UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of March
2024
PEARSON plc
(Exact
name of registrant as specified in its charter)
N/A
(Translation
of registrant's name into English)
80 Strand
London, England WC2R 0RL
44-20-7010-2000
(Address
of principal executive office)
Indicate
by check mark whether the Registrant files or will file annual
reports
under
cover of Form 20-F or Form 40-F:
Form
20-F
X
Form 40-F
Indicate
by check mark whether the Registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934
Yes
No X
Pearson 2023 Preliminary Results (Unaudited)
|
1st March
2024
|
Another year of financial outperformance. Positive outlook with a
stable platform for continued growth
|
Financial
Highlights
|
£m
|
2023
|
2022
|
|
£m
|
2023
|
2022
|
|
Business performance
|
|
|
|
Statutory results
|
|
|
|
Sales
|
3,674
|
3,841
|
|
Sales
|
3,674
|
3,841
|
|
Adjusted operating profit
|
573
|
456
|
|
Operating profit
|
498
|
271
|
|
Operating cash flow
|
587
|
401
|
|
Profit for the year
|
380
|
244
|
|
Free cash flow
|
387
|
222
|
|
Net cash generated from operations
|
682
|
527
|
|
Adjusted earnings per share
|
58.2p
|
51.8p
|
|
Basic earnings per share
|
53.1p
|
32.8p
|
Highlights
|
●
|
Underlying Group sales growth1 of
5%, excluding OPM2 and
the Strategic Review3 businesses.
|
|
●
|
Group adjusted operating profit of £573m, up 31% on an
underlying basis compared to 2022 with significant expansion in
adjusted operating profit margin from 11.9% to 15.6%, underpinned
by sales growth and execution of £120m cost efficiency
programme.
|
|
●
|
Operating cash conversion of 102% driving 74% headline increase in
free cash flow.
|
|
●
|
Proposed final dividend of 15.7p, resulting in full year dividend
up 6% to 22.7p.
|
|
●
|
Clear capital allocation priorities underpinning £300m share
buyback launched last September and today announcing intention to
extend share buyback programme by £200m.
|
|
●
|
Positive outlook for 2024 and 2025 in line with expectations and
Group guidance unchanged. Free cash flow expected to further
improve next year due to lower restructuring cash
costs.
|
Omar Abbosh, Pearson's Chief
Executive, said:
"2023 was another year of strong operational and financial
performance, with results surpassing initial expectations once
again, driven by our Assessment & Qualifications and English
Language Learning businesses. Our consistently strong cash
generation has sustained investment to support our future growth
and deliver ongoing value for shareholders.
"Pearson is a strong company with excellent market potential,
people committed to our mission, and a purpose that genuinely helps
communities. My conversations with our customers, our people and
our investors have confirmed that and more. Pearson is well
positioned today, providing a stable platform for continued growth
that can benefit from the inflection point we see with the
development of AI. I am optimistic about the opportunities this
advancement in technology brings, underpinned by our trusted brand,
large high quality data sets and strong capabilities in assessment,
content and services. We have an exciting future ahead of
us."
2024 priorities
|
●
|
We will deliver on current 2024 market
expectations4 for Group
underlying sales growth and adjusted operating profit given the
strength of our core businesses, alongside a disciplined focus on
organic growth, customer expectations and
execution.
|
|
●
|
The range and quality of products across our business supplying the
vast Enterprise market presents a large and still forming
opportunity, which we plan to maximise.
|
|
●
|
We will continue to infuse our products and services with a wide
range of AI solutions and capabilities to ensure we lead on
innovation for our end consumers.
|
|
●
|
We will provide a business and strategic update at our interim
results in July.
|
Underlying sales
growth1 of
5%, excluding OPM2 and
Strategic Review3 businesses;
1% in aggregate
|
●
|
Assessment & Qualifications sales were up 7% largely driven by
a strong performance in Pearson VUE with good progress in IT and
healthcare alongside the commencement of new contracts. There was
also good growth across US Student Assessments, Clinical and UK
& International Qualifications, due to new contract wins, good
government funding and price increases.
|
|
●
|
Virtual Learning sales decreased 20%, primarily due to an expected
87% decrease in the Online Program Management (OPM) business
resulting from the previously announced ASU contract loss. Virtual
Schools sales declined 2%, with enrolments for the 2023/24 academic
year lower due to the previously announced loss of a larger partner
school.
|
|
●
|
Higher Education sales were down 3%, in line with expectations,
driven by loss of adoptions to non-mainstream publishers in the
first half of the year, as well as pricing mix. Pearson+ continued
to perform well, passing the milestone of 1 million cumulative paid
subscriptions for the calendar year.
|
|
●
|
English Language Learning sales increased 30% with all three
segments contributing to this growth. Pearson Test of English (PTE)
was the outstanding contributor, delivering volume growth of 49%
against a backdrop of favourable migration policy in Australia and
market share gains in India.
|
|
●
|
Workforce Skills sales grew 11% for the full year, with a solid
performance in both Vocational Qualifications and Workforce
Solutions.
|
Adjusted operating profit1 up
31% on an underlying basis to £573m
|
●
|
Performance driven by sales growth and execution of the £120m
cost efficiency programme, partially offset by investment and
inflation. Adjusted operating profit margin rose to 15.6% (2022:
11.9%).
|
|
●
|
Headline growth was 26% reflecting business performance along with
portfolio changes and currency movements.
|
|
●
|
Adjusted earnings per share grew to 58.2p (2022: 51.8p) reflecting
adjusted operating profit growth, normalisation of tax and interest
charges and the reduction in issued shares as a result of share
buybacks.
|
Cash performance
|
●
|
Operating cash1 inflow
increased on a headline basis from £401m in 2022 to £587m
in 2023, representing excellent cash conversion of 102%. This
increase is reflective of the trading performance of the business,
good cash collections and reduced product development in Higher
Education connected to the cost efficiency
programme.
|
|
●
|
Our excellent cash conversion drove an increase in free cash flow
from £222m in 2022 to £387m in 2023, a free cash flow
conversion of 93%5.
2023 included £63m of cash restructuring costs in relation to
the cost efficiency programme.
|
Strong balance sheet supports continued organic and inorganic
investment alongside increased shareholder returns
|
●
|
We completed the acquisition of PDRI, significantly expanding
Pearson's services to the US federal government as well as growing
our presence with large employers.
|
|
●
|
Year-end net debt of £0.7bn (2022: £0.6bn) with net debt
/ adjusted EBITDA ratio at 1.0x (2022: 0.8x).
|
|
●
|
Return on capital was 10.3% (2022: 8.7%).
|
|
●
|
Proposed final dividend of 15.7p (2022: 14.9p) which equates to a
full year dividend of 22.7p (2022: 21.5p).
|
|
●
|
The previously announced buyback to repurchase £300m of shares
continued. As at 28th February
2024 £288m of shares had been repurchased at an average price
of 928p per share, representing 96% of the total
programme.
|
|
●
|
Given the strength of our free cash flow in 2023 we intend to
extend our share buyback programme by £200m.
|
Statutory results
|
●
|
Sales decreased 4% to £3,674m (2022: £3,841m) reflecting
business performance, portfolio changes and currency
movements.
|
|
●
|
Statutory operating profit was £498m (2022: £271m). The
increase in 2023 was driven by increased trading profits and a
reduction in the costs of major restructuring, partially offset by
a net loss related to acquisitions and disposals compared to a net
gain in 2022.
|
|
●
|
Net cash generated from operations of £682m (2022:
£527m).
|
|
●
|
Statutory earnings per share of 53.1p (2022: 32.8p).
|
Continued
strategic and operational progress across the business
Advancing future growth drivers and building strong digital
offerings
|
●
|
In Assessment & Qualifications we won a number of VUE contracts
that commenced in 2023 and maintained our high customer renewal
rates. Within our UK & International Qualifications business we
leveraged our technology capabilities to extend our onscreen exams
offering with the roll out of GCSE Computer Science and
International GCSEs in English Language and Literature. Within
Clinical Assessment our high quality, trusted portfolio of
intellectual property continued to be a source of competitive
advantage, helping to drive growth in our Digital Assessment
Library for Schools (DALS) product. We won subscription contracts
with Chicago Public Schools and Miami Dade County School
District.
|
|
●
|
In Virtual Schools we launched a new Connections Academy Career
Pathways programme in five schools for middle and high school
students, where we are offering a tri-credit approach to
career-readiness courses in partnership with Coursera and Acadeum,
amongst others. We saw encouraging enrolment trends in these
schools and are planning to roll the initiative out to an
additional 15 schools in 2024 to drive future growth. We are
pleased to have secured two new schools in the States impacting the
2023/24 and 2024/25 academic years.
|
|
●
|
In Higher Education we made significant strides in converging our
platforms to enhance stability and deliver upgraded, best-in-class
features to improve our customer experience. Stability was much
improved in the Fall semester with up time improving to 99.8% for
our platform products. We also improved our technology support,
leading to improved NPS scores amongst faculty during the peak Fall
season. Within our product suite we introduced 6 new iLabs to take
our total to 21. Generative AI study tools designed to help
students better learn and understand challenging subjects were
launched in beta within select titles for Pearson+ and Mastering
for Fall back-to-school. We're encouraged by how students are
engaging with these tools, with over 60,000 AI conversations taking
place in Pearson's Tro Chemistry Mastering eText alone and 75% of
users saying the tools were 'helpful' or 'very helpful'. We have
already expanded the beta to 12 additional MyLab and Mastering
titles with at least 40 math, science, business and nursing titles
to follow by Fall semester 2024. We delivered 2% growth in platform
units in 2023. Pearson+ continued to grow, passing the milestone of
1 million cumulative paid subscriptions to reach 1,048k for the
calendar year and we continued to build out our supplementary
learning Channels offering, with 19 study channels now live. The
changes we have made to our sales team and go to market strategy
are delivering early signs of success including a number of
takeaway adoptions in the Fall back to school selling period. We
believe these changes set us up well for continued progress in
2024.
|
|
●
|
In English Language Learning, we have seen a strong increase in the
number of users on our digital platforms. Coupled with investment
in new digital content, including video and audio, and the strength
of the Global Scale of English, we are confident that we are
delivering engaging learning experiences while enabling teachers to
better understand and meet the needs of their learners. In our
Mondly enterprise focused business, we are launching Mondly by
Pearson Workplace English, which benefits from workplace-specific
content, leveraging our institutional courseware portfolio, and
enhanced features. Coupled with investment in our Versant suite of
tests, this strengthens our offering in the Corporate language
learning space.
|
|
●
|
Within our Workforce Solutions business we evolved our offering
from a unified product approach, building a powerful technology
stack that has enabled us to break down core Faethm capabilities
into modular application programming interfaces. We are seeing
contract wins across digital credentialing and strategic workforce
planning solutions with the likes of Cleveland Clinic and
ServiceNow.
|
Expanding our reach in new and adjacent markets
|
●
|
In Assessment & Qualifications we acquired PDRI, a trusted
provider of workforce assessment services. PDRI launched a full
suite of hiring assessment programmes for the Transportation
Security Administration and also won multi-year contracts with a
number of other US federal agencies, including the US Air Force,
Drug Enforcement Administration, Bureau of Alcohol, Tobacco,
Firearms and Explosives, and Department of Homeland Security.
