Pearson 2024 Preliminary Results (Unaudited)
Pearson (PSO) reported strong 2024 financial results with 3% underlying group sales growth and adjusted operating profit of £600m, up 10% with margin expansion to 16.9%. The company achieved free cash flow of £490m with 117% conversion rate.
Key highlights include a 6% increase in full-year dividend to 24.0p and announcement of a new £350m share buyback program. The company formed a strategic partnership with AWS to enhance learning products with cloud infrastructure and AI capabilities.
Business segment performance showed varied results: Assessment & Qualifications up 3%, English Language Learning up 8%, Workforce Skills up 6%, Higher Education up 1%, while Virtual Schools decreased 1%. The company maintains its medium-term guidance for mid-single digit underlying sales growth CAGR and sustained margin improvement averaging 40 basis points annually.
Pearson (PSO) ha riportato risultati finanziari solidi per il 2024 con una crescita delle vendite di gruppo del 3% e un utile operativo rettificato di 600 milioni di sterline, in aumento del 10% con un'espansione del margine al 16,9%. L'azienda ha raggiunto un flusso di cassa libero di 490 milioni di sterline con un tasso di conversione del 117%.
I punti salienti includono un aumento del 6% del dividendo annuale a 24,0p e l'annuncio di un nuovo programma di riacquisto di azioni da 350 milioni di sterline. L'azienda ha formato una partnership strategica con AWS per migliorare i prodotti di apprendimento con infrastrutture cloud e capacità di intelligenza artificiale.
Le performance dei segmenti di business hanno mostrato risultati variabili: Assessment & Qualifications in aumento del 3%, English Language Learning in aumento dell'8%, Workforce Skills in aumento del 6%, Higher Education in aumento dell'1%, mentre le Scuole Virtuali sono diminuite dell'1%. L'azienda mantiene le sue previsioni a medio termine per una crescita delle vendite sottostanti a singolo cifra e un miglioramento sostenuto del margine che mediamente raggiunge i 40 punti base all'anno.
Pearson (PSO) informó resultados financieros sólidos para 2024 con un crecimiento del 3% en las ventas subyacentes del grupo y un beneficio operativo ajustado de 600 millones de libras esterlinas, un aumento del 10% con una expansión del margen al 16,9%. La compañía logró un flujo de caja libre de 490 millones de libras esterlinas con una tasa de conversión del 117%.
Los aspectos más destacados incluyen un aumento del 6% en el dividendo anual a 24,0p y el anuncio de un nuevo programa de recompra de acciones de 350 millones de libras esterlinas. La empresa formó una asociación estratégica con AWS para mejorar los productos de aprendizaje con infraestructura en la nube y capacidades de inteligencia artificial.
El rendimiento de los segmentos de negocio mostró resultados variados: Assessment & Qualifications aumentó un 3%, English Language Learning aumentó un 8%, Workforce Skills aumentó un 6%, Higher Education aumentó un 1%, mientras que las Escuelas Virtuales disminuyeron un 1%. La compañía mantiene su guía a medio plazo para un crecimiento de ventas subyacentes de un solo dígito y una mejora sostenida del margen que promedia 40 puntos básicos anuales.
피어슨(PSO)는 2024년 강력한 재무 결과를 보고했으며, 그룹 매출이 3% 증가하고 조정된 운영 이익이 6억 파운드로 10% 증가하며 마진이 16.9%로 확대되었습니다. 이 회사는 자유 현금 흐름이 4억 9천만 파운드에 달하며, 전환율은 117%입니다.
주요 하이라이트로는 연간 배당금 6% 증가하여 24.0p에 이르고, 3억 5천만 파운드 규모의 자사주 매입 프로그램 발표가 있습니다. 이 회사는 AWS와 전략적 파트너십을 체결하여 클라우드 인프라와 AI 기능으로 학습 제품을 향상시키고 있습니다.
비즈니스 부문 성과는 다양한 결과를 보여주었습니다: Assessment & Qualifications 3% 증가, English Language Learning 8% 증가, Workforce Skills 6% 증가, Higher Education 1% 증가, 반면 가상 학교는 1% 감소했습니다. 이 회사는 중기 목표로 중간 단일 자릿수의 기본 매출 성장 CAGR과 연평균 40베이시스 포인트의 지속적인 마진 개선을 유지합니다.
Pearson (PSO) a annoncé de solides résultats financiers pour 2024 avec une croissance des ventes sous-jacentes du groupe de 3% et un bénéfice d'exploitation ajusté de 600 millions de livres sterling, en hausse de 10% avec une expansion de la marge à 16,9%. L'entreprise a réalisé un flux de trésorerie libre de 490 millions de livres sterling avec un taux de conversion de 117%.
Les points forts incluent une augmentation de 6% du dividende annuel à 24,0p et l'annonce d'un nouveau programme de rachat d'actions de 350 millions de livres sterling. L'entreprise a formé un partenariat stratégique avec AWS pour améliorer les produits d'apprentissage avec une infrastructure cloud et des capacités d'intelligence artificielle.
Les performances des segments d'activité ont montré des résultats variés : Assessment & Qualifications en hausse de 3%, English Language Learning en hausse de 8%, Workforce Skills en hausse de 6%, Higher Education en hausse de 1%, tandis que les Écoles Virtuelles ont diminué de 1%. L'entreprise maintient ses prévisions à moyen terme pour une croissance des ventes sous-jacentes à un chiffre et une amélioration continue de la marge d'environ 40 points de base par an.
Pearson (PSO) berichtete über starke Finanzzahlen für 2024 mit einem Umsatzwachstum der Gruppe von 3% und einem bereinigten Betriebsgewinn von 600 Millionen Pfund, was einem Anstieg von 10% und einer Margenausweitung auf 16,9% entspricht. Das Unternehmen erzielte einen freien Cashflow von 490 Millionen Pfund mit einer Konversionsrate von 117%.
Wichtige Highlights sind ein 6%iger Anstieg der Jahresdividende auf 24,0p und die Ankündigung eines neuen Rückkaufprogramms für Aktien im Wert von 350 Millionen Pfund. Das Unternehmen bildete eine strategische Partnerschaft mit AWS, um Lernprodukte mit Cloud-Infrastruktur und KI-Funktionen zu verbessern.
Die Leistung der Geschäftssegmente zeigte unterschiedliche Ergebnisse: Assessment & Qualifications um 3% gestiegen, English Language Learning um 8% gestiegen, Workforce Skills um 6% gestiegen, Higher Education um 1% gestiegen, während die virtuellen Schulen um 1% zurückgingen. Das Unternehmen hält an seiner mittelfristigen Prognose für ein Umsatzwachstum im niedrigen einstelligen Bereich und einer nachhaltigen Margenverbesserung von durchschnittlich 40 Basispunkten pro Jahr fest.
