlying sales growth of 7% in the first quarter

Highlights

·    Ongoing strategic and operational progress, with underlying sales
 growth of 7%. 2022 adjusted operating profit guidance reaffirmed.

 ·      Direct to consumer strategy strengthened with acquisition of
 Mondly further enhancing our position in English Language Learning.

 ·      First tranche of £350m share buyback commenced.

 Andy Bird, Pearson's Chief Executive, said:

 "Pearson has continued to make strong strategic, operational and financial
 progress through the first quarter. Underlying sales grew by 7%, and we remain
 on track to deliver on our 2022 financial expectations and medium term
 guidance.

 "Our acquisition of Mondly, one of the world's leading online language
 learning platforms, is another exciting strategic development. It strengthens
 Pearson's direct to consumer strategy and supports our ambition to become the
 global leader in English language learning for committed learners.

 "We remain sharply focused on the successful execution of our strategy and we
 are encouraged by the momentum we are seeing across the business."

 

Underlying sales growth of 7%

·      Assessment & Qualifications sales grew 22% with growth across
all areas. US Student Assessment delivered a strong performance partially
reflecting the normalisation of exam timetables. Clinical Assessment also
delivered a strong performance due in part to the phasing of orders.

·      Virtual Learning sales increased 3% underpinned by strong
retention rates in Virtual Schools and growth in OPM. As announced on 19(th)
April, our OPM contract with ASU will end as of June 2023.

·      English Language Learning sales increased 18%, with growth in
Pearson Test of English volumes weighted to Q1 from borders re-opening and
improving global mobility.

·      Workforce Skills sales grew 9% (excluding acquisitions) driven by
ongoing growth in BTEC, GED and TalentLens. We made good strategic progress
with Pearson's GED Testing Service selected as an education partner for
Amazon's Career Choice programme.

·      Higher Education sales were down 5% due to expected declines in
US Higher Education reflecting the continued decline in enrolments and courses
per enrolment combined for the 2021/22 academic year.

·      Sales in businesses under strategic review decreased 11% as
expected.

 

Strategically important acquisition of Mondly in English Language Learning
announced today

·      The acquisition marks another step in our digital strategy,
giving us access to the fast growing direct to consumer English language
learning market.

·      Strategic growth area for Pearson with synergies and
cross-selling opportunities, particularly in Institutional, Pearson Test of
English and Workforce Skills.

·      Full details are available in the press release on our website,
https://plc.pearson.com/en-GB/news
(https://plc.pearson.com/en-GB/news/pearson-acquires-leading-online-language-learning-platform)
/pearson-acquires-leading-online-language-learning-platform
(https://plc.pearson.com/en-GB/news/pearson-acquires-leading-online-language-learning-platform)
.

 

Share buyback programme to return £350m to shareholders

·      First tranche commenced in April, of which over £75m already
completed.

 

 

 

Financial summary
                                  Underlying growth
 Sales
 Assessment & Qualifications      22%
 Virtual Learning                 3%
 English Language Learning        18%
 Workforce Skills                 9%
 Higher Education                 (5)%
 Strategic review                 (11)%
 Total                            7%

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

 

Financial update

The statute of limitations on a number of tax provisions lapsed in April 2022.
This will lead to a one-off impact in 2022, reducing our effective tax rate
from current market expectations of c.21% to 15-17%, and our interest charge
from c.£57m to £10m-£15m. For 2023, we currently expect our tax rate to be
in the range of 23-25%, reflecting our geographical footprint, and our
interest charge to be £40m-£45m. We anticipate that a decision regarding the
ongoing EU Commission investigation into whether certain aspects of the UK tax
system constituted State Aid could be announced over the summer.

 

Contacts

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

                     James Caddy          +44 (0) 7825 948 218
 Media               Tom Steiner          +44 (0) 7787 415 891

                     Gemma Terry          +44 (0) 7841 363 216
 Teneo               Charles Armitstead   +44 (0) 7703 330 269

 

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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