Within VUE we expect to derive future growth from moving further up
the technology certification value chain and we saw encouraging
signs in this market in 2023. Within Clinical Assessment we made
further progress in pursuing our strategy to partner with clinical
pharmaceutical companies, winning a contract to deliver assessments
to aid determining the effectiveness of a drug used in the
treatment of Alzheimer's disease. Our UK & International
Qualifications business delivered good international growth in
2023. We see further opportunity for growth internationally across
our Assessment & Qualifications businesses into 2024 and
beyond.
|
|
●
|
In English Language Learning we won recognition for the Pearson
Test of English for Canadian Student Direct Stream and economic
immigration visa applications. This grants access to the full
potential of the Canadian market, which is the largest of the three
key markets which Pearson now has recognition to operate in. We
launched PTE for Canadian Student Direct Stream visa applications
in the second half of 2023 and opened bookings for PTE for Canadian
economic immigration visa applications in February 2024. We
continue to invest in building our brand awareness and testing
capacity in the PTE market. We opened one of our largest
company-owned Pearson VUE testing centres in Chandigarh, India.
With the ability to deliver more than 14,000 tests per month,
including PTE, this marks another step forward in the important
Indian market, where based on the estimated market size we have
seen market share gains throughout 2023.
|
|
●
|
In our Vocational Qualifications business we signed a contract with
the Jordanian Ministry of Education to partner on the reform of
Jordan's technical and vocational education and training provision
in schools with over 50,000 learners expected to take these courses
over the next three years. International expansion will be an
important growth driver for our Vocational Qualifications business
going forwards.
|
Delivering efficiencies and reshaping the portfolio
|
●
|
We delivered £120m of cost efficiencies in 2023 across product
and content support costs, technology and corporate
property.
|
|
●
|
Cost efficiencies supported adjusted operating profit margin
improvement from 11.9% in 2022 to 15.6% in 2023.
|
|
●
|
We disposed of our Pearson Online Learning Services (POLS)
business, further focusing Pearson's portfolio towards future
growth opportunities.
|
Outlook
2024 outlook
|
●
|
We expect Group underlying sales growth, adjusted operating profit
and tax will be in line with current market
expectations4.
Our interest charge will be c.£45m given our ongoing
£300m share buyback and intended extension by a further
£200m.
|
|
●
|
Every 1c movement in £:$ rate will equate to approximately
£5m adjusted operating profit impact.
|
|
●
|
In Assessment & Qualifications we expect sales growth of low to
mid-single digit.
|
|
●
|
In Virtual Schools we expect sales to decline at a similar rate to
2023, given the previously cited loss of a larger partner school
for the 2024/25 academic year. We are pleased to have secured two
new schools in the States impacting the 2023/24 and 2024/25
academic years and therefore expect the division to return to
growth beyond 2024.
|
|
●
|
In Higher Education we expect to return to sales
growth.
|
|
●
|
In English Language Learning we continue to expect high single
digit sales growth.
|
|
●
|
In Workforce Skills we expect to achieve high single digit sales
growth.
|
|
●
|
We expect a free cash flow conversion of 95-100%.
|
2025 ambition
|
●
|
We continue to expect the Group to achieve mid-single digit
underlying sales 3-year CAGR from 2022 to 2025, excluding OPM and
Strategic Review businesses, and remain on track to achieve our
16-17% adjusted operating profit margin guidance.
|
Executive changes
We are excited about the growth opportunity across the enterprise
learning market and working with organisations to address the
challenges of building an adaptable workforce that is augmented by
AI. Reflecting on our partnerships and capabilities, we are
confident we can build on our existing products and services in the
enterprise market to drive higher growth longer term.
Pearson announces the appointment of Vishaal Gupta as the new
President of Workforce Skills.
Vishaal currently serves as a Senior Managing Director with
Accenture. Vishaal is an enterprise sales leader who leads a team
that originates and closes large and complex deals, particularly in
the areas of Technology Transformation and Strategic Managed
Services. Vishaal has over 29 years' experience working in
technology driven companies.
Mike Howells, President of Workforce Skills, will
be leaving Pearson in March. Mike has led the evolution of our
Workforce Skills division for the last three years, overseeing the
development of our enterprise solutions business and further
extending the international presence of our Vocational
Qualifications business. We thank him for his
contribution.
Contacts
|
Investor Relations
|
Jo Russell
James Caddy
|
+44 (0) 7785 451 266
+44 (0) 7825 948 218
|
|
|
Gemma Terry
Brennan Matthews
|
+44 (0) 7841 363 216
+1 (332) 238-8785
|
|
Media
Teneo
Pearson
|
Charles Armitstead
Laura Ewart
|
+44 (0) 7703 330 269
+44 (0) 7798 846 805
|
|
Results event
|
Pearson's prelim results presentation today at 08:30 (GMT).
Register to receive log in details: https://pearson.connectid.cloud/register
|
|
About
Pearson
At
Pearson, our purpose is simple: to add life to a lifetime of
learning. We believe that every learning opportunity is a chance
for a personal breakthrough. That's why our Pearson employees are
committed to creating vibrant and enriching learning experiences
designed for real-life impact. We are the world's leading learning
company, serving customers with digital content, assessments,
qualifications, and data. For us, learning isn't just what we do.
It's who we are. Visit us at pearsonplc.com
Notes
Forward looking statements: Except
for the historical information contained herein, the matters
discussed in this statement include forward-looking statements. In
particular, all statements that express forecasts, expectations and
projections with respect to future matters, including trends in
results of operations, margins, growth rates, overall market
trends, the impact of interest or exchange rates, the availability
of financing, anticipated cost savings and synergies and the
execution of Pearson's strategy, are forward-looking statements. By
their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that will occur in future. They are based on numerous
assumptions regarding Pearson's present and future business
strategies and the environment in which it will operate in the
future. There are a number of factors which could cause actual
results and developments to differ materially from those expressed
or implied by these forward-looking statements, including a number
of factors outside Pearson's control. These include international,
national and local conditions, as well as competition. They also
include other risks detailed from time to time in Pearson's
publicly-filed documents and you are advised to read, in
particular, the risk factors set out in Pearson's latest annual
report and accounts, which can be found on its website
(www.pearsonplc.com).
Any forward-looking statements speak only as of the date they are
made, and Pearson gives no undertaking to update forward-looking
statements to reflect any changes in its expectations with regard
thereto or any changes to events, conditions or circumstances on
which any such statement is based. Readers are cautioned not to
place undue reliance on such forward-looking
statements.
Operational
review
|
£m
|
2023
|
2022
|
Headline
growth
|
CER
growth1
|
Underlying
growth1
|
|
Sales
|
|
|
|
|
|
|
Assessment & Qualifications
|
1,559
|
1,444
|
8%
|
9%
|
7%
|
|
Virtual Learning
|
616
|
820
|
(25)%
|
(24)%
|
(20)%
|
|
Higher Education
|
855
|
898
|
(5)%
|
(4)%
|
(3)%
|
|
English Language Learning
|
415
|
321
|
29%
|
32%
|
30%
|
|
Workforce Skills
|
220
|
204
|
8%
|
8%
|
11%
|
|
Strategic Review
|
9
|
154
|
(94)%
|
(94)%
|
(74)%
|
|
Total
|
3,674
|
3,841
|
(4)%
|
(3)%
|
1%
|
|
Total, excluding OPM2 and
Strategic Review3
|
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
Adjusted operating profit/loss
|
|
|
|
|
|
|
Assessment & Qualifications
|
350
|
258
|
36%
|
36%
|
33%
|
|
Virtual Learning
|
76
|
70
|
9%
|
9%
|
(17)%
|
|
Higher Education
|
110
|
91
|
21%
|
22%
|
20%
|
|
English Language Learning
|
47
|
25
|
88%
|
116%
|
112%
|
|
Workforce Skills
|
(8)
|
(3)
|
(167)%
|
(167)%
|
(400)%
|
|
Strategic Review
|
(2)
|
15
|
(113)%
|
(107)%
|
94%
|
|
Total
|
573
|
456
|
26%
|
28%
|
31%
|
1Throughout 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 13. c) Constant
exchange rates are calculated by assuming the average FX in the
prior year prevailed through the current year.
2We have completed the sale of
the POLS business and as such have removed from underlying measures
throughout. Within this specific measure we exclude our entire OPM
business (POLS and ASU) to aid comparison to
guidance.
3Strategic Review is sales in
international courseware local publishing businesses being wound
down. There
will be no sales or profits reported in this division going
forwards.
42024 consensus on the Pearson
website; underlying sales growth 3.7%, adjusted operating profit of
£621m at £:$ 1.22, tax rate 24%.
5Free cash flow conversion
calculated as free cash flow divided by adjusted
earnings.
6VUE test volumes include PTE
and GED tests but sales for each of these tests are reflected in
the English Language Learning and Workforce Skills divisions
respectively. PDRI test volumes are not currently included in this
metric.
Assessment
& Qualifications
In Assessment & Qualifications, sales increased 7% on an
underlying basis and 8% on a headline basis. Adjusted operating
profit increased 33% in underlying terms due to operating leverage
on sales growth and margin and opex cost efficiencies, partially
offset by inflation and 36% in headline terms due to this,
portfolio changes and currency movements.
Pearson VUE sales were up 10% in underlying terms with particularly
strong growth in the IT and healthcare segments, alongside the
commencement of new contracts. VUE test volumes6 grew
6% to 20.7m. We maintained our high contract renewal track record,
reporting a rate of 93.6% across the business for
2023.
In US Student Assessment, sales increased 4% in underlying terms
driven by the commencement of new contracts following new business
wins.
In Clinical Assessment, sales increased 5% in underlying terms
supported by pricing, good
government funding and continued focus on health and
wellbeing.
In UK and International Qualifications, sales increased 6% in
underlying terms driven by price increases and good international
growth.
We are pleased with the continued momentum that Assessment &
Qualifications showed in 2023. We're poised to deliver low to
mid-single digit sales growth and continued strong margins in 2024,
with an excellent outlook beyond, with growth initiatives that will
help us to expand the scope of offering and reach.
Virtual
Learning
In Virtual Learning, sales decreased 20% on an underlying basis and
25% on a headline basis, primarily due to the expected decrease in
our OPM business. Adjusted operating profit decreased 17% in
underlying terms due to trading performance partially offset by
cost efficiencies and increased 9% in headline terms due to this
and portfolio changes.