- Strong free cash flow of £490m with 117% conversion rate
- New £350m share buyback program announced
- Operating profit up 10% to £600m with margin expansion to 16.9%
- 6% dividend increase to 24.0p per share
- Strategic AWS partnership to enhance AI and cloud capabilities
- English Language Learning segment grew 8%
- Workforce Skills segment up 6%
- Virtual Schools sales decreased 1% due to partner school losses
- Virtual Learning sales declined 4%
- Net debt increased to £0.9bn from £0.7bn in 2023
- Higher finance costs at £45m vs £33m in 2023
- Increased effective tax rate to 24.4% from 23.0%
Insights
Pearson's 2024 results demonstrate robust financial performance with underlying sales growth of 3% (excluding OPM and Strategic Review businesses) and a 10% increase in adjusted operating profit to
The company's cash generation stands out as particularly impressive, with free cash flow of
Segment performance shows encouraging signs across most divisions. The return to growth in Higher Education (
The dividend increase of
Pearson's strategic partnership with AWS represents a significant evolution in the company's technology strategy, extending beyond typical vendor relationships. This collaboration integrates AWS's cloud infrastructure and AI capabilities throughout Pearson's product ecosystem while establishing joint go-to-market initiatives that should accelerate enterprise adoption.
The company's accelerated AI integration across its product portfolio demonstrates a sophisticated approach to educational technology. Rather than superficial AI implementation, Pearson has developed practical applications that address specific user needs – from AI study tools for Higher Education students (which reportedly make users 4x more likely to engage in active studying) to AI-generated custom assessments that halve teachers' workload.
The Smart Lesson Generator (formerly Teaching Pal) leverages Pearson's proprietary content with generative AI to create customized educational materials, while the AI-powered Digital Language Tutor offers personalized language training for corporate clients. These implementations show Pearson is focusing on tangible productivity improvements rather than merely adding AI as a marketing feature.
Particularly promising is the company's approach to the enterprise skills market. The integration of Faethm data sets into Degreed's platform enables real-time skills gap analysis, positioning Pearson as a strategic partner in workforce transformation. Credly's milestone of 100 million unique badges demonstrates significant scale in skills credentialing – increasingly valuable as AI reshapes job requirements across industries.
The organizational change to combine enterprise sales capabilities globally under Enterprise Learning and Skills, plus the strategic transfer of the IT Pro business from Higher Education, indicates a cohesive approach to targeting corporate customers. This restructuring should improve cross-selling opportunities and streamline go-to-market strategies for enterprise offerings.
Confident in outlook building on year of good financial and strategic delivery. Further progress on AI and Enterprise priorities with new strategic partnership with AWS. Strong cash generation and financial position support launch of new
Financial Highlights
£m | 2024 | vs 2023 | £m | 2024 | 2023 | |
Business performance | Statutory results | |||||
Sales (growth ex. OPM3 and Strategic Review4) | 3,552 | + | Sales | 3,552 | 3,674 | |
Adjusted operating profit | 600 | + | Operating profit | 541 | 498 | |
Operating cash flow | 662 | + | Profit for the year | 435 | 380 | |
Free cash flow | 490 | + | Net cash generated from operations | 811 | 682 | |
Adjusted earnings per share | 62.1p | + | Basic earnings per share | 64.5p | 53.1p |
Highlights
- Underlying Group sales growth1 of
3% , excluding OPM3 and the Strategic Review4 businesses. - Group adjusted operating profit of
£600m , up10% underlying1 with 130bps margin expansion from15.6% to16.9% , underpinned by sales growth and cost efficiencies. - Free cash flow of
£490m representing free cash flow conversion of117% 5. - Full year dividend per share up
6% to 24.0p. Announcing intention to commence a£350m share buyback. - Positive outlook for 2025 in line with market expectations6. Reiterating medium term guidance for mid-single digit underlying sales growth CAGR and sustained margin improvement that will equate to an average increase of 40 basis points per annum.
- Accelerated roll out of AI across our product offering - remains a key priority in 2025.
- Further Enterprise momentum with new strategic partnership with AWS (link here):
- Extending the commercial relationship between Pearson VUE and AWS;
- Expansion of AWS Cloud infrastructure and AI capabilities to further enhance and scale our learning products and services; and
- Collaboration on joint go-to market activities to drive growth across a range of learning experiences.
Omar Abbosh, Pearson's Chief Executive, said:
"2024 was another year of delivery and strategic progress for Pearson. The application of innovative technologies, like AI, in our learning experiences, alongside a sharper focus on how we go to market, is building good momentum across our businesses.
"We also continue to focus on expanding our presence in the highly attractive Enterprise skills market at a time where Pearson can play an important role in helping bridge the critical skills gap that impacts the economy, workforce and individuals. Today's strategic partnership with AWS is another example of how in joining forces with significant industry players we can reach more learners and provide them with the tools they need to succeed.
"We are pleased to announce our intention to commence a
2025 priorities
- Deliver on 2025 market expectations6 for underlying Group sales growth, adjusted operating profit and cash flow;
- Continue to lead on the application of innovative technologies, like GenAI, in our learning and assessment experience platforms; and
- Grow Pearson's business across the Enterprise customer segment.
2024 Financial Performance
Underlying sales growth1 of
- Assessment & Qualifications delivered a solid performance across all sub business units, with sales up
3% for the full year and accelerating in the second half of 2024. - Virtual Schools sales decreased
1% , due to the previously announced partner school losses, 2024/25 academic year enrolments were up4% on a same school basis and we also opened 3 new schools. Virtual Learning sales declined4% attributable to the final portion of the OPM ASU contract in the first half of 2023. - Higher Education returned to growth with sales increasing
1% driven by continued gains in adoption share, enrolments, and pricing, partially offset by mix impacts. - English Language Learning delivered a strong performance with sales growth of
8% , driven by Institutional, with Pearson Test of English (PTE) performing well against a tough market backdrop. - Workforce Skills sales grew
6% , with a solid performance in both Vocational Qualifications and Workforce Solutions.
Adjusted operating profit1 up
- Underlying performance driven by sales growth and cost efficiencies, partially offset by investment and inflation. Adjusted operating profit margin rose to
16.9% (2023:15.6% ). - Headline adjusted operating profit growth was
5% reflecting business performance partially offset by currency movements and some portfolio changes. - Adjusted net finance costs increased to
£45m (2023:£33m ). The effective tax rate on adjusted profit before tax increased to24.4% (2023:23.0% ). - Adjusted earnings per share increased
7% to 62.1p (2023: 58.2p) reflecting adjusted operating profit growth and the reduction in issued shares as a result of share buybacks, partially offset by increased interest and tax.
Excellent cash performance
- Operating cash1 inflow increased on a headline basis from
£587m in 2023 to£662m in 2024, representing excellent cash conversion of110% . This increase is reflective of the trading performance of the business and favourable working capital movements. - This operating cash performance and a reduction in below the line reorganisation costs drove an increase in free cash flow from
£387m in 2023 to£490m in 2024, a free cash flow conversion of117% 5.
