REG - Pearson PLC - Trading Statement

PearsonAnnouncement

19/01/2022 07:05

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RNS Number : 8786Y  Pearson PLC  19 January 2022

Pearson January Trading Update (Unaudited)

 19 January 2022  Strong financial performance in 2021, full year guidance raised

 Andy Bird, Chief Executive said:

 "We made great progress in Q4 and are delivering a strong full year
 performance, with sales growth and profit exceeding our original guidance. Led
 by a strong management team, we are repositioning the business, driving
 digital innovation and an increased focus on the consumer through the launch
 of Pearson+. We are well placed to build on this momentum in the year
 ahead and look to the future with confidence."

 Full year Group sales up 8% and adjusted operating profit expected of c.£385m
 up c.33% compared to last year and ahead of expectations*, at an average
 USD:GBP exchange rate of 1.38.

 ·      Strong performance in Assessment & Qualifications

 -     Sales in Assessment & Qualifications, our largest business, were
 up 18% driven by the strength of Professional Certification (VUE), Clinical
 Assessment and US Student Assessment, following a recovery from COVID-19.

 -     VUE test volumes grew 30% to 16.8m due to this recovery, new client
 launches and growth in existing programs. Volumes in OnVUE**, Pearson's online
 proctoring service, grew 46% reflecting continuing demand for remote testing.

 -     In Q4, sales were up 2% as growth in US Student Assessment was
 partially offset by expected declines in VUE, due to strong comparators from a
 COVID-19 catch up in Q4 2020.

 ·      Further momentum in Virtual Learning

 -     Sales in Virtual Learning grew 11% for the full year with sales
 growth of 17% in Virtual Schools due to strong enrolment growth in the prior
 academic year (2020-21). Online Program Management (OPM) grew with good
 underlying enrolment growth of 7%.

 -     Maryville University extended its OPM partnership for online degrees
 in the high-demand field of Nursing to 2033 and Northeastern University added
 new online master's degree and certificate programs in Nursing and Healthcare.
 Virtual Schools announced its first Connections Academy in the state of
 Virginia, which begins enrolment in 2022.

 -     Q4 sales in Virtual Schools, which relate to the current academic
 year (2021-22) were down 4% reflecting modest enrolment growth offset by
 pricing mix. OPM sales grew 8% in the quarter with the impact of discontinued
 programs in OPM having now come to an end.

 ·      Stronger end to the year in Higher Education

 -     Sales in Higher Education were down 5% for the full year. Growth in
 Canadian and UK Courseware was more than offset by a 6% decline in US Higher
 Education Courseware.

 -     Continued momentum in Inclusive Access where sales to not-for-profit
 institutions grew 18% representing 16% of total US Higher Education Courseware
 revenue versus 13% last year.

 -     In Q4, lower international sales were partially offset by growth in
 the US, meaning H2 sales (which are representative of the current academic
 year) for US Higher Education Courseware decreased 9%. This performance in
 H2 was driven by a 6% decline in enrolments and courses per enrolment
 combined, as well as price pressure due to the mix shift from print and
 bundles to etext and platform, and lower monetisation.

 ·      Positive performance in Workforce Skills

 -     Sales in Workforce Skills grew 6% with strong growth in GED and
 TalentLens as well as growth in BTEC and Apprenticeships.

 -     In Q4, revenue grew 13% due to a phasing benefit in BTECs.

 ·      Good progress in English Language Learning

 -     Sales in English Language Learning grew 17% for the full year due to
 a COVID-19 recovery in both International courseware and Pearson Test of
 English (PTE) where volumes grew 25% compared to 2020.

 -     Q4 sales grew 21% driven by a strong performance in PTE as local
 restrictions in Australia and India were lifted. English courseware also
 rebounded strongly with growth across most international markets including a
 strong recovery in Latin America.

 ·      Sales in businesses under strategic review were up 1% for the
 full year.

 ·      Strategic progress - 2021 highlights

 -     Launched direct to consumer strategy led by new digital learning
 service, Pearson+, which continues to make good progress with 2.75m registered
 users, reflecting a strong uptake from MyLab and Mastering users, 133k paid
 subscriptions, and an app store rating of 4.7.

 -     Pearson's flagship Higher Education product, Revel, completed the
 move to incorporate the Pearson Learning Platform's capabilities, providing
 enhanced features, and a new visual design for mobile.

 -     Acquired Faethm, the workforce AI and predictive analytics company,
 enhancing Pearson's Workforce Skills capabilities.

 -     The disposal of Pearson's Brazilian K12 Sistemas business completed
 on 1st October 2021. Marketing is progressing well in businesses under
 strategic review.

 ·      Board appointments

 -     Appointed Omid Kordestani as Non-Executive Chair Designate and Tim
 Score as Deputy Chair Designate, providing exceptional leadership with highly
 relevant skills to drive Pearson's digital, consumer strategy.

 -     Pearson has today also announced the appointment of experienced
 business leader Esther Lee as Independent Non-Executive Director. Esther
 brings significant experience to the Board through her prior executive
 leadership roles developing customer strategies to drive digital
 transformation and growth. She has served in a variety of senior roles at
 global brands including MetLife Inc., AT&T, Euro RSCG Worldwide, and The
 Coca-Cola Company. Esther is a Board member at The Clorox Company (NYSE: CLX.)
 She will join the Board on 1st February 2022.

 ·      Strong cashflow

 -     Strong balance sheet, net debt of less than £400m and a strong cash
 performance.

Financial summary

 Underlying sales growth for 2021      Q4     Full Year
 Sales
 Assessment & Qualifications           2%     18%
 Virtual Learning                      0%     11%
 Higher Education                      (2%)   (5%)
 Workforce Skills                      13%    6%
 English Language Learning             21%    17%
 Sub total                             2%     8%
 Strategic review                      (18%)  1%
 Total                                 1%     8%

 

 

For an accompanying data table providing 2021 metrics relating to revenue
across select key businesses, please follow this link
(https://plc.pearson.com/sites/pearson-corp/files/pearson-full-year-2021-data-sheet.pdf)
.

 

Full year results will be announced on 25(th) February 2022 when we will
provide a strategic update and 2022 guidance.

 

 Notes

 Throughout this announcement: growth rates are stated on an underlying basis
 unless otherwise stated. Underlying growth rates exclude both currency
 movements and portfolio changes. Unless otherwise stated, growth rates relate
 to the twelve-month period.

 * Consensus adjusted operating profit as at 12(th) November 2021 was £375m at
 average USD:GBP of 1.38.

 ** OnVUE test volumes include GED test but revenues for GED are reflected in
 the Workforce Skills division under Pearson's new divisional structure.

 Contacts
 Investor Relations  Jo Russell          +44 (0) 7785 451 266
 Media               Tom Steiner         +44 (0) 7787 415 891

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

 

 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.pearson.com/corporate/investors.html
 (www.pearson.com/corporate/investors.html) ). 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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