Sales in our OPM business were down 87% on an underlying basis, as
expected, following the wind down of the ASU contract. Pearson
Online Learning Services sales are no longer included in underlying
measures following the completion of the disposal in the first half
of the year.
Virtual Schools sales were down 2%, driven by lower enrolments and
lower district partnership renewals, partially offset by good
retention rates, improvements in funding and growth associated with
the launch of our Connections Academy Career Pathways. Enrolments
for the 2023/24 academic year were down 5% due to the previously
cited loss of a larger partner school. Excluding the impact of this
school, enrolments were up 1%.
We are pleased to have secured two new schools in the States
impacting the 2023/24 and 2024/25 academic years. We expect
enrolments to be lower for the 2024/25 academic year, due to the
loss of a major school in that period and for annual sales to
decline at a similar level to 2023. We remain confident in the
long-term growth of the business as we roll out additional Career
Academies aimed at supporting teenagers who wish to gain career and
technical education and experience.
Higher
Education
In Higher Education, sales
declined 3% for the full year on an underlying basis, in line with
expectations, and decreased 5% on a headline basis due to currency
movements and portfolio changes. Adjusted
operating profit increased 20% in underlying terms driven primarily
by cost efficiencies, partially offset by trading performance and
inflation, and increased 21% in headline terms due to this,
currency movements and portfolio changes.
In the US, sales declines were driven by the loss of adoptions to
non-mainstream publishers in the first half of the year, as well as
pricing mix. There
was strong growth in Inclusive Access with 22% sales growth to
not-for-profit institutions and the total number of institutions
increasing to c.1,250. We
delivered 2% growth in platform units in 2023 enabled
by changes
we have made to our sales team and go to market strategy with the
support of increasing platform stability. Pearson+
performed well in the Fall semester with 3.03m registered users and
516k paid subscriptions, representing 27% growth compared to the
prior year Fall semester. Pearson+ passed the milestone of 1
million cumulative paid subscriptions for the calendar
year.
We expect a return to sales growth in 2024, with increased margins
as the organisational changes and focused investments we have made
to strengthen our competitive position begin to bear fruit. Further
cost savings will be partially offset in 2024 by above the line
restructuring charges.
English
Language Learning
In English Language Learning, sales were up 30% on an underlying
basis and 29% on a headline basis. Adjusted operating profit
increased by 112% in underlying terms due to sales growth partially
offset by increased investment in brand awareness and testing
capacity and inflation, and was up 88% in headline terms due to
this and currency movements.
PTE volumes were up 49% supported by favourable migration policy in
Australia as well as market share gain in India. Our Institutional
business performed well, with strong performance across Latin
America and Middle East markets. Our Mondly business also
contributed to growth with an increase in consumer
billings.
English Language Learning continues to deliver strong growth and
strategic progress for Pearson. We expect this division to deliver
more normalised high-single digit sales growth in
2024.
Workforce
Skills
In Workforce Skills, sales were up 11% on an underlying basis and
8% on a headline basis. Adjusted operating profit declined by
£8m in underlying terms due to investment in the business
across our Workforce Solutions product suite partially offset by
trading and decreased £5m in headline terms due to this and
portfolio changes.
Sales growth was driven by solid performances in both the
Vocational Qualifications and Workforce Solutions
businesses. The
Vocational Qualifications business grew by 10% in underlying
terms. The
Workforce Solutions business grew by 13% in underlying terms.
Pearson has 1,547 enterprise clients in its Workforce Skills
portfolio, up 3% on last year.
We focused our efforts on pivoting towards delivering more modular,
personalised offerings to our clients in 2023, leveraging our
powerful technology stack. In 2024, we intend to capitalise on the
positive signs we are seeing in our customer pipeline and will be
targeting high single digit sales growth.
Strategic
Review
Sales in our international courseware local publishing businesses
under strategic review declined 74% on an underlying basis and were
down 94% on a headline basis for the full year. Operations in these
businesses have now been wound down in line with our previous
communications. There will be no sales or profits reported in this
division going forwards.
KPIs
|
KPI
|
Objective
|
KPI Measure
|
2023 Actual
|
2022 Actual
|
|
Digital Growth
|
Drive digital sales growth
|
Underlying growth in Group digital and digital-enabled
sales
|
8%*
|
9%
|
|
Virtual Schools US enrolments**
|
100k
|
105k
|
|
OnVUE volumes
|
2.7m
|
3.0m
|
|
Higher Education US digital registrations
|
9.8m
|
9.9m
|
|
PTE volume
|
1,231k
|
827k
|
|
Consumer Engagement
|
Create engaging and personalised consumer experiences
|
NPS for Connections Academy
|
+67
|
+67
|
|
NPS for PTE
|
+55
|
+52
|
|
Pearson+ registered users
|
3.03m
|
2.83m
|
|
Mondly paid subscriptions
|
432k
|
446k
|
|
Workforce Skills new registered users
|
5.3m
|
4.7m
|
|
Product Effectiveness
|
Improve the effectiveness of our products to deliver better
outcomes
|
PTE speed of score return
|
1.0 days
|
1.3 days
|
|
VUE test volumes
|
20.7m
|
19.4m
|
|
VUE Partner retention
|
93.6%
|
99.9%
|
|
Workforce Skills number of enterprise customers
|
1,547
|
1,503
|
|
Workforce Skills enterprise customer net retention
rate
|
66%
|
74%
|
|
Higher Education product usage - text units
|
4.5m
|
4.8m
|
|
Culture of Engagement & Inclusion
|
Build a culture of engagement and inclusion where diverse talent is
heard, invested in and valued for their strengths and
skills
|
Employee engagement
Pearson uses the
GallupQ12 survey
to measure engagement, annually
|
4.09 GrandMean on a 5 point Likert scale
|
3.96 GrandMean on a 5 point Likert scale
|
|
Investing in diverse talent
The % of responses
who agree or strongly agree to Gallup Q12 survey
questions.
|
In the last six months, someone at work has talked to me about my
progress = 73%
|
In the last six months, someone at work has talked to me about my
progress = 67%
|
|
This last year, I have had opportunities at work to learn and grow
= 76%
|
This last year, I have had opportunities at work to learn and grow
= 72%
|
|
Culture of Inclusion Index
The GrandMean of 3
Gallup Q12 survey
questions:
- At work, I am treated with respect
- My company is committed to building the strengths of each
employee
- If I raised a concern about ethics and integrity, I am confident
my employer would do what is right
|
4.21 GrandMean
on a 5 point Likert scale
|
4.12 GrandMean
on a 5 point Likert scale
|
|
Increasing diverse talent***
Objective: Increase BIPOC / BAME representation at all manager
levels and maintain overall gender parity
|
Representation of BIPOC/BAME employees at Manager level and above =
22.0%
|
Representation of BIPOC/BAME employees at Manager level and above =
20.7%
|
|
Global % of female employees = 59.1%
|
Global % of female employees = 59.0%
|
|
Sustainability Strategy
|
Achieve net zero carbon by 2030
|
Progress against achieving net zero carbon by 2030, as measured
through percentage carbon reduction****
|
16% reduction vs 2022
|
3% reduction vs 2021
|
* Excluding OPM and Strategic Review businesses.
** Measure definition has changed to number of government-funded
student enrolments at partner schools within the US as of 30
September. Excludes private-pay students at Pearson Online Academy
and district partnerships. This is more closely aligned to business
processes.
*** Previously reported 'Increasing diverse talent' metrics retired
and new strategic remuneration measures incorporated.
**** The net emissions reduction figures have been assured by an
independent third-party, SLR Consulting Ltd. Corporate Citizenship
% reduction in total tCO2e above is calculated using a
location-based methodology. Within the 2023 number, 4% is due to
portfolio changes. These will be removed following the normal
rebasing exercise in 2024.
For a full list of KPI measure definitions, please refer
to: https://plc.pearson.com/en-GB/company/our-targets-kpis
FINANCIAL REVIEW
Operating
result
Sales decreased on a headline basis by £167m or 4% from
£3,841m in 2022 to £3,674m in 2023 and adjusted operating
profit increased by £117m or 26% from £456m in 2022 to
£573m in 2023 (for a reconciliation of this measure see note 2
to the condensed consolidated financial statements).
The
headline basis simply compares the reported results for 2023 with
those for 2022. We also present sales and profits on an underlying
basis which exclude 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. Our portfolio change is calculated by
excluding sales and profits made by businesses disposed in either
2022 or 2023 and by ensuring the contribution from acquisitions is
comparable year on year. Portfolio changes mainly relate to the
disposals of the Group's interests in POLS, Pearson College, our
international courseware local publishing business in India and
businesses within Higher Education in 2023, the disposal of our
international courseware local publishing businesses in Europe,
French-speaking Canada, South Africa and Hong Kong in 2022, the
acquisition of PDRI in 2023 and the acquisitions of Credly and
Mondly in 2022.
On an underlying basis, sales increased by 1% in 2023 compared to
2022 and adjusted operating profit increased by 31%. Currency
movements decreased sales by £33m and decreased adjusted
operating profit by £10m. Portfolio changes decreased sales by
£175m and decreased adjusted operating profit by £8m. On
an underlying basis, excluding OPM and Strategic Review, sales
increased by 5% in 2023 compared to 2022.
There were no new accounting standards adopted in 2023 that
impacted sales or statutory or adjusted operating
profits.
Adjusted
operating profit includes the results from discontinued operations
when relevant but excludes charges for intangible amortisation and
impairment, acquisition related costs, gains and losses arising
from disposals, the cost of major restructuring, certain property
charges and one-off costs related to the UK pension scheme. A
summary of these adjustments is included below and in more detail
in note 2 to the condensed consolidated financial
statements.
|
|
|
|
|
|
All figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
498
|
271
|
|
Add
back: Cost of major restructuring
|
|
-
|
150
|
|
Add
back: Property charges
|
|
11
|
-
|
|
Add
back: Intangible charges
|
|
48
|
56
|
|
Add
back: UK pension discretionary increases
|
|
-
|
3
|
|
Add
back: Other net gains and losses
|
|
16
|
(24)
|
|
Adjusted operating profit
|
|
573
|
456
|
In
2023, there are no costs of major restructuring. Property charges
of £11m relate to impairments of property assets arising from
the impact of updates in 2023 to assumptions initially made during
the 2022 and 2021 restructuring programmes. In 2022, restructuring
costs of £150m mainly related to staff redundancies and
impairment of right-of-use property assets including the impact of
updated assumptions related to the recoverability of right-of-use
assets made in 2021.
Intangible
amortisation charges in 2023 were £48m compared to a charge of
£56m in 2022. This is due to decreased amortisation from
recent disposals partially offset by additional amortisation from
recent acquisitions.