Strong balance sheet supporting continued investment and shareholder returns
- Year-end net debt of
£0.9b n (2023:£0.7b n), with free cash flow more than offset by dividends and share buybacks. Net debt / adjusted EBITDA ratio of 1.1x (2023: 1.0x). - Proposed final dividend of 16.6p (2023: 15.7p) which equates to a full year dividend of 24.0p (2023: 22.7p) an increase of
6% compared to 2023. - In 2024 we completed a
£500m share buyback which commenced in September 2023, reducing our share count by7% . Consistent with our capital allocation framework and strong free cash flow we are announcing our intention to commence a£350m share buyback. - Issued a
£350m Education Bond providing long term financing for the business. - Both Moody's and Fitch upgraded Pearson's long-term issuer ratings, moving the outlook to stable.
- Return on capital was
10.4% (2023:10.3% ) with earnings increase counterbalanced by FX changes.
Statutory results
- Sales decreased
3% on a headline basis to£3,552m (2023:£3,674m ) with currency movements and portfolio changes offsetting underlying business performance. - Statutory operating profit increased
9% to£541m (2023:£498m ) driven by increased trading profits, a reduction in property and intangible amortisation charges, a lower year on year net loss from acquisitions and disposals, partially offset by one offUK discretionary pension charges. - Net cash generated from operations of
£811m (2023:£682m ). - Statutory earnings per share of 64.5p (2023: 53.1p).
Driving performance in the core business, infusing AI into our products and services and sharpening focus on the Enterprise market
- In Assessment & Qualifications we continued to demonstrate good financial performance and strong customer renewals. Pearson VUE is making progress in expanding its test prep offering through building out the Pearson Skilling Suite and expanding its go to market capabilities in this area. We also secured several meaningful new enterprise customer contracts and renewals relevant to the Pearson VUE business including ServiceNow, Microsoft and AWS. US Student Assessment performed well, securing key customer renewals and expanding formative testing in
Arizona andNorth Dakota . InUK & International Qualifications we developed new AI features within our Exam Practice Assistant to support GCSE students preparing for their exams. In Clinical Assessment we successfully launched the 5th edition of Wechsler Adult Intelligence Scale and expanded our Digital Assessment Library for Schools (DALS) platform subscription model. - In Virtual Schools we opened 3 new schools and scaled our career and college readiness programmes to 24 schools in 2024. We also piloted a new enrolment portal, doubling the speed for enrolment, helping to drive underlying enrolment growth on a same school basis. We have also embedded AI study tools into our content to provide high school students with step-by-step assistance – leveraging technology piloted in Higher Education. For teachers, we've launched AI-generated custom assessments, halving the time it takes teachers to create an assessment.
- In Higher Education we were pleased to return to growth, and grew adoption share in US Higher Education, aided by AI study tools for students and AI MyLab and Mastering instruction tools for educators. A recent survey in the US found that Higher Education students using Pearson AI study tools are 4x more likely to engage in active and efficient studying, while educators see new opportunities to enhance instruction. We have also rolled out our AI study tools into global editions of leading higher education titles to enable access for our International students. We have been successful in scaling and monetising our Channels product. In October 2024, we began to directly sell our K-12 proprietary Advanced Placement (AP®), Dual Enrolment and Career and Technical Education (CTE) materials. Investing in a dedicated in-house sales team will enable us to expand and strengthen customer relationships with US school administrators going forward as the demand for college and career readiness programmes grows.
- In English Language Learning, we launched PTE Core, our newest test designed to meet
Canada's specific migration needs, expanded our Wizard business inBrazil driven by its online business and new government partnerships, and developed two new AI products. Smart Lesson Generator, formerly named Teaching Pal, leverages Pearson's trusted IP with generative AI to simplify educators' work and save them time by creating customised lesson content and activities. Our AI powered Digital Language Tutor is specifically designed to help businesses improve English proficiency at scale and unlock employee potential. The AI tutor offers highly realistic, personalised training, underpinned by trusted learning science, and builds on a successful pilot programme conducted with corporate clients. - Our Workforce Skills business delivered a solid performance and we continued to acquire new customers and expand existing relationships, landing major collaborations and partnerships. We announced a multi-year deal with ServiceNow to supercharge workforce development and employee experiences in the age of AI. We also expanded our partnership with Degreed which will integrate Faethm data sets into Degreed's platform, offering real-time insights into the most relevant skills across industries, allowing companies to benchmark skills, identify gaps, and prioritise key areas for upskilling. This year we have announced further strategic partnerships with Microsoft and AWS including joint go-to-market initiatives including AI upskilling. Credly crossed the 100 million unique badge milestone, with credentials representing the acquisition of skills that are critical for the future workforce, especially as AI reshapes job roles and industry standards. We launched GED & Me, the GED Testing Service Mobile App, which achieved circa 100,000 downloads in its first 6 months, with users completing the GED programme at a
10% higher rate compared to those not on the app.
Outlook
Evolution of Workforce Skills
- From January this year, Workforce Skills became Enterprise Learning and Skills, bringing together Pearson's enterprise sales capabilities globally (excluding those of Pearson VUE). In addition, sub-unit Workforce Solutions became Enterprise Solutions. Vishaal Gupta will continue to lead this part of the business.
- The enterprise focused business within Higher Education (IT Pro) has been transferred into Enterprise Learning and Skills from January this year. This business generated
£45m of revenue and£19m of adjusted operating profit in 2024.
2025 guidance
Sales | Group | In line with current market expectations6. |
Assessment & Qualifications | Sales to grow low to mid-single digit. Growth will be H2 weighted with new | |
Virtual Learning | To return to growth in H2 and the full year driven by enrolment increases, | |
Higher Education | Sales growth in 2025 will be higher than in 2024 as we build on the | |
English Language Learning | Sales growth will moderate given the likely impacts of elections on | |
Enterprise Learning and Skills | Sales to grow high single digit with Vocational Qualifications seeing solid | |
Group Profit | Adjusted Operating Profit | In line with current market expectations6. |
Interest | Adjusted net finance costs of c. | |
Tax rate | We expect the effective tax rate on adjusted profit before tax to be between | |
Cash flow | We expect a free cash flow conversion5 of 90 | |
FX | Every 1c movement in GBP:USD rate equates to approximately | |
Medium term outlook unchanged
- Beyond 2025, Pearson is positioned to deliver a mid-single digit underlying sales growth CAGR, sustained margin improvement that will equate to an average increase of 40 basis points per annum and strong free cash conversion5, in the region of
90% to100% , on average, across the period.
Financial Calendar
- 2025 Q1 Trading Update will be announced on 2 May 2025.
Executive change
Pearson announces the appointment of Sharon Hague, currently Managing Director of our US Student Assessment and
Gio Giovannelli, current President of English Language Learning, has decided to leave Pearson following a thorough transition. Gio has been instrumental in driving strong financial and operational performance, including accelerated revenue growth in our English Language Learning business unit. We thank him for his contribution.
