Pearson healthy revenue and profit growth in H1

Brand growth

Pearson plc (LON:PSON) has announced its interim results for the six months to 30th June 2021 (Unaudited).


Underlying revenue up 17% to £1,597m

· Global Online Learning up 25% driven by strong growth in US Virtual Schools; modest growth in OPM with good underlying growth offset by discontinued programs.

· Global Assessment grew 34% with growth across all divisions, following the closure of test centres and schools and exam cancellations in 2020.

· North American Courseware up 2%, driven by a recovery in Canada which more than offset a 2% decline in US Higher Education Courseware.

· International grew 8% with growth in courseware, clinical assessment and PTE following school, bookstore and test centre closures last year.

Adjusted operating profit of £127m, following loss of £(23)m in H1 2020

· Recovery with operating leverage from trading, cost savings, and favourable timing partially offset by inflation and FX.

· Adjusted EPS 10.5p (H1 2020: loss of (5.1)p).

· Net interest payable of £27m (H1 2020: £27m). Interest on borrowings increased slightly, offset by favourable timing and a one-off gain following the close out of interest rate swaps.

Strong balance sheet and cash flow with H1 net debt of £646m (H1 2020: £982m)

· Interim dividend of 6.3p declared (H1 2020: 6.0p), an increase of 5%.

· Available liquidity of approximately £1.4bn at the end of the period.

Statutory results

· Sales increased 7% to £1,597m (2020: £1,492m) reflecting underlying performance, partially offset by portfolio changes and currency movements.

· Statutory operating profit £9m in H1 2021 (H1 2020: £107m), with the decrease due to the profit on disposal of Penguin Random House in 2020 and restructuring costs in 2021 partially offset by improved trading and reduced intangible charges.

· Statutory EPS 2.3p (H1 2020: 6.3p).

Early strategic progress

· Implementation of new organisational structure with management team in place for H2.

· Strategic review of international courseware local publishing businesses progressed.

· Pearson+, our new college learning app for US students launched today:

o Enables direct relationship with millions of students.

o Accelerates recapture of secondary market.

o Flexible and affordable subscription plans.

2021 outlook

· H2 revenue expectations broadly consistent with assumptions outlined on 8 March 2021*:

o Virtual Learning revenue flat with enrolments in Virtual Schools broadly flat for 2021/22, and discontinued programs in OPM offsetting underlying growth.

o Higher Education to decline as expected; less than seen in recent years.

o School Assessment growth to offset performance in Professional Certification after strong H2 2020 due to pent up demand.

o Ongoing growth in Workforce Skills.

o English Language Learning impacted by continuing COVID-19 pressure on migration and mobility, with further local lockdowns in key market Australia and borders expected to remain closed until 2022.

o International markets opening more slowly than hoped given new COVID-19 variants.

· We continue to expect adjusted operating profit for FY21 to be in line with market expectations.**

Financial summary

£mH1 2021H1 2020Headline growthCER growthUnderlying growth
Business performance     
Adjusted operating profit/(loss)127(23)652%722%858%
Operating cash flow10(214)   
Adjusted earnings/(loss) per share (basic)10.5p(5.1)p   
Dividend per share6.3p6.0p   
Net debt(646)(982)   
Statutory results     
Operating profit9107   
Net cash generated from / (used in) operations79(117)   
Basic earnings per share2.3p6.3p   

*Outlook commentary presented in our new divisions; the group will be managed and reported this way in the second half.

** Pearson VUMA published consensus on 3 March 2021; adjusted operating profit £377m at USD:GBP 1.36.

Throughout this announcement: a) Growth rates are stated on an underlying basis unless otherwise stated. Underlying growth rates exclude currency movements, and portfolio changes. b) The ‘business performance’ measures are non-GAAP measures and reconciliations to the equivalent statutory heading under IFRS are included in notes to the attached condensed consolidated financial statements 2, 3, 4, 5, 7, and 17. 

Andy Bird, Chief Executive said:

“Pearson has made good strategic, operational and financial progress in the first half of 2021 leading to healthy revenue and profit growth in the period. This reflects a strong rebound from 2020 with encouraging momentum in the underlying business. We are pleased to declare an interim dividend of 6.3p for our shareholders.

“Today we have reached a significant milestone in our direct-to-consumer strategy with the launch of our new college app, Pearson+. This will provide learners with the accessible, flexible and affordable resources they need for success. It also enables us to create direct relationships with learners and to continue to engage with them as they move into their careers.”

“Whilst there’s still much to do in the second half, with the key back to school selling season ahead of us and notwithstanding ongoing COVID-related uncertainty in some of our major markets, we are moving with pace and purpose and we remain on track to meet current market expectations.”

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