UK
pension discretionary increases in 2022 related to one-off pension
increases awarded to certain cohorts of pensioners in response to
the cost of living crisis.
Other
net gains and losses in 2023 relate largely to the gain on disposal
of the POLS business and gains on the releases of accruals and a
provision related to previous acquisitions and disposals, partially
offset by losses on the disposal of Pearson College and costs
related to current and prior year disposals and acquisitions. Other
net gains and losses in 2022 largely related to the gain on
disposal of the international courseware local publishing business
in French-speaking Canada and a gain arising on a decrease in the
deferred consideration payable on prior year acquisitions, offset
by costs related to disposals and acquisitions.
The
reported operating profit of £498m in 2023 compares to an
operating profit of £271m in 2022. The increase in 2023 is
mainly due to increased trading profits and a reduction in the
costs of major restructuring, partially offset by a net loss
related to acquisitions and disposals compared to a net gain in
2022.
Net finance costs
Net finance costs increased on a headline basis from a net income
of £52m in 2022 to a net cost of £5m in 2023. The
increase is primarily due to the release, in 2022, of £35m of
interest recorded in respect of provisions for uncertain tax
positions, a reduction in gains arising from mark to market
movements on investments and derivatives, partially offset by
additional finance income in respect of retirement
benefits.
Net interest payable reflected in adjusted earnings in 2023 was
£33m, compared to £1m in 2022. The difference is
primarily due to the items noted above. In addition, in 2023, there
were increased interest costs related to the drawdown during the
year of the revolving credit facility, partially offset by reduced
bond interest due to the bond repayments made in 2022.
Net finance income in respect of 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 included in the net
finance costs (but not in our adjusted measure) are interest costs
relating to acquisition or disposal transactions, fair value
movements on investments classified as fair value through profit
and loss, foreign exchange and other gains and losses on
derivatives. Interest relating to acquisition or disposal
transactions is excluded from adjusted earnings 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 and other gains and losses 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 (for more information see note 3 to the
condensed consolidated financial statements). Interest on certain
tax provisions is excluded from our adjusted measure in order to
mirror the treatment of the underlying tax item.
In 2023, the total of these items excluded from adjusted earnings
was income of £28m compared to income of £53m in 2022.
Net finance income in respect of retirement benefits increased from
£9m in 2022 to £26m in 2023 reflecting the comparative
funding position of the plans at the beginning of each year and the
higher prevailing discount rates. Interest costs in respect of
deferred and contingent consideration are £4m in 2023 compared
to £5m in 2022, these costs relate to recent acquisitions.
Fair value gains on investments in unlisted securities are
£13m in 2023 compared to £28m in 2022. In addition, there
were losses year on year on long-term interest rate hedges and an
interest charge on tax provisions of £5m was recognised in
2022 in relation to the EU State Aid matter. For a reconciliation
of the adjusted measure see note 3 to the condensed consolidated
financial statements.
Taxation
The
reported tax charge on a statutory basis in 2023 was £113m
(23.0%) compared to a £79m charge (24.5%) in
2022.
The tax on adjusted earnings in 2023 was a charge of £124m
(2022: £71m), corresponding to an adjusted effective tax rate
on adjusted profit before tax of 23.0% (2022: 15.6%). The increase
in the effective rate from prior year is primarily due to the
release of tax provisions following the expiry of the statute of
limitations in the US driving a lower tax rate in 2022 which is not
recurring in 2023. For a reconciliation of the adjusted measure see
note 4 to the condensed consolidated financial
statements.
In 2023, there was a net tax payment of £97m
(2022: £109m). The overall amount decreased primarily as a
result of one-off disposal events in 2022 that are not recurring in
2023.
A net deferred tax liability of £11m is recognised
in 2023 compared to a net £20m deferred tax asset in 2022. The
overall amount decreased mainly due to the acquisition of PDRI
during the year and ongoing utilisation of tax losses.
The current tax creditor principally consists of provisions for tax
uncertainties. Refer to note 14 to the condensed consolidated
financial statements for details of other uncertain tax
positions.
Other
comprehensive income
Included in other comprehensive income are the net exchange
differences on translation of foreign operations. The loss on
translation of £177m in 2023 compares to a gain in 2022 of
£330m. The loss in 2023 arises from an overall weakening of
the currencies to which the Group is exposed and in particular the
US dollar. A significant proportion of the Group's operations are
based in the US and the US dollar weakened in 2023 from an opening
rate of £1:$1.21 to a closing rate at the end of 2023 of
£1:$1.27. At the end of 2022, the US dollar had strengthened
from an opening rate of £1:$1.35 to a closing rate of
£1:$1.21. The gain in 2022 was driven by this movement in the
US dollar.
Also
included in other comprehensive income in 2023 is an actuarial loss
of £85m in relation to the retirement benefit obligations of
the Group. The loss arises largely from returns on assets below the
discount rate and changes in actuarial assumptions including
the discount rate and inflation. The actuarial loss in 2023 of
£85m compares to an actuarial gain in 2022 of
£54m.
Fair
value gains of £1m (2022: £18m) have been recognised in
other comprehensive income and relate to movements in the value of
investments in unlisted securities held at FVOCI.
In
2023, a gain of £122m was recycled from the currency
translation reserve to the income statement in relation to the
disposal of the POLS business. In 2022, a gain of £5m was
recycled from the currency translation reserve to the income
statement in relation to various businesses disposed.
Cash
flow and working capital
Our
operating cash flow measure is an adjusted measure used to align
cash flows with our adjusted profit measures (see note 13 to the
condensed consolidated financial statements). Operating cash inflow
increased on a headline basis by £186m from £401m in 2022
to £587m in 2023. The increase is largely explained by the
drop-through of increased trading profits, good cash collections
and reduced investment spend in Higher Education connected to the
2022 efficiency programme, as well as the impact of
disposals.
The
equivalent statutory measure, net cash generated from operations,
was £682m in 2023 compared to £527m in 2022. Compared to
operating cash flow, this measure includes restructuring costs and
acquisition 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 2023,
restructuring cash outflow was £63m compared to £35m in
2022.
In
2023, there was an overall £234m decrease in cash and cash
equivalents compared to a decrease of £394m in 2022. The
decrease in 2023 is primarily due to payments for acquisitions of
subsidiaries of £171m, dividends paid of £154m, share
buyback programme of £186m, other own share purchases of
£35m, tax paid of £97m, capital expenditure of
£126m, and repayments of lease liabilities of £84m. These
were offset by the cash inflow from operations of
£682m.
Liquidity
and capital resources
The
Group's net debt increased from £557m at the end of 2022 to
£744m at the end of 2023. The increase is largely due to the
share buyback programme, cash outflows on acquisitions and
disposals, dividend payments and tax payments, partially offset by
strong operating cash flow. Refer to note 12 to the condensed
consolidated financial statements for details of the composition of
net debt.
In
May 2022, the Group repaid the remaining $117m (£95m) of its
2022 US dollar bond upon maturity. In December 2022, the Group
repaid the remaining $94m (£76m) of its 2023 US dollar
bond.
At 31 December 2023, the Group
had approximately £1.0bn in total liquidity immediately
available from cash and its Revolving Credit Facility maturing
February 2027. In assessing the Group's liquidity and viability,
the Board analysed a variety of downside scenarios including a
severe but plausible downside scenario where the Group is impacted
by a combination of all principal risks, as well as reverse stress
testing to identify what would be required to either breach
covenants or run out of liquidity. The Group would maintain
comfortable liquidity headroom and sufficient headroom against
covenant requirements during the period under assessment in the
severe but plausible scenario, even before modelling the mitigating
effect of actions that management would take in the event that
these downside risks were to crystallise. In all scenarios it is
assumed that the Revolving Credit Facility is available and that
the €300m bond with a maturity due within the going concern
assessment period is refinanced ahead of time with a £250m
bond or bank facility.
At 31 December 2023, the Group was rated BBB- (positive outlook)
with Fitch and Baa3 (stable outlook) with Moody's.
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.
The Group has 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
post-retirement benefits amounted to £45m in 2023 (2022:
£66m), of which a charge of £71m (2022: £75m) was
reported in operating profit and income of £26m (2022:
£9m) was reported in other net finance costs. In 2022, a
charge of £3m related to one-off discretionary pension
increases has been excluded from adjusted operating
profit.
The
overall surplus on UK Group pension plans of £574m at the end
of 2022 has decreased to a surplus of £491m at the end of
2023. The decrease has arisen principally due to the actuarial loss
noted above in the other comprehensive income section. In total,
the worldwide net position in respect of pensions and other
post-retirement benefits decreased from a net asset of £520m
at the end of 2022 to a net asset of £455m at the end of
2023.
Businesses
acquired
In
March 2023, the Group completed the acquisition of 100% of the
share capital of Personnel Decisions Research Institutes, LLC
('PDRI') for cash consideration of £152m ($187m). There is no
contingent or deferred consideration. Net assets acquired of
£91m were recognised on the Group's balance sheet including
£117m of acquired intangible assets. Goodwill of £61m was
also recognised in relation to the acquisition.
The
cash outflow in 2023 relating to acquisitions of subsidiaries was
£171m plus £4m of acquisition costs. In addition, there
were cash outflows relating to the acquisition of associates of
£5m and investments of £8m.
The
cash outflow in 2022 relating to acquisitions of subsidiaries was
£228m arising primarily from the acquisitions of Credly and
Mondly. In addition, there were cash outflows relating to the
acquisition of associates of £5m and investments of
£12m.
Businesses
disposed
In
2023, the Group disposed of its interests in its POLS businesses in
the US, UK, Australia and India. The business disposed excludes
Pearson's contract with ASU. The consideration to be received is
deferred and comprises a 27.5% share of positive adjusted EBITDA in
each calendar year for 6 years and 27.5% of the proceeds received
by the purchaser in relation to any future monetisation event. The
consideration has been valued at £12m and a pre-tax gain on
disposal of £13m has been recognised.
In
addition, £19m of losses arose from the disposals of Pearson
College and the international courseware local publishing business
in India, £12m of costs related to previous disposals were
recognised and a gain of £9m has been recognised in relation
to the release of a provision related to a historical
disposal.
In
2023, the cash outflow from the disposal of businesses of £38m
mainly relates to the disposals described above. In 2022, the cash
inflow from disposals of £333m mainly related to the disposal
of the Group's international courseware local publishing businesses
and the receipt of deferred proceeds from the US K12 Courseware
sale in 2019.
In
addition, proceeds of £7m (2022: £17m) were received in
relation to the disposal of investments.
Dividends
The dividend accounted for in our
2023 financial statements totalling £155m represents the final
dividend in respect of 2022 (14.9p) and the interim dividend for
2023 (7.0p). We are proposing a final dividend for 2023 of
15.7p bringing the total paid and payable in respect of 2023
to 22.7p.