Contacts
Investor Relations | Alex Shore Steph Crinnegan | +44 (0) 7720 947 853 +44 (0) 7780 555 351 |
Gemma Terry Brennan Matthews | +44 (0) 7841 363 216 +1 (332) 238-8785 | |
Media Teneo Pearson |
Ed Cropley Laura Ewart |
+44 (0) 7492 949 346 +44 (0) 7798 846 805 |
Results event | Pearson's prelim results presentation today at Register to join the session virtually here: |
About Pearson
At Pearson, our purpose is simple: to help people realise the life they imagine through learning. We believe that every learning opportunity is a chance for a personal breakthrough. That's why our Pearson employees are committed to creating vibrant and enriching learning experiences designed for real-life impact. We are the world's lifelong learning company, serving customers with digital content, assessments, qualifications, and data. For us, learning isn't just what we do. It's who we are. Visit us at pearsonplc.com.
Notes
Forward looking statements: Except for the historical information contained herein, the matters discussed in this statement include forward-looking statements. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing, anticipated cost savings and synergies and the execution of Pearson's strategy, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in future. They are based on numerous assumptions regarding Pearson's present and future business strategies and the environment in which it will operate in the future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside Pearson's control. These include international, national and local conditions, as well as competition. They also include other risks detailed from time to time in Pearson's publicly-filed documents and you are advised to read, in particular, the risk factors set out in Pearson's latest annual report and accounts, which can be found on its website (www.pearsonplc.com). Any forward-looking statements speak only as of the date they are made, and Pearson gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on such forward-looking statements.
Operational review
£m | 2024 | 2023 | Headline growth | CER growth1 | Underlying growth1 |
Sales | |||||
Assessment & Qualifications | 1,591 | 1,559 | 2 % | 4 % | 3 % |
Virtual Learning | 489 | 616 | (21 %) | (19 %) | (4 %) |
Higher Education | 826 | 855 | (3 %) | (1 %) | 1 % |
English Language Learning | 420 | 415 | 1 % | 8 % | 8 % |
Workforce Skills | 226 | 220 | 3 % | 4 % | 6 % |
Strategic Review | - | 9 | (100 %) | (100 %) | (100 %) |
Total | 3,552 | 3,674 | (3 %) | 0 % | 2 % |
Total, excluding OPM3 and | 3 % | ||||
Adjusted operating profit | |||||
Assessment & Qualifications | 368 | 350 | 5 % | 8 % | 7 % |
Virtual Learning | 66 | 76 | (13 %) | (9 %) | (9 %) |
Higher Education | 108 | 110 | (2 %) | 2 % | 12 % |
English Language Learning | 50 | 47 | 6 % | 30 % | 30 % |
Workforce Skills | 8 | (8) | 200 % | 188 % | 200 % |
Strategic Review | - | (2) | 100 % | 100 % | 100 % |
Total | 600 | 573 | 5 % | 9 % | 10 % |
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 11. c) Constant exchange rates are calculated by assuming the average FX in the prior year prevailed through the current year. |
2 Headline growth rate. |
3 We completed the sale of the Pearson Online Learning Services (POLS) business in June 2023 and as such have removed it from underlying measures throughout. Within this specific measure we exclude our entire OPM business (POLS and ASU) to aid comparison to guidance. |
4 Strategic Review is sales in international courseware local publishing businesses which have been wound down. As expected, there are no sales in these businesses in 2024. |
5 Free cash flow conversion calculated as free cash flow divided by adjusted earnings. |
6 2025 consensus on the Pearson website dated 27th January 2025; underlying sales growth |
7 Pearson VUE test volumes include PTE and GED tests but sales for each of these tests are reflected in the English Language Learning and Workforce Skills business units respectively. |
Assessment & Qualifications
In Assessment & Qualifications, sales increased
Pearson VUE sales were up
In US Student Assessment, sales increased
In Clinical Assessment, sales increased
In
We expect to deliver low to mid-single digit underlying sales growth in 2025. We will focus on maintaining our leading positions through contract renewals and new wins, together with emerging growth opportunities that include: monetising our test prep capabilities; international expansion; AI scoring and proctoring; formative assessment within US Student Assessment; pharma and ongoing digital product expansion in Clinical Assessment.
Virtual Learning
In Virtual Learning, sales decreased
Virtual Schools sales were down
We expect enrolments to increase for the 2025/26 academic year, benefitting from new school openings and operational changes, with the business unit returning to growth in H2 and for the full year in 2025. We remain confident in stronger longer-term growth as we continue to scale our career and college readiness programmes, drive improvements in our enrolment performance and look to expand our school footprint through new school openings.
Higher Education
In Higher Education, sales grew
In the US, sales grew
We expect sales growth in 2025 to be higher than in 2024. We will focus on continuing to win adoption share through sales excellence and ongoing product improvements, including AI powered tools, further scaling our Channels product, driving improved International performance and expanding market opportunity into new collar skills. 2025 will be a transitionary year for our K-12 channel as we ramp up our direct sales team selling our proprietary AP®, Dual Enrolment, and CTE materials into US states and school districts.
English Language Learning
In English Language Learning, sales were up
PTE performed well against a tough market backdrop of tightening migration policies. While volumes declined
We expect sales growth to moderate in 2025, driven by strength in Institutional and Mondly offset by PTE. We expect PTE to decline due to a continuation of the challenging market backdrop, including upcoming elections in
Workforce Skills
In Workforce Skills, sales were up
Sales growth was driven by solid performances in both the Vocational Qualifications and Workforce Solutions businesses. The Vocational Qualifications business grew by
From January 2025, Workforce Skills became Enterprise Learning and Skills, bringing together
Pearson's enterprise sales capabilities globally (excluding those in Pearson VUE). We expect to deliver high single digit sales growth driven by enterprise sales momentum in Enterprise Solutions, aided by the new business unit structure and go-to-market approach, as well as international expansion in Vocational Qualifications.
