# Pearson healthy revenue and profit growth in H1

- Link: https://www.directorstalkinterviews.com/pearson-healthy-revenue-and-profit-growth-in-h1/4121013403
- Published: 2021-07-30T07:25:05+01:00
- Author: Amilia Stone

[Pearson plc](https://www.directorstalkinterviews.com/ftse-company/pearson-plc/pson.l)(
LON:PSON) has announced its interim results for the six months to 30^(th) June 2021(
Unaudited).

**Highlights**

**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**

| £m | H1 2021 | H1 2020 | Headline growth | CER growth | Underlying growth | 
| Business performance |   |   |   |   |   | 
| Sales | 1,597 | 1,492 | 7% | 16% | 17% | 
| Adjusted operating profit/(loss) | 127 | (23) | 652% | 722% | 858% | 
| Operating cash flow | 10 | (214) |   |   |   | 
| Adjusted earnings/(loss) per share (basic) | 10.5p | (5.1)p |   |   |   | 
| Dividend per share | 6.3p | 6.0p |   |   |   | 
| Net debt | (646) | (982) |   |   |   | 
| Statutory results |   |   |   |   |   | 
| Sales | 1,597 | 1,492 |   |   |   | 
| Operating profit | 9 | 107 |   |   |   | 
| Net cash generated from / (used in) operations | 79 | (117) |   |   |   | 
| Basic earnings per share | 2.3p | 6.3p |   |   |   |

*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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