This final 2023 dividend which was approved by the Board in
February 2024, is subject to approval at the forthcoming AGM. For
2023, the dividend is covered 2.6
times by adjusted earnings.
The
final dividend will be paid on 3 May 2024 to shareholders who are
on the register of members at close of business on 22 March 2024
(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 12 April
2024. A Dividend Reinvestment Plan (DRIP) is provided by Equiniti
Financial Services Limited. 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.shareview.co.uk/info/drip
Share
buyback
On
28 April 2023, the Group announced its intention to commence a
£300m share buyback programme in order to return capital to
shareholders. The programme commenced on 21 September 2023. At 31
December 2023, approximately 20m shares had been bought back at a
cash cost of £186m. The liability for the remainder of the
£300m programme plus related costs has been accounted for in
2023. The nominal value of the cancelled shares of £5m has
been transferred to the capital redemption reserve.
The
£300m share buyback programme has continued in 2024 and as at
28 February 2024, £288m of shares had been repurchased,
representing 96% of the total programme. We intend to extend
this share buyback programme by £200m.
CONDENSED
CONSOLIDATED INCOME STATEMENT
for
the year ended 31 December 2023
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
Sales
|
2
|
3,674
|
3,841
|
|
Cost
of goods sold
|
|
(1,839)
|
(2,046)
|
|
Gross profit
|
|
1,835
|
1,795
|
|
|
|
|
|
|
Operating
expenses
|
|
(1,322)
|
(1,549)
|
|
Other
net gains and losses
|
2
|
(16)
|
24
|
|
Share
of results of joint ventures and associates
|
|
1
|
1
|
|
Operating profit
|
2
|
498
|
271
|
|
|
|
|
|
|
Finance
costs
|
3
|
(81)
|
(71)
|
|
Finance
income
|
3
|
76
|
123
|
|
Profit before tax
|
|
493
|
323
|
|
Income
tax
|
4
|
(113)
|
(79)
|
|
Profit for the year
|
|
380
|
244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity
holders of the company
|
|
378
|
242
|
|
Non-controlling
interest
|
|
2
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share (in
pence per share)
|
|
|
|
|
Basic
|
5
|
53.1p
|
32.8p
|
|
Diluted
|
5
|
52.7p
|
32.6p
|
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 year ended 31 December 2023
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
380
|
244
|
|
|
|
|
|
|
Items that may be reclassified to the income statement
|
|
|
|
|
Net
exchange differences on translation of foreign
operations
|
|
(177)
|
330
|
|
Currency
translation adjustment disposed
|
|
(122)
|
(5)
|
|
Attributable
tax
|
|
-
|
4
|
|
|
|
|
|
|
Items that are not reclassified to the income
statement
|
|
|
|
|
Fair
value gain on other financial assets
|
|
1
|
18
|
|
Attributable
tax
|
|
-
|
1
|
|
Remeasurement
of retirement benefit obligations
|
|
(85)
|
54
|
|
Attributable
tax
|
|
20
|
(12)
|
|
Other comprehensive (expense) / income for the year
|
|
(363)
|
390
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
17
|
634
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity
holders of the company
|
|
16
|
630
|
|
Non-controlling
interest
|
|
1
|
4
|
CONDENSED
CONSOLIDATED BALANCE SHEET
as
at 31 December 2023
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
217
|
250
|
|
Investment property
|
|
79
|
60
|
|
Intangible assets
|
9
|
3,091
|
3,177
|
|
Investments in joint ventures and associates
|
|
22
|
25
|
|
Deferred income tax assets
|
|
35
|
57
|
|
Financial assets - derivative financial instruments
|
|
32
|
43
|
|
Retirement benefit assets
|
|
499
|
581
|
|
Other financial assets
|
|
143
|
133
|
|
Income tax assets
|
|
41
|
41
|
|
Trade and other receivables
|
|
135
|
139
|
|
Non-current assets
|
|
4,294
|
4,506
|
|
|
|
|
|
|
Intangible assets - product development
|
|
947
|
975
|
|
Inventories
|
|
91
|
105
|
|
Trade and other receivables
|
|
1,050
|
1,139
|
|
Financial assets - derivative financial instruments
|
|
16
|
16
|
|
Income tax assets
|
|
15
|
9
|
|
Cash and cash equivalents (excluding overdrafts)
|
|
312
|
558
|
|
Current assets
|
|
2,431
|
2,802
|
|
|
|
|
|
|
Assets classified as held for sale
|
|
2
|
16
|
|
Total assets
|
|
6,727
|
7,324
|
|
|
|
|
|
|
Financial liabilities - borrowings
|
|
(1,094)
|
(1,144)
|
|
Financial liabilities - derivative financial
instruments
|
|
(38)
|
(54)
|
|
Deferred income tax liabilities
|
|
(46)
|
(37)
|
|
Retirement benefit obligations
|
|
(44)
|
(61)
|
|
Provisions for other liabilities and charges
|
|
(15)
|
(14)
|
|
Other liabilities
|
|
(98)
|
(120)
|
|
Non-current liabilities
|
|
(1,335)
|
(1,430)
|
|
|
|
|
|
|
Trade and other liabilities
|
|
(1,275)
|
(1,254)
|
|
Financial liabilities - borrowings
|
|
(67)
|
(86)
|
|
Financial liabilities - derivative financial
instruments
|
|
(5)
|
(11)
|
|
Income tax liabilities
|
|
(32)
|
(43)
|
|
Provisions for other liabilities and charges
|
|
(25)
|
(85)
|
|
Current liabilities
|
|
(1,404)
|
(1,479)
|
|
|
|
|
|
|
Liabilities classified as held for sale
|
|
-
|
-
|
|
Total liabilities
|
|
(2,739)
|
(2,909)
|
|
|
|
|
|
|
Net assets
|
|
3,988
|
4,415
|
|
|
|
|
|
|
Share capital
|
|
174
|
179
|
|
Share premium
|
|
2,642
|
2,633
|
|
Treasury shares
|
|
(19)
|
(15)
|
|
Reserves
|
|
1,177
|
1,605
|
|
Total equity attributable to equity holders of the
company
|
|
3,974
|
4,402
|
|
Non-controlling interest
|
|
14
|
13
|
|
Total equity
|
|
3,988
|
4,415
|
The
condensed consolidated financial statements were approved by the
Board on 29 February 2024.
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for
the year ended 31 December 2023
|
|
|
|
|
|
|
Equity
attributable to equity holders of the company
|
|
|
|
all figures in £ millions (unaudited)
|
Share
capital
|
Share
premium
|
Treasury
shares
|
Capital
redemption reserve
|
Fair
value reserve
|
Translation
reserve
|
Retained
earnings
|
Total
|
Non-controlling
interest
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
At 1 January 2023
|
179
|
2,633
|
(15)
|
28
|
(13)
|
709
|
881
|
4,402
|
13
|
4,415
|
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
378
|
378
|
2
|
380
|
|
Other
comprehensive (expense) / income
|
-
|
-
|
-
|
-
|
1
|
(298)
|
(65)
|
(362)
|
(1)
|
(363)
|
|
Total
comprehensive (expense) / income
|
-
|
-
|
-
|
-
|
1
|
(298)
|
313
|
16
|
1
|
17
|
|
Equity-settled
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
40
|
40
|
-
|
40
|
|
Taxation
on equity-settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
-
|
1
|
|
Transfer
of gain on disposal of FVOCI investment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Issue
of ordinary shares
|
-
|
9
|
-
|
-
|
-
|
-
|
-
|
9
|
-
|
9
|
|
Buyback
of equity
|
(5)
|
-
|
-
|
5
|
-
|
-
|
(304)
|
(304)
|
-
|
(304)
|
|
Purchase
of treasury shares
|
-
|
-
|
(35)
|
-
|
-
|
-
|
-
|
(35)
|
-
|
(35)
|
|
Release
of treasury shares
|
-
|
-
|
31
|
-
|
-
|
-
|
(31)
|
-
|
-
|
-
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(155)
|
(155)
|
-
|
(155)
|
|
At 31 December 2023
|
174
|
2,642
|
(19)
|
33
|
(12)
|
411
|
745
|
3,974
|
14
|
3,988
|
|
2022
|
|
At
1 January 2022
|
189
|
2,626
|
(12)
|
18
|
(4)
|
386
|
1,067
|
4,270
|
10
|
4,280
|
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
242
|
242
|
2
|
244
|
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
18
|
323
|
47
|
388
|
2
|
390
|
|
Total
comprehensive income
|
-
|
-
|
-
|
-
|
18
|
323
|
289
|
630
|
4
|
634
|
|
Equity-settled
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
38
|
38
|
-
|
38
|
|
Taxation
on equity-settled transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
3
|
3
|
-
|
3
|
|
Transfer
of gain on disposal of FVOCI investment
|
-
|
-
|
-
|
-
|
(27)
|
-
|
27
|
-
|
-
|
-
|
|
Issue
of ordinary shares
|
-
|
7
|
-
|
-
|
-
|
-
|
-
|
7
|
-
|
7
|
|
Buyback
of equity
|
(10)
|
-
|
-
|
10
|
-
|
-
|
(353)
|
(353)
|
-
|
(353)
|
|
Purchase
of treasury shares
|
-
|
-
|
(37)
|
-
|
-
|
-
|
-
|
(37)
|
-
|
(37)
|
|
Release
of treasury shares
|
-
|
-
|
34
|
-
|
-
|
-
|
(34)
|
-
|
-
|
-
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(156)
|
(156)
|
(1)
|
(157)
|
|
At
31 December 2022
|
179
|
2,633
|
(15)
|
28
|
(13)
|
709
|
881
|
4,402
|
13
|
4,415
|
CONDENSED
CONSOLIDATED CASH FLOW STATEMENT
for
the year ended 31 December 2023
|
|
|
|
|
|
all figures in £ millions (unaudited)
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
Profit
before tax
|
|
493
|
323
|
|
Net
finance costs / (income)
|
3
|
5
|
(52)
|
|
Depreciation
& impairment - PPE, investment property & assets held for
sale
|
|
90
|
136
|
|
Amortisation
and impairment - software
|
|
123
|
125
|
|
Amortisation
and impairment - acquired intangible assets
|
|
46
|
54
|
|
Other
net gains and losses
|
|
13
|
(24)
|
|
Product
development capital expenditure
|
|
(300)
|
(357)
|
|
Product
development amortisation
|
|
284
|
303
|
|
Share-based
payment costs
|
|
40
|
35
|
|
Change
in inventories
|
|
9
|
(34)
|
|
Change
in trade and other receivables
|
|
(24)
|
33
|
|
Change
in trade and other liabilities
|
|
(20)
|
(84)
|
|
Change
in provisions for other liabilities and charges
|
|
(61)
|
50
|
|
Other
movements
|
|
(16)
|
19
|
|
Net
cash generated from operations
|
|
682
|
527
|
|
Interest
paid
|
|
(60)
|
(57)
|
|
Tax
paid
|
|
(97)
|
(109)
|
|
Net cash generated from operating activities
|
|
525
|
361
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Acquisition
of subsidiaries, net of cash acquired
|
10
|
(171)
|
(228)
|
|
Acquisition
of joint ventures and associates
|
10
|
(5)
|
(5)
|
|
Purchase
of investments
|
|
(8)
|
(12)
|
|
Purchase
of property, plant and equipment
|
|
(30)
|
(57)
|
|
Purchase
of intangible assets
|
|
(96)
|
(90)
|
|
Disposal
of subsidiaries, net of cash disposed
|
11
|
(38)
|
333
|
|
Proceeds
from sale of investments
|
11
|
7
|
17
|
|
Proceeds
from sale of property, plant and equipment
|
|
5
|
14
|
|
Lease
receivables repaid including disposals
|
|
15
|
18
|
|
Interest
received
|
|
20
|
22
|
|
Dividends
from joint ventures and associates
|
|
-
|
1
|
|
Net cash (used in) / generated from investing
activities
|
|
(301)
|
13
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds
from issue of ordinary shares
|
|
9
|
7
|
|
Buyback
of equity
|
|
(186)
|
(353)
|
|
Purchase
of treasury shares
|
|
(35)
|
(37)
|
|
Proceeds
from borrowings
|
|
285
|
-
|
|
Repayment
of borrowings
|
|
(285)
|
(171)
|
|
Repayment
of lease liabilities
|
|
(84)
|
(93)
|
|
Dividends
paid to company's shareholders
|
|
(154)
|
(156)
|
|
Dividends
paid to non-controlling interest
|
|
-
|
(1)
|
|
Net cash used in financing activities
|
|
(450)
|
(804)
|
|
Effects
of exchange rate changes on cash and cash equivalents
|
|
(8)
|
36
|
|
Net decrease in cash and cash equivalents
|
|
(234)
|
(394)
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
543
|
937
|
|
Cash and cash equivalents at end of year
|
|
309
|
543
|
For the purposes of the cash flow statement, cash and cash
equivalents are presented net of overdrafts repayable on
demand.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
1. Basis of preparation
The condensed consolidated financial statements have been prepared
in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and in accordance with UK-adopted
International Accounting Standards. The condensed consolidated
financial statements have also been prepared in accordance with
IFRS Accounting Standards as issued by the International Accounting
Standards Board (IASB).