2024 KPIs
KPI | Objective | KPI Measure | 2024 Actual | 2023 Actual |
Digital Growth | Drive digital | Underlying growth* in | 4 % | 8 % |
Virtual Schools US | 96k | 100k | ||
OnVUE volumes | 2.3m | 2.7m | ||
Higher Education US digital | 10.1m | 9.8m | ||
PTE volume | 1,108k | 1,231k | ||
Consumer | Create | NPS for Connections | +67 | +67 |
NPS for PTE | +60 | +55 | ||
Pearson+ registered users | 3.06m | 3.03m | ||
Mondly paid subscriptions | 495k | 432k | ||
Credly new registered | 6.0m | 5.3m | ||
Product | Improve the | PTE speed of score return | 1.3 days | 1.0 days |
VUE test volumes*** | 20.7m | 20.7m | ||
VUE Partner retention | 99.2 % | 93.6 % | ||
Workforce Skills number of | 1,509 | 1,547 | ||
Credly enterprise customer | 91 % | 88 % | ||
Higher Education product | 4.7m | 4.5m | ||
Culture of | Build a | Employee engagement
Pearson uses the | 4.16 Grand Mean on a 5 | 4.09 Grand Mean on a 5 |
Investing in diverse talent
The % of responses who
| In the last six | In the last six | ||
This last year, I have | This last year, I have | |||
Culture of Inclusion Index
The GrandMean of 3
- At work, I am treated with - My company is committed - If I raised a concern about
| 4.24 GrandMean on a 5 point Likert | 4.21 GrandMean on a 5 point Likert | ||
Increasing diverse talent
Objective: Increase BIPOC | Representation of | Representation of | ||
Global % of female employees = | Global % of female | |||
Sustainability | Reduce | Progress against achieving |
|
|
* 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 2023. Excludes private-pay students at Pearson Online Academy and district partnerships. This is more closely aligned to |
business processes. |
*** From 2024 Pearson VUE test volumes now include PDRI tests. |
**** Previously reported 'Workforce Skills enterprise customer net retention rate' which combined Credly and Faethm. Methodology change to only include Credly customer retention going forward as Faethm is not a retention based business. |
***** The net emissions reduction figures have been assured by an independent third-party, SLR Consulting Ltd. % reduction in total tCO2 above is calculated using a location methodology. In 2024, we updated our 2018 and 2023 GHG emissions baselines to reflect recent acquisitions and disposals, and to align with changes in data methodology as a result of transitioning to a new emissions data management system. Annual reductions include a |
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
The headline basis simply compares the reported results for 2024 with those for 2023. We also present sales and profits on an underlying basis which excludes the effects of exchange, the effect of portfolio changes arising from acquisitions and disposals and the impact of adopting new accounting standards that are not retrospectively applied. Our portfolio change is calculated by excluding sales and profits made by businesses disposed in either 2024 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 Pearson Online Learning Services ('POLS'), Pearson College, our international courseware local publishing business in
On an underlying basis, sales increased by
Adjusted operating profit includes the results from discontinued operations when relevant but excludes charges for acquired intangible amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation and associated property charges and one-off costs related to the
All figures in £ millions | 2024 | 2023 | |
Operating profit | 541 | 498 | |
Add back: Cost of major reorganisation | (2) | - | |
Add back: Property charges | - | 11 | |
Add back: Intangible charges | 41 | 48 | |
Add back: | 13 | - | |
Add back: Other net gains and losses | 7 | 16 | |
Adjusted operating profit | 600 | 573 |
In 2024, the costs of major reorganisation relate to a release of
In 2024, there are no property charges. In 2023, charges of
Intangible amortisation charges in 2024 were
Other net gains and losses in 2024 relate to costs arising from prior year acquisitions and disposals, partially offset by a gain on the partial disposal of an investment in an associate. In 2023, other net gains and losses 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, which were more than offset by losses on the disposal of Pearson College and costs related to disposals and acquisitions.
The reported operating profit of
Net finance costs
Net finance costs increased on a headline basis from a net cost of
Adjusted net finance costs reflected in adjusted earnings in 2024 are
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 as it is considered part of the acquisition cost or disposal proceeds rather than being reflective of the underlying financing costs of the Group. Foreign exchange, fair value movements on investments classified as FVTPL and other gains and losses on derivatives are excluded from adjusted earnings as they represent short-term fluctuations in market value and are subject to significant volatility. Other gains and losses may not be realised in due course as it is normally the intention to hold the related instruments to maturity. Interest on certain tax provisions is excluded from our adjusted measure in order to mirror the treatment of the underlying tax item. In 2024, the total of these items excluded from adjusted earnings was income of
Taxation
The reported tax charge on a statutory basis in 2024 was
The tax on adjusted earnings in 2024 was a charge of
In 2024, there was a net tax payment of
A net deferred tax liability of
Other comprehensive income
Included in other comprehensive income are the net exchange differences on translation of foreign operations. The loss on translation of
Also included in other comprehensive income in 2024 is an actuarial gain of
Fair value losses of
In 2023, a gain of
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 11 to the condensed consolidated financial statements). Operating cash flow increased on a headline basis by
The equivalent statutory measure, net cash generated from operations, was
Free cash flow increased on a headline basis by
In 2024, there was an overall
The movement on trade and other liabilities is driven by the payment of deferred consideration relating to previous acquisitions, the movement on the accrual for share buyback programmes as well as movements in working capital balances.
Liquidity and capital resources
The Group's net debt increased from
In 2024, the Group issued a new
At 31 December 2024, the Group had available liquidity of
At 31 December 2024, the Group was rated BBB (stable outlook) with Fitch and Baa2 (stable outlook) with Moody's.
Post-retirement benefits
Pearson operates a variety of pension and post-retirement plans. The
The charge to profit in respect of worldwide pensions and post-retirement benefits amounted to
The overall surplus on
Businesses acquired and disposed
There were no material acquisitions of subsidiaries in 2024. In March 2023, the Group completed the acquisition of
The cash outflow in 2024 relating to acquisitions of subsidiaries was
There were no disposals of subsidiaries in 2024. In 2023, the Group disposed of its interests in its POLS businesses in the US,
Dividends
The dividend accounted for in our 2024 financial statements totalling
The final dividend will be paid on 9 May 2025 to shareholders who are on the register of members at close of business on 21 March 2025 (the Record Date). Shareholders may elect to reinvest their dividend in the Dividend Reinvestment Plan (DRIP). The last date for receipt of DRIP elections and revocations will be 15 April 2025. A Dividend Reinvestment Plan (DRIP) is provided by Computershare Investor Services. The DRIP enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.computershare.com/investor
Share buyback
On 20 September 2023, the Board approved a
On 27 February 2025, the Board approved a
CONDENSED CONSOLIDATED INCOME STATEMENT | |||
for the year ended 31 December 2024 | |||
all figures in £ millions (unaudited) | note | 2024 | 2023 |
Continuing operations | |||
Sales | 2 | 3,552 | 3,674 |
Cost of goods sold | (1,741) | (1,839) | |
Gross profit | 1,811 | 1,835 | |
Operating expenses | (1,265) | (1,322) | |
Other net gains and losses | 2 | (7) | (16) |
Share of results of joint ventures and associates | 2 | 1 | |
Operating profit | 2 | 541 | 498 |
Finance costs | 3 | (112) | (81) |
Finance income | 3 | 81 | 76 |
Profit before tax | 510 | 493 | |
Income tax | 4 | (75) | (113) |
Profit for the year | 435 | 380 | |
Attributable to: | |||
Equity holders of the company | 434 | 378 | |
Non-controlling interest | 1 | 2 | |
Earnings per share (in pence per share) | |||
Basic | 5 | 64.5p | 53.1p |
Diluted | 5 | 63.5p | 52.7p |
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 2024 | |||
all figures in £ millions (unaudited) | 2024 | 2023 | |
Profit for the year | 435 | 380 | |
Items that may be reclassified to the income statement | |||
Net exchange differences on translation of foreign operations | (35) | (177) | |
Currency translation adjustment disposed | - | (122) | |
Attributable tax | 12 | - | |
Items that are not reclassified to the income statement | |||
Fair value (loss) / gain on other financial assets | (2) | 1 | |
Attributable tax | - | - | |
Remeasurement of retirement benefit obligations | 5 | (85) | |
Attributable tax | (2) | 20 | |
Other comprehensive expense for the year | (22) | (363) | |
Total comprehensive income for the year | 413 | 17 | |
Attributable to: | |||
Equity holders of the company | 412 | 16 | |
Non-controlling interest | 1 | 1 | |
CONDENSED CONSOLIDATED BALANCE SHEET | |||
as at 31 December 2024 | |||
all figures in £ millions (unaudited) | note | 2024 | 2023 |
Property, plant and equipment | 216 | 217 | |
Investment property | 77 | 79 | |
Intangible assets | 9 | 3,026 | 3,091 |
Investments in joint ventures and associates | 12 | 22 | |
Deferred income tax assets | 52 | 35 | |
Financial assets – derivative financial instruments | 20 | 32 | |
Retirement benefit assets | 491 | 499 | |
Other financial assets | 141 | 143 | |
Income tax assets | 4 | 41 | |
Trade and other receivables | 125 | 135 | |
Non-current assets | 4,164 | 4,294 | |
Intangible assets – product development | 947 | 947 | |
Inventories | 74 | 91 | |
Trade and other receivables | 1,030 | 1,050 | |
Financial assets – derivative financial instruments | 31 | 16 | |
Income tax assets | 103 | 15 | |
Cash and cash equivalents (excluding overdrafts) | 543 | 312 | |
Current assets | 2,728 | 2,431 | |
Assets classified as held for sale | - | 2 | |
Total assets | 6,892 | 6,727 | |
Financial liabilities – borrowings | (1,157) | (1,094) | |
Financial liabilities – derivative financial instruments | (4) | (38) | |
Deferred income tax liabilities | (58) | (46) | |
Retirement benefit obligations | (41) | (44) | |
Provisions for other liabilities and charges | (13) | (15) | |
Other liabilities | (83) | (98) | |
Non-current liabilities | (1,356) | (1,335) | |
Trade and other liabilities | (1,054) | (1,275) | |
Financial liabilities – borrowings | (315) | (67) | |
Financial liabilities – derivative financial instruments | (54) | (5) | |
Income tax liabilities | (27) | (32) | |
Provisions for other liabilities and charges | (23) | (25) | |
Current liabilities | (1,473) | (1,404) | |
Liabilities classified as held for sale | - | - | |
Total liabilities | (2,829) | (2,739) | |
Net assets | 4,063 | 3,988 | |
Share capital | 166 | 174 | |
Share premium | 2,649 | 2,642 | |
Treasury shares | (7) | (19) | |
Reserves | 1,240 | 1,177 | |
Total equity attributable to equity holders of the company | 4,048 | 3,974 | |
Non-controlling interest | 15 | 14 | |
Total equity | 4,063 | 3,988 | |
The condensed consolidated financial statements were approved by the Board on 27 February 2025. |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||
for the year ended 31 December 2024 | ||||||||||
Equity attributable to equity holders of the company | ||||||||||
all figures in £ millions (unaudited) | Share | Share | Treasury | Capital | Fair | Translation | Retained | Total | Non- | Total |
2024 | ||||||||||
At 1 January 2024 | 174 | 2,642 | (19) | 33 | (12) | 411 | 745 | 3,974 | 14 | 3,988 |
Profit for the year | - | - | - | - | - | - | 434 | 434 | 1 | 435 |
Other comprehensive (expense) / income | - | - | - | - | (2) | (35) | 15 | (22) | - | (22) |
Total comprehensive (expense) / income | - | - | - | - | (2) | (35) | 449 | 412 | 1 | 413 |
Equity-settled transactions1 | - | - | - | - | - | - | 37 | 37 | - | 37 |
Taxation on equity-settled transactions | - | - | - | - | - | - | 11 | 11 | - | 11 |
Issue of ordinary shares | - | 7 | - | - | - | - | - | 7 | - | 7 |
Buyback of equity | (8) | - | - | 8 | - | - | (204) | (204) | - | (204) |
Purchase of treasury shares | - | - | (33) | - | - | - | - | (33) | - | (33) |
Release of treasury shares | - | - | 45 | - | - | - | (45) | - | - | - |
Dividends | - | - | - | - | - | - | (156) | (156) | - | (156) |
At 31 December 2024 | 166 | 2,649 | (7) | 41 | (14) | 376 | 837 | 4,048 | 15 | 4,063 |
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 |
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 |
1. Equity-settled transactions are presented net of withholding taxes that the Group is obligated to pay on behalf of employees. The | ||||||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT | |||
for the year ended 31 December 2024 | |||
all figures in £ millions (unaudited) | note | 2024 | 2023 |
Cash flows from operating activities | |||
Profit before tax | 510 | 493 | |
Net finance costs | 3 | 31 | 5 |
Depreciation & impairment – PPE, investment property & assets held for sale | 77 | 90 | |
Amortisation and impairment – software | 117 | 123 | |
Amortisation and impairment – acquired intangible assets | 41 | 46 | |
Other net gains and losses | 5 | 13 | |
Product development capital expenditure | (284) | (300) | |
Product development amortisation | 291 | 284 | |
Share-based payment costs | 44 | 40 | |
Change in inventories | 15 | 9 | |
Change in trade and other receivables | 32 | (24) | |
Change in trade and other liabilities | (99) | (20) | |
Change in provisions for other liabilities and charges | (1) | (61) | |
Other movements | 32 | (16) | |
Net cash generated from operations | 811 | 682 | |
Interest paid | (65) | (60) | |
Tax paid | (119) | (97) | |
Net cash generated from operating activities | 627 | 525 | |
Cash flows from investing activities | |||
Acquisition of subsidiaries, net of cash acquired | (39) | (171) | |
Acquisition of joint ventures and associates | - | (5) | |
Purchase of investments | (7) | (8) | |
Purchase of property, plant and equipment | (33) | (30) | |
Purchase of intangible assets | (91) | (96) | |
Disposal of subsidiaries, net of cash disposed | (7) | (38) | |
Proceeds from sale of investments | - | 7 | |
Proceeds from sale of property, plant and equipment | 6 | 5 | |
Lease receivables repaid including disposals | 18 | 15 | |
Interest received | 20 | 20 | |
Dividends received | 2 | - | |
Net cash used in from investing activities | (131) | (301) | |
Cash flows from financing activities | |||
Proceeds from issue of ordinary shares | 7 | 9 | |
Buyback of equity | (318) | (186) | |
Settlement of share-based payments | (40) | (35) | |
Proceeds from borrowings | 1,265 | 285 | |
Repayment of borrowings | (921) | (285) | |
Repayment of lease liabilities | (78) | (84) | |
Dividends paid to company's shareholders | (156) | (154) | |
Net cash used in financing activities | (241) | (450) | |
Effects of exchange rate changes on cash and cash equivalents | (21) | (8) | |
Net increase / (decrease) in cash and cash equivalents | 234 | (234) | |
Cash and cash equivalents at beginning of year | 309 | 543 | |
Cash and cash equivalents at end of year | 543 | 309 | |
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 2024
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
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 2023 Annual Report. There are no changes to accounting standards that have a material impact on the condensed consolidated financial statements for the year ended 31 December 2024.