The condensed consolidated financial statements 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. They have also been prepared
in accordance with the accounting policies set out in the 2022
Annual Report. In addition, the Group has applied the exception
under IAS 12 to recognising and disclosing information about
deferred tax assets and liabilities related to Pillar Two income
taxes.
The Group adopted IFRS 17 'Insurance Contracts' for the first time
in 2023, but it has not had a material impact on the condensed
consolidated financial statements. There are no other changes to
accounting standards that have a material impact on the condensed
consolidated financial statements for the year ended 31 December
2023.
In assessing the Group's ability to continue as a going concern for
the period to 30 June 2025, the Board analysed a variety of
downside scenarios including a severe but plausible scenario where
the Group is impacted by all principal risks from 2023 adjusted for
probability weighting, 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
throughout 2024 to 2025.
At 31 December 2023, the Group had available liquidity of
c£1.0bn, comprising central cash balances and its undrawn $1bn
Revolving Credit Facility (RCF), which matures in February
2027. Under a severe downside case, the Group would still
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 have concluded that there are no material
uncertainties that cast doubt on the Group's ability to continue as
a going concern and that they have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the assessment period to 30 June 2025. 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 2022
Annual Report. In 2023, the allocation of goodwill to the
cash-generating units and groups of cash-generating units is no
longer considered to be a key judgement, and the recoverability of
goodwill balances and the level of provisions for anticipated
returns are no longer considered to be key areas of
estimation.
In addition, on 30 June 2023, the Group disposed of its interests
in its POLS businesses in the US, UK, Australia and India. Whether
the associated results and cash flows of the related businesses
should be classified and presented as discontinued operations is a
significant judgement. The Group's judgement is that the results
and cash flows of the related businesses should not be classified
and presented as discontinued operations on the basis that the
businesses disposed do not constitute a separate major line of
business or geographical area of operations, and the cashflows
related to one of the large contracts within the business are being
retained. The POLS business is within the Virtual Learning segment
and represents £93m of sales for the year ended 31 December
2023 out of the total sales in the Virtual Learning segment of
£616m. If the Group had concluded that this business
represented discontinued operations, its results and the related
gain on disposal would not have been included within each of the
continuing operations income statement lines. Profit for the period
from continuing operations would have been £10m lower and this
amount would have been separately presented as profit for the
period from discontinued operations as a single line item. Adjusted
operating profit would be unchanged.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
1. Basis of preparation continued
The Group has also assessed the impact of the uncertainty presented
by the volatile macro-economic and geo-political environment on the
condensed consolidated financial statements, specifically
considering the impact on key judgements and significant estimates
along with other areas of increased risk including financial
instruments, hedge accounting and translation methodologies. No
material accounting impacts relating to the areas assessed were
recognised in 2023. The Group has assessed the impacts of climate
change on the Group's financial statements. The assessment did not
identify any material impact on the Group's significant judgements
or estimates, the recoverability of the Group's assets at 31
December 2023 or the assessment of going concern for the period to
30 June 2025. The Group will continue to monitor these areas of
increased judgement, estimation and risk for material
changes.
The financial information for the year ended 31 December 2022 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 2022 was unqualified and did not contain an
emphasis of matter paragraph or any statement under section 498 of
the Companies Act 2006.
This preliminary announcement does not constitute the Group's full
financial statements for the year ended 31 December 2023. The
Group's full financial statements will be approved by the Board of
Directors and reported on by the auditors in March
2024. Accordingly, the financial information for 2023 is
presented unaudited in the preliminary
announcement.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS for the year ended 31 December
2023
2. Segment information
The following describes the principal activities of the five main
operating segments:
- Assessments
& Qualifications - Pearson VUE, US School Assessment, Clinical
Assessment, UK GCSE and A Levels and International academic
qualifications and associated courseware including
the English-speaking Canadian and Australian K-12 businesses, and
PDRI.
- Virtual
Learning - Virtual Schools and Online Program
Management.
- English
Language Learning - Pearson Test of English, Institutional
Courseware and English Online Solutions.
- Workforce
Skills - BTEC, GED, Credly, TalentLens, Faethm, Pearson College and
Apprenticeships.
- Higher
Education - US, Canadian and International Higher Education
Courseware businesses.
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
Assessments
& Qualifications
|
|
1,559
|
1,444
|
|
Virtual
Learning
|
|
616
|
820
|
|
English
Language Learning
|
|
415
|
321
|
|
Workforce
Skills
|
|
220
|
204
|
|
Higher
Education
|
|
855
|
898
|
|
Strategic
Review
|
|
9
|
154
|
|
Total sales
|
|
3,674
|
3,841
|
|
|
|
|
|
|
Adjusted operating profit
|
|
|
|
|
Assessments
& Qualifications
|
|
350
|
258
|
|
Virtual
Learning
|
|
76
|
70
|
|
English
Language Learning
|
|
47
|
25
|
|
Workforce
Skills
|
|
(8)
|
(3)
|
|
Higher
Education
|
|
110
|
91
|
|
Strategic
Review
|
|
(2)
|
15
|
|
Total adjusted operating profit
|
|
573
|
456
|
There were no material inter-segment sales.
The following table reconciles the Group's measure of segmental
performance, adjusted operating profit, to statutory operating
profit:
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
|
573
|
456
|
|
Cost
of major restructuring
|
|
-
|
(150)
|
|
Property
charges
|
|
(11)
|
-
|
|
Intangible
charges
|
|
(48)
|
(56)
|
|
UK
Pension discretionary increases
|
|
-
|
(3)
|
|
Other
net gains and losses
|
|
(16)
|
24
|
|
Operating profit
|
|
498
|
271
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2023
2. Segment information continued
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 intangible charges for amortisation and
impairment, acquisition related costs, gains and losses arising
from disposals, property charges, the cost of major restructuring
and one-off costs related to the UK pension scheme.
Cost
of major restructuring - In 2023, there are no costs of major
restructuring. In 2022, the restructuring costs of £150m
mainly related to staff redundancies and impairment of right of use
property assets. The 2022 charge includes the impact of updated
assumptions related to the recoverability of right-of-use assets
made in 2021.
Property
charges - Charges of £11m relate to impairments of property
assets arising from the impact of updates in 2023 to assumptions
initially made during the 2022 and 2021 restructuring
programmes.
Intangible
charges - 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 2023 were £48m compared to a charge of £56m in
2022. This is due to decreased amortisation from recent disposals
partially offset by additional amortisation from recent
acquisitions.
UK
pension discretionary increases - Charges in 2022 relate to one-off
pension increases awarded to certain cohorts of pensioners in
response to the cost of living crisis.
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 as
they distort the performance of the Group as reported on a
statutory basis. Other net gains and losses also includes costs
related to business closures and acquisitions. Other net gains and
losses in 2023 relate largely to the gain on disposal of the POLS
business and gains relating to the releases of accruals and a
provision related to previous acquisitions and disposals, partially
offset by losses on the disposal of Pearson College and costs
related to current and prior year disposals and acquisitions. In
2022, they related to the gains on the disposal of our
international courseware local publishing businesses in Europe,
French-speaking Canada and Hong Kong and a gain arising on a
decrease in the deferred consideration payable on prior year
acquisitions, offset by a loss on disposal of our international
courseware local publishing businesses in South Africa due to
recycling of currency translation adjustments and costs related to
disposals and acquisitions.
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 restructuring 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 year ended 31 December 2023
3. Net finance costs
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Interest
payable on financial liabilities at amortised cost and associated
derivatives
|
|
(34)
|
(32)
|
|
Interest
on lease liabilities
|
|
(23)
|
(25)
|
|
Interest
on deferred and contingent consideration
|
|
(4)
|
(5)
|
|
Fair
value movements on derivatives
|
|
(20)
|
(2)
|
|
Interest
on provisions for uncertain tax positions
|
|
-
|
(7)
|
|
Finance costs
|
|
(81)
|
(71)
|
|
|
|
|
|
|
Interest
receivable on financial assets at amortised cost
|
|
16
|
18
|
|
Interest
on lease receivables
|
|
4
|
5
|
|
Net
finance income in respect of retirement benefits
|
|
26
|
9
|
|
Fair
value movements on investments held at FVTPL
|
|
13
|
28
|
|
Net
foreign exchange gains
|
|
3
|
1
|
|
Fair
value movements on derivatives
|
|
10
|
27
|
|
Interest
on provisions for uncertain tax positions
|
|
4
|
35
|
|
Finance income
|
|
76
|
123
|
|
|
|
|
|
|
Analysed
as:
|
|
|
|
|
Net
interest payable reflected in adjusted earnings
|
|
(33)
|
(1)
|
|
Other
net finance income
|
|
28
|
53
|
|
Net finance (costs) / income
|
|
(5)
|
52
|
Net interest payable is the finance cost measure used in
calculating adjusted earnings. Net finance costs classified as
other net finance costs are excluded from the calculation of the
Group's adjusted earnings.
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Net
finance (costs) / income
|
|
(5)
|
52
|
|
Net
finance income in respect of retirement benefits
|
|
(26)
|
(9)
|
|
Interest
on deferred and contingent consideration
|
|
4
|
5
|
|
Fair
value movements on investments held at FVTPL
|
|
(13)
|
(28)
|
|
Net
foreign exchange gains
|
|
(3)
|
(1)
|
|
Fair
value movements on derivatives
|
|
10
|
(25)
|
|
Interest
on provisions for uncertain tax positions
|
|
-
|
5
|
|
Net interest payable reflected in adjusted earnings
|
|
(33)
|
(1)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
3. Net finance costs continued
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, fair value
movements on investments classified as FVTPL, foreign exchange and
other gains and losses on derivatives. Interest relating to
acquisition or disposal transactions is excluded from adjusted
earnings 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 and other gains and losses
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.
4. Income tax
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
493
|
323
|
|
Tax
calculated at UK rate of 23.5% (2022:19%)
|
|
(116)
|
(62)
|
|
Effect
of overseas tax rate
|
|
(1)
|
(12)
|
|
Non-deductible
expenses
|
|
(6)
|
(9)
|
|
Impact
of rate changes
|
|
(1)
|
3
|
|
Other
tax items
|
|
11
|
1
|
|
Income tax charge
|
|
(113)
|
(79)
|
|
|
|
|
|
|
Tax
rate reflected in statutory earnings
|
|
23.0%
|
24.5%
|
The
statutory rate is broadly in line with the standard rate of tax.
Other tax items of £11m consists primarily of a £5m gain
on sale of business not subject to tax and £3m of adjustments
in respect of prior years.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
4.
Income tax continued
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Income tax charge
|
|
(113)
|
(79)
|
|
Tax
on cost of major restructuring
|
|
-
|
(37)
|
|
Tax
on property charges
|
|
(3)
|
-
|
|
Tax
on other net gains and losses
|
|
(10)
|
10
|
|
Tax
on intangible charges
|
|
(11)
|
(11)
|
|
Tax
on UK pension discretionary increase
|
|
-
|
(1)
|
|
Tax
on other net finance costs
|
|
7
|
13
|
|
Tax
on goodwill and intangibles
|
|
4
|
16
|
|
Tax
on UK tax rate change
|
|
1
|
(1)
|
|
Other
tax items
|
|
1
|
19
|
|
Adjusted income tax charge
|
|
(124)
|
(71)
|
|
|
|
|
|
|
Adjusted
profit before tax
|
|
540
|
455
|
|
|
|
|
|
|
Tax
rate reflected in adjusted earnings
|
|
23.0%
|
15.6%
|
The
adjusted income tax charge excludes the tax benefit or charge on
items excluded from profit before tax (see notes 2, 3 and
6).
The
current 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.
UK
legislation in relation to Pillar Two was substantively enacted on
20 June 2023 and is effective from 1 January 2024. The Group is in
scope of this legislation and has performed an assessment of the
Group's potential exposure to Pillar Two income taxes. The
assessment of the potential exposure to Pillar Two income taxes is
based on the most recent financial information available for the
constituent entities in the Group. Based on the assessment, 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 and 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.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
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
year, 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
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
for the year
|
|
380
|
244
|
|
Non-controlling
interest
|
|
(2)
|
(2)
|
|
Earnings attributable to equity holders
|
|
378
|
242
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares (millions)
|
|
711.5
|
738.1
|
|
Effect
of dilutive share options (millions)
|
|
5.8
|
3.9
|
|
Weighted
average number of shares (millions) for diluted
earnings
|
|
717.3
|
742.0
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share (in
pence per share)
|
|
|
|
|
Basic
|
|
53.1p
|
32.8p
|
|
Diluted
|
|
52.7p
|
32.6p
|
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 our investors 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 restructuring 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
Group's definition of adjusted earnings per share may not be
comparable to other similarly titled measures reported by other
companies. A reconciliation of the adjusted measures to their
corresponding statutory measures is shown in the tables below and
in notes 2, 3 and 4.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
6.
Adjusted earnings per share continued
|
|
|
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
note
|
Statutory income statement
|
Cost of major restructuring
|
Property charges
|
Other net gains and losses
|
Intangible charges
|
UK pension discretionary increases
|
Other finance costs
|
Other tax items
|
Adjusted income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
Operating profit
|
2
|
498
|
-
|
11
|
16
|
48
|
-
|
-
|
-
|
573
|
|
Net
finance costs
|
3
|
(5)
|
-
|
-
|
-
|
-
|
-
|
(28)
|
-
|
(33)
|
|
Profit before tax
|
|
493
|
-
|
11
|
16
|
48
|
-
|
(28)
|
-
|
540
|
|
Income
tax
|
4
|
(113)
|
-
|
(3)
|
(10)
|
(11)
|
-
|
7
|
6
|
(124)
|
|
Profit for the year
|
|
380
|
-
|
8
|
6
|
37
|
-
|
(21)
|
6
|
416
|
|
Non-controlling
interest
|
|
(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
|
Earnings
|
|
378
|
-
|
8
|
6
|
37
|
-
|
(21)
|
6
|
414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
|
|
|
711.5
|
|
|
Weighted average number of shares (millions) for diluted
earnings
|
|
|
|
717.3
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share (basic)
|
|
|
|
58.2p
|
|
|
Adjusted earnings per share (diluted)
|
|
|
|
57.7p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
6.
Adjusted earnings per share continued
|
|
|
|
|
|
|
|
|
|
|
|
|
all figures in £ millions
|
note
|
Statutory income statement
|
Cost of major restructuring
|
Property charges
|
Other net gains and losses
|
Intangible charges
|
UK pension discretionary increases
|
Other finance costs
|
Other tax items
|
Adjusted income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
Operating profit
|
2
|
271
|
150
|
-
|
(24)
|
56
|
3
|
-
|
-
|
456
|
|
Net
finance costs
|
3
|
52
|
-
|
-
|
-
|
-
|
-
|
(53)
|
-
|
(1)
|
|
Profit before tax
|
|
323
|
150
|
-
|
(24)
|
56
|
3
|
(53)
|
-
|
455
|
|
Income
tax
|
4
|
(79)
|
(37)
|
-
|
10
|
(11)
|
(1)
|
13
|
34
|
(71)
|
|
Profit for the year
|
|
244
|
113
|
-
|
(14)
|
45
|
2
|
(40)
|
34
|
384
|
|
Non-controlling
interest
|
|
(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
|
Earnings
|
|
242
|
113
|
-
|
(14)
|
45
|
2
|
(40)
|
34
|
382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
|
|
|
738.1
|
|
|
Weighted average number of shares (millions) for diluted
earnings
|
|
|
|
742.0
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share (basic)
|
|
|
|
51.8p
|
|
|
Adjusted earnings per share (diluted)
|
|
|
|
51.5p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
7. Dividends
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
recognised as distributions to equity shareholders in the
year
|
|
155
|
156
|
The
Directors are proposing a final dividend of 15.7p per equity share,
payable on 3 May 2024 to shareholders on the register at the close
of business on 22 March 2024. This final dividend, which will
absorb an estimated £107m of shareholders' funds, has not been
included as a liability as at 31 December 2023.
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:
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Average
rate for profits
|
|
1.25
|
1.24
|
|
Year
end rate
|
|
1.27
|
1.21
|
9. Non-current intangible
assets
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
2,434
|
2,480
|
|
Other
intangibles
|
|
657
|
697
|
|
Non-current intangible assets
|
|
3,091
|
3,177
|
Business
combinations resulted in the recognition of additional goodwill of
£61m (2022: £204m) and intangible assets of £117m
(2022: £110m) (see note 10 for further details).
There
were no significant impairments to acquisition related or other
intangibles in 2023 or 2022.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
10. Acquisitions
On
22 March 2023, the Group acquired 100% of the share capital of
Personnel Decisions Research Institutes, LLC ('PDRI') for cash
consideration of £152m ($187m). PDRI is a provider of
workforce assessment services and has significant expertise in
providing recruitment assessment solutions to the US federal
government. It forms part of the Assessment & Qualifications
division. There is no contingent or deferred consideration. Net
assets acquired of £91m were recognised on the Group's balance
sheet including £117m of acquired intangible assets mainly
relating to customer relationships and contracts, and technology
that will be amortised over periods up to 15 years.
This
transaction has resulted in the recognition of £61m of
goodwill, which represents the expected growth of the business, the
workforce and know-how acquired and the anticipated synergies, none
of which can be recognised as separate intangible assets. The
goodwill is not deductible for tax purposes.
On
28 January 2022, the Group acquired 100% of the share capital of
Credly Inc (Credly), having previously held a 19.9% interest in the
company. Total consideration was £149m comprising upfront cash
consideration of £107m, Pearson's existing interest valued at
£31m and £11m of deferred consideration. The deferred
consideration is payable two years from the acquisition date.
£49m of intangible assets were recognised, mainly relating to
the existing customer relationships that will be amortised over 20
years, and technology, which will be amortised over five
years.
On
28 April 2022, the Group acquired 100% of the share capital of ATI
STUDIOS A.P.P.S S.R.L (Mondly). It now forms part of the English
Language Learning division. Total consideration was £135m
comprising upfront cash consideration of £105m, and deferred
consideration of £30m. The deferred consideration is payable
over two years from the acquisition date with no performance
conditions attached. In addition, a further $29.6m (c£24m) of
cash and $10m (c£8m) in shares will be paid over the four
years from the acquisition date, dependent on continuing
employment, and therefore these additional amounts will be expensed
over the period and are not treated as consideration. £50m of
intangible assets were recognised, the majority of which relates to
acquired technology, and will be amortised over periods upto seven
years.