In assessing the Group's ability to continue as a going concern for the period to 30 June 2026, the Board analysed a variety of downside scenarios including a severe but plausible scenario where the Group is impacted by all principal risks in both 2025 and 2026, 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 free cash flow throughout 2025 to 2026.
At 31 December 2024, the Group had available liquidity of
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 2026. The condensed consolidated financial statements have therefore been prepared on a going concern basis.
The preparation of condensed consolidated financial statements requires the use of certain critical accounting assumptions. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the condensed consolidated financial statements, have been set out in the 2023 Annual Report. In 2024, the classification of the results and cash flows of disposed businesses as discontinued operations is no longer considered to be a key judgement, and the valuation of acquired intangible assets recognised on the acquisition of a business and the recoverability of right-of-use assets are no longer considered to be key areas of estimation.
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 2024. 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 2024 or the assessment of going concern for the period to 30 June 2026. 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 2023 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 consolidated financial statements for the year ended 31 December 2023 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 consolidated financial statements for the year ended 31 December 2024. The Group's full consolidated financial statements will be approved by the Board of Directors and reported on by the auditors in March 2025. Accordingly, the financial information for 2024 is presented unaudited in the preliminary announcement.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
2. Segment information
The Group has five main global business units, which are each considered separate operating segments for management and reporting purposes. These five business units are Assessment & Qualifications, Virtual Learning, English Language Learning, Higher Education and Workforce Skills. In addition, the International Courseware local publishing businesses, most of which were disposed in 2022 with the remainder being wound down in 2023, were being managed as a separate business unit, known as Strategic Review. There are no longer any reported results for the Strategic Review business unit.
all figures in £ millions | 2024 | 2023 | |
Sales | |||
Assessments & Qualifications | 1,591 | 1,559 | |
Virtual Learning | 489 | 616 | |
English Language Learning | 420 | 415 | |
Workforce Skills | 226 | 220 | |
Higher Education | 826 | 855 | |
Strategic Review | - | 9 | |
Total sales | 3,552 | 3,674 | |
Adjusted operating profit | |||
Assessments & Qualifications | 368 | 350 | |
Virtual Learning | 66 | 76 | |
English Language Learning | 50 | 47 | |
Workforce Skills | 8 | (8) | |
Higher Education | 108 | 110 | |
Strategic Review | - | (2) | |
Total adjusted operating profit | 600 | 573 | |
| |||
all figures in £ millions | 2024 | 2023 | |
Adjusted operating profit | 600 | 573 | |
Cost of major reorganisation | 2 | - | |
Property charges | - | (11) | |
Intangible charges | (41) | (48) | |
(13) | - | ||
Other net gains and losses | (7) | (16) | |
Operating profit | 541 | 498 | |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
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 and one-off costs related to the
Costs of major reorganisation – In 2024, there is a release of
Property charges – In 2024, there were no property charges. Charges of
Intangible charges – These represent amortisation 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 2024 were
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 2024 are costs related to prior year acquisitions and disposals, partially offset by a gain on the partial disposal of our investment in an associate. In 2023, other net gains and losses 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, which were more than offset by losses on the disposal of Pearson College and costs related to current and prior year 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 reorganisation programmes but excludes the significant associated costs, and adjusted operating profit excludes costs related to acquisitions, and the amortisation of intangibles acquired in business combinations, but does not exclude the associated revenues. The Group's definition of adjusted operating profit may not be comparable to other similarly titled measures reported by other companies.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
3. Net finance costs
all figures in £ millions | 2024 | 2023 | |
Interest payable on financial liabilities at amortised cost and associated derivatives | (48) | (34) | |
Interest on lease liabilities | (22) | (23) | |
Interest on deferred and contingent consideration | (2) | (4) | |
Fair value movements on investments held at FVTPL | (11) | - | |
Net foreign exchange losses | (3) | - | |
Fair value movements on derivatives | (19) | (20) | |
Interest on provisions for uncertain tax positions | (7) | - | |
Finance costs | (112) | (81) | |
Interest receivable on financial assets at amortised cost | 25 | 16 | |
Interest on lease receivables | 4 | 4 | |
Net finance income in respect of retirement benefits | 21 | 26 | |
Fair value movements on investments held at FVTPL | - | 13 | |
Net foreign exchange gains | - | 3 | |
Fair value movements on derivatives | 26 | 10 | |
Interest on provisions for uncertain tax positions | 5 | 4 | |
Finance income | 81 | 76 | |
Analysed as: | |||
Net interest payable reflected in adjusted earnings | (45) | (33) | |
Other net finance income | 14 | 28 | |
Net finance costs | (31) | (5) | |
| |||
all figures in £ millions | 2024 | 2023 | |
Net finance costs | (31) | (5) | |
Net finance income in respect of retirement benefits | (21) | (26) | |
Interest on deferred and contingent consideration | 2 | 4 | |
Fair value movements on investments held at FVTPL | 11 | (13) | |
Net foreign exchange losses / (gains) | 3 | (3) | |
Fair value movements on derivatives | (7) | 10 | |
Interest on provisions for uncertain tax positions | (2) | - | |
Adjusted net finance costs | (45) | (33) | |
Net finance income relating to retirement benefits has been excluded from adjusted earnings as we believe the income statement presentation does not reflect the economic substance of the underlying assets and liabilities. Also excluded are interest costs relating to acquisition or disposal transactions as it is considered part of the acquisition cost or disposal proceeds rather than being reflective of the underlying financing costs of the Group. Foreign exchange, fair value movements on investments classified as FVTPL and other gains and losses on derivatives are excluded from adjusted earnings as they represent short-term fluctuations in market value and are subject to significant volatility. Other gains and losses may not be realised in due course as it is normally the intention to hold the related instruments to maturity. Interest on certain tax provisions is excluded from our adjusted measure in order to mirror the treatment of the underlying tax item.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
4. Income tax
all figures in £ millions | 2024 | 2023 | |
Profit before tax | 510 | 493 | |
Tax calculated at | (127) | (116) | |
Effect of overseas tax rate | (1) | (1) | |
Non-deductible expenses | 3 | (6) | |
Impact of | - | (1) | |
State Aid provision release | 63 | - | |
Other tax items | (13) | 11 | |
Income tax charge | (75) | (113) | |
Tax rate reflected in statutory earnings | 14.7 % | 23.0 % |
The reduction in the statutory rate of tax in 2024 is principally due to the impact of the favourable State Aid decision in September 2024 and subsequent release of the provision held in relation to this issue.