In
2022, the Group also made three smaller acquisitions in the period
for total consideration of £11m.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
10. Acquisitions continued
Details of the fair values of the assets and liabilities recognised
at the acquisition date and the related consideration is shown in
the table below. Amounts for intangible assets and goodwill are
provisional as management finalise reviews of the asset
valuations.
|
|
|
|
|
|
|
all figures in £ millions
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
117
|
110
|
|
Deferred tax assets
|
|
|
-
|
8
|
|
Trade and other receivables
|
|
|
8
|
8
|
|
Cash and cash equivalents
|
|
|
4
|
13
|
|
Trade
and other liabilities
|
|
|
(7)
|
(26)
|
|
Deferred
tax liabilities
|
|
|
(31)
|
(22)
|
|
Net assets acquired
|
|
|
91
|
91
|
|
Goodwill
|
|
|
61
|
204
|
|
Total
|
|
|
152
|
295
|
|
|
|
|
|
|
|
Satisfied by:
|
|
|
|
|
|
Cash consideration
|
|
|
152
|
223
|
|
Deferred and contingent consideration
|
|
|
-
|
41
|
|
Fair value of existing investment
|
|
|
-
|
31
|
|
Total consideration
|
|
|
152
|
295
|
|
|
|
|
|
|
Cash flow from acquisitions
|
|
|
|
|
Cash - current year acquisitions
|
|
(152)
|
(223)
|
|
Cash and cash equivalents acquired
|
|
4
|
13
|
|
Deferred payments for prior year acquisitions and other
items
|
|
(23)
|
(18)
|
|
Net cash outflow
|
|
|
(171)
|
(228)
|
PDRI
generated revenues of £24m and a profit after tax of £4m
for the period from acquisition date to 31 December 2023. If the
acquisition had occurred on 1 January 2023, the Group's revenue
would have been £7m higher and the profit after tax would have
been £1m higher.
Total
acquisition-related costs of £12m (2022: £20m) were
recognised within other net gains and losses. There were also gains
of £5m (2022: £8m) arising on decreases in the deferred
consideration payable on prior year acquisitions.
In
addition to the cash flows relating to subsidiaries above, the
Group paid a further £5m (2022: £3m) in respect of an
existing investment in an associate, and in 2022, also acquired an
associate for cash
consideration
of £2m.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
11. Disposals
On
30 June 2023, the Group disposed of its interests in its POLS
businesses in the US, UK, Australia and India. The business
disposed excludes Pearson's contract with ASU. The consideration to
be received is deferred and comprises a 27.5% share of positive
adjusted EBITDA in each calendar year for 6 years and 27.5% of the
proceeds received by the purchaser in relation to any future
monetisation event. The consideration has been valued at £12m
and a pre-tax gain on disposal of £13m has been recognised. In
addition, a gain of £9m has been recognised which arises from
the release of a provision related to a historical disposal,
£19m of losses arose from the disposals of Pearson College and
the international courseware local publishing business in India and
£12m of costs related to previous disposals were
recognised.
In
2022, the Group disposed of its interests in the Canadian
educational publisher (ERPI), Pearson Italia S.p.A, Stark Verlag
GmbH, Austin Education (Hong Kong) Limited, Pearson South Africa
(Pty) Ltd and various other South African companies. Total cash
consideration received was £287m resulting in a pre-tax gain
on disposal of £42m. All entities disposed of were previously
in the Strategic Review segment. £5m of losses arose from
other immaterial disposals and costs related to the wind-down of
certain businesses. None of the disposed businesses meet the
criteria to be presented as discontinued operations.
|
|
|
|
|
|
|
all figures in £ millions
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, including goodwill
|
|
|
(53)
|
(77)
|
|
Property, plant and equipment
|
|
|
(5)
|
(11)
|
|
Intangible assets - product development
|
|
|
(15)
|
(39)
|
|
Inventories
|
|
|
(1)
|
(33)
|
|
Trade and other receivables
|
|
|
(65)
|
(106)
|
|
Deferred tax
|
|
|
8
|
(12)
|
|
Current tax (receivable) / payable
|
|
|
(2)
|
7
|
|
Cash and cash equivalents (excluding overdrafts)
|
|
|
(12)
|
(21)
|
|
Provisions for other liabilities and charges
|
|
|
-
|
1
|
|
Retirement
benefit obligations
|
|
|
-
|
2
|
|
Trade
and other liabilities
|
|
|
31
|
45
|
|
Financial
liabilities - borrowings
|
|
|
-
|
8
|
|
Net assets disposed
|
|
|
(114)
|
(236)
|
|
|
|
|
|
|
|
Cumulative currency translation adjustment
|
|
|
122
|
5
|
|
Cash proceeds
|
|
|
1
|
291
|
|
Deferred proceeds
|
|
|
12
|
2
|
|
Costs of disposal
|
|
|
(30)
|
(25)
|
|
(Loss) / gain on disposal
|
|
|
(9)
|
37
|
|
|
|
|
|
|
|
Cash flow from disposals
|
|
|
|
|
|
Proceeds - current year disposals
|
|
|
1
|
291
|
|
Proceeds - prior year disposals
|
|
|
-
|
86
|
|
Cash and cash equivalents disposed
|
|
|
(12)
|
(21)
|
|
Costs and other disposal liabilities paid
|
|
|
(27)
|
(23)
|
|
Net cash (outflow) / inflow from disposals
|
|
|
(38)
|
333
|
In addition to the above,
deferred proceeds relating to the K12 sale were received in 2022,
and in 2023, proceeds of £7m (2022: £17m) were received
in relation to the disposal of investments.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
12. Net debt
|
|
|
|
|
|
all figures in £ millions
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Derivative
financial instruments
|
|
32
|
43
|
|
Trade
and other receivables - investment in finance lease
|
|
82
|
104
|
|
Current assets
|
|
|
|
|
Derivative
financial instruments
|
|
16
|
16
|
|
Trade
and other receivables - investment in finance lease
|
|
18
|
17
|
|
Cash
and cash equivalents (excluding overdrafts)
|
|
312
|
558
|
|
Non-current liabilities
|
|
|
|
|
Borrowings
|
|
(1,094)
|
(1,144)
|
|
Derivative
financial instruments
|
|
(38)
|
(54)
|
|
Current liabilities
|
|
|
|
|
Borrowings
(including overdrafts)
|
|
(67)
|
(86)
|
|
Derivative
financial instruments
|
|
(5)
|
(11)
|
|
Net debt
|
|
(744)
|
(557)
|
Included
in borrowings at 31 December 2023 are lease liabilities of
£547m (non-current £483m, current £64m). This
compares to lease liabilities of £605m (non-current
£534m, current £71m) at 31 December 2022. The net lease
liability at 31 December 2023 after including the investment in
finance leases noted above was £447m (2022: £484m). Net
debt excluding net lease liabilities is £297m (2022:
£73m).
In
May 2022, the Group repaid its $117m (£95m) USD 3.75% notes
upon maturity. In December 2022, the Group repaid its $94m
(£76m) USD 3.25% notes.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
13. 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.
|
all figures in £ millions
|
Statutory measure
|
Cost of major restructuring
|
Property charges
|
Other net gains and losses
|
Intangible charges
|
UK pension discretionary increases
|
Purchase/ disposal of PPE and software
|
Net addition of right-of-use assets
|
Dividends from joint ventures & associates
|
Adjusted
measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
Operating
profit
|
498
|
-
|
11
|
16
|
48
|
-
|
-
|
-
|
-
|
573
|
Adjusted operating profit
|
|
Net cash generated from operations
|
682
|
63
|
-
|
4
|
-
|
-
|
(121)
|
(41)
|
-
|
587
|
Operating cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
Operating
profit
|
271
|
150
|
-
|
(24)
|
56
|
3
|
-
|
-
|
-
|
456
|
Adjusted operating profit
|
|
Net cash generated from operations
|
527
|
35
|
-
|
-
|
-
|
-
|
(133)
|
(29)
|
1
|
401
|
Operating cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below reconciles operating cash flow to net
debt.
|
all figures in £ millions
|
note
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of operating cash flow to closing net
debt
|
|
|
|
|
|
|
|
|
Operating cash flow
|
|
587
|
401
|
|
Tax
paid
|
|
(97)
|
(109)
|
|
Net
finance costs paid
|
|
(40)
|
(35)
|
|
Net
cost paid for major restructuring
|
|
(63)
|
(35)
|
|
Free cash flow
|
|
387
|
222
|
|
Dividends
paid (including to non-controlling interest)
|
|
(154)
|
(157)
|
|
Net movement of funds from operations
|
|
233
|
65
|
|
Acquisitions
and disposals
|
|
(219)
|
105
|
|
Disposal
of lease liabilities
|
|
-
|
8
|
|
Net
equity transactions
|
|
(212)
|
(383)
|
|
Other
movements on financial instruments
|
|
11
|
(2)
|
|
Movement in net debt
|
|
(187)
|
(207)
|
|
Opening
net debt
|
|
(557)
|
(350)
|
|
Closing net debt
|
12
|
(744)
|
(557)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for
the year ended 31 December 2023
14. Contingencies and other
liabilities
There are contingent Group 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.
On 25 April 2019, the European Commission published the full
decision that the United Kingdom controlled foreign company group
financing partial exemption ('FCPE') partially constitutes State
Aid. This decision was appealed by the UK Government and other
parties. On 8 June 2022 the EU General Court dismissed the appeal,
however, this decision was further appealed by the UK Government
and other parties, with the subsequent hearing having taken place
on 10 January 2024 (outcome pending). The total exposure is
calculated to be £105m (excluding interest) with a provision
of £63m held in relation to this issue. The remaining tax
receivable is disclosed as a non-current asset on the balance
sheet. The provision is calculated considering a range of possible
outcomes and applying a probability to each, resulting in a
weighted average outcome. The possible outcomes considered range
from no liability through to the full exposure (£105m). This
issue is specific to periods up to 2018 and is not a continuing
exposure.
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 1,294m (£209m) up to 31
December 2023, with additional potential exposure of BRL 24m
(£4m) 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.
The Group is also under assessment from the UK tax authorities with
the relevant years being 2019 to 2021. The maximum exposure is
calculated to be £43m with a provision of £21m currently
held in respect of this assessment. The provision is calculated
considering a range of possible outcomes and applying a probability
to each, resulting in a weighted average outcome. The possible
outcomes considered range from no liability through to the full
exposure (£43m). The point being assessed is specific to 2019
to 2021 and is not a continuing exposure.
15. Related parties
At 31 December 2022, the Group had a current liability payable to
Academy of Pop of £5m, which related to the Group's initial
capital contribution that had not yet been paid. This balance was
paid in early 2023.
There were no other material related party transactions in 2023 or
2022.
16. Events after the balance sheet
date
On 29 February 2024, the Board approved an extension to the share
buyback programme of £200m.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
PEARSON
plc
|
|
|
|
|
Date: 01
March 2024
|
|
|
|
By: /s/
NATALIE WHITE
|
|
|
|
|
|
------------------------------------
|
|
|
Natalie
White
|
|
|
Deputy
Company Secretary
|
Pearson (NYSE:PSO)
過去 株価チャート
から 12 2024 まで 1 2025
Pearson (NYSE:PSO)
過去 株価チャート
から 1 2024 まで 1 2025