On 25 April 2019, the European Commission published its final decision that the
In 2024, other tax items of
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
4. Income tax continued
Adjusted income tax is the tax measure used in calculating adjusted earnings. The table below reconciles the statutory income tax charge to the adjusted income tax charge.
all figures in £ millions | 2024 | 2023 | |
Income tax charge | (75) | (113) | |
Tax on cost of major reorganisation | 1 | - | |
Tax on property charges | - | (3) | |
Tax on other net gains and losses | - | (10) | |
Tax on intangible charges | (10) | (11) | |
Tax on | (3) | - | |
Tax on other net finance costs | 5 | 7 | |
Tax on goodwill and intangibles | 4 | 4 | |
Tax on | - | 1 | |
State Aid provision release | (63) | - | |
Movement in provision for tax uncertainties | 6 | - | |
Other tax items | (1) | 1 | |
Adjusted income tax charge | (136) | (124) | |
Adjusted profit before tax | 555 | 540 | |
Tax rate reflected in adjusted earnings | 24.4 % | 23.0 % |
The adjusted income tax charge excludes the tax benefit or charge on items excluded from adjusted profit before tax (see notes 2 and 3).
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.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
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 | 2024 | 2023 | |
Earnings for the year | 435 | 380 | |
Non-controlling interest | (1) | (2) | |
Earnings attributable to equity holders | 434 | 378 | |
Weighted average number of shares (millions) | 673.0 | 711.5 | |
Effect of dilutive share options (millions) | 11.0 | 5.8 | |
Weighted average number of shares (millions) for diluted earnings | 684.0 | 717.3 | |
Earnings per share (in pence per share) | |||
Basic | 64.5p | 53.1p | |
Diluted | 63.5p | 52.7p |
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 reorganisation programmes and certain other items that are also not representative of underlying performance (see notes 2, 3 and 4 for further information and reconciliation to equivalent statutory measures). The adjusted earnings per share includes both continuing and discontinued businesses when relevant. The Group's definition of adjusted earnings per share may not be comparable to other similarly titled measures reported by other companies.
all figures in £ millions | note | 2024 | 2023 |
Adjusted operating profit | 2 | 600 | 573 |
Adjusted net finance costs | 3 | (45) | (33) |
Adjusted income tax | 4 | (136) | (124) |
Non-controlling interest | (1) | (2) | |
Adjusted earnings | 418 | 414 | |
Weighted average number of shares (millions) | 673.0 | 711.5 | |
Weighted average number of shares (millions) for diluted earnings | 684.0 | 717.3 | |
Adjusted earnings per share - basic | 62.1p | 58.2p | |
Adjusted earnings per share - diluted | 61.1p | 57.7p |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
7. Dividends
all figures in £ millions | 2024 | 2023 | |
Amounts recognised as distributions to equity shareholders in the year | 156 | 155 |
The Directors are proposing a final dividend of 16.6p per equity share, payable on 9 May 2025 to shareholders on the register at the close of business on 21 March 2025. This final dividend, which will absorb an estimated
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:
2024 | 2023 | ||
Average rate for profits | 1.28 | 1.25 | |
Year end rate | 1.25 | 1.27 |
9. Non-current intangible assets
all figures in £ millions | 2024 | 2023 | |
Goodwill | 2,437 | 2,434 | |
Other intangibles | 589 | 657 | |
Non-current intangible assets | 3,026 | 3,091 |
There were no significant acquisitions in 2024. In 2023, acquisitions resulted in the recognition of additional goodwill of
There were no significant impairments to acquisition related or other intangibles in 2024 or 2023.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
10. Net debt
all figures in £ millions | 2024 | 2023 | |
Non-current assets | |||
Derivative financial instruments | 20 | 32 | |
Trade and other receivables – investment in finance lease | 64 | 82 | |
Current assets | |||
Derivative financial instruments | 31 | 16 | |
Trade and other receivables – investment in finance lease | 19 | 18 | |
Cash and cash equivalents (excluding overdrafts) | 543 | 312 | |
Non-current liabilities | |||
Borrowings | (1,157) | (1,094) | |
Derivative financial instruments | (4) | (38) | |
Current liabilities | |||
Borrowings (including overdrafts) | (315) | (67) | |
Derivative financial instruments | (54) | (5) | |
Net debt | (853) | (744) |
Included in borrowings at 31 December 2024 are lease liabilities of
In 2024, the Group issued a new
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
11. 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 £ | Statutory | Cost of | Property | Other net | Intangible |
| Purchase/ | Net addition | Dividends | Adjusted | ||||||||||||
2024 | ||||||||||||||||||||||
Operating profit | 541 | (2) | - | 7 | 41 | 13 | - | - | - | 600 | Adjusted | |||||||||||
Net cash | 811 | 8 | - | 5 | - | - | (118) | (46) | 2 | 662 | Operating | |||||||||||
2023 | ||||||||||||||||||||||
Operating profit | 498 | - | 11 | 16 | 48 | - | - | - | - | 573 | Adjusted | |||||||||||
Net cash | 682 | 63 | - | 4 | - | - | (121) | (41) | - | 587 | Operating | |||||||||||
The table below reconciles operating cash flow to net debt.
all figures in £ millions | note | 2024 | 2023 |
Operating cash flow | 662 | 587 | |
Tax paid | (119) | (97) | |
Net finance costs paid | (45) | (40) | |
Net cost paid for major reorganisation | (8) | (63) | |
Free cash flow | 490 | 387 | |
Dividends paid (including to non-controlling interest) | (156) | (154) | |
Net movement of funds from operations | 334 | 233 | |
Acquisitions and disposals | (58) | (219) | |
Net equity transactions | (351) | (212) | |
Other movements on financial instruments | (34) | 11 | |
Movement in net debt | (109) | (187) | |
Opening net debt | (744) | (557) | |
Closing net debt | 10 | (853) | (744) |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
12. Contingencies and other liabilities
There are Group contingent liabilities that arise in the normal course of business in respect of indemnities, warranties and guarantees in relation to former subsidiaries and in respect of guarantees in relation to subsidiaries, joint ventures and associates. In addition, there are contingent liabilities of the Group in respect of unsettled or disputed tax liabilities, legal claims, contract disputes, royalties, copyright fees, permissions and other rights. None of these claims are expected to result in a material gain or loss to the Group.
The Group is under assessment from the tax authorities in
13. Related parties
There were no material related party transactions in the period that have materially affected the financial position or performance of the Group and no guarantees have been provided to related parties in the year.
14. Events after the balance sheet date
On 27 February 2025, the Board approved a
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SOURCE Pearson
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