Slide 1: Pearson 2023 Interim Results
Pearson 2023 Interim Results 31st July 2023
Slide 2: Forward-looking statements
Forward-looking statements
Slide 3: Key messages
Key messages Significant profit growth Excellent H1 financial and margin expansion performance, full year reflecting benefits of cost expectations reaffirmed efficiency programme Continued momentum Confident in group with Pearson+ as guidance for 2023 paid subscriptions and the medium-term increased
Slide 4: Continued operational and strategic progress
Continued operational and strategic progress English Language Virtual Assessment Higher Workforce Learning Learning & Qualifications Education Skills • Recognition for • Launching • New programme • Re-organisation of • Signed contract PTE by Canadian Connections launched for U.S. TSA sales force hel
Slide 5: Financial Review & Outlook
Financial Review & Outlook 5
Slide 6: Excellent H1 financial results
Excellent H1 financial results • Excellent Group performance • Divisional results in line with or ahead of expectations Revenue £1,879m Adjusted operating Operating cash flow • Significant profit growth supported up 6% underlying* profit £250m up £79m, up £70m from by delivery of cost efficiencies 4
Slide 7: H1 2023 sales
H1 2023 sales £m 2023 2022 CER growth* Underlying growth Assessment & Qualifications 796 710 8% 7% Virtual Learning 373 390 (9)% (15)% Higher Education 379 373 (2)% (2)% English Language Learning 184 122 50% 44% Workforce Skills 140 127 9% 9% Businesses under strategic review*** 7 66 (89)% (50)% Tot
Slide 8: H1 2023 adjusted operating profit
H1 2023 adjusted operating profit £m 2023 2022 Margin (%) 2023 Underlying growth Assessment & Qualifications 174 136 22% 20% Virtual Learning* 47 14 13% 72% Higher Education (1) (4) 0% 25% English Language Learning 8 (4) 4% 275% Workforce Skills 21 28 15% (20)% Businesses under strategic review** 1
Slide 9: Strong cash & balance sheet position
Strong cash & balance sheet position £m 2023 2022 Key takeaways Operating cash flow 79 9 • Strong operating cash flow improvement driven by increased profits Net debt (911) (810) • Higher net debt largely due to dividends, tax, and 2022 share buyback more than Dividend 7.0p 6.6p offsetting strong op
Slide 10: Capital allocation
Capital allocation Strong progress on portfolio reshaping • Completed acquisition of PDRI in March. Significantly expanding Pearson’s services to the U.S. federal government • Completed the disposal of POLS Returning excess cash to shareholders • Reaffirming commitment to progressive and sustainable
Slide 11: 2023 Group expectations reaffirmed
2023 Group expectations reaffirmed Group outlook* • 2023 Group revenue, adjusted operating profit and profit margin outlook remain in line with expectations. • We reiterate our guidance of mid-single digit Group revenue growth for 2022-2025 and for margins to rise to upper end of mid-teens in 2025.
Slide 12: Financial highlights: key takeaways
Financial highlights: key takeaways Excellent H1 financial On track to deliver £120m Full year expectations performance cost efficiency program reaffirmed* Strong balance sheet supports further investment Strong operating cashflow in product innovation and shareholder returns *2023 consensus on the
Slide 13: Artificial Intelligence
Artificial Intelligence 13
Slide 14: AI is a long-term positive for Pearson
AI is a long-term positive for Pearson 1. Value of our proprietary IP and data sets will increase over time 2. We have deep AI experience and expertise across company 3. Starting to introduce new, AI-enabled products across the business 4. AI can unlock further opportunities for cost efficiencies 14
Slide 15: Pearson well positioned for the future of learning
Pearson well positioned for the future of learning Executing on our Optimistic about growth strategy with excellent prospects going forward financial performance Stable, growing and Opportunities to leverage more evenly distributed our IP and data sets to portfolio, with learning and create innovati
Slide 16: Appendix
Appendix 16
Slide 17: Measuring our success: strategic KPIs
Measuring our success: strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world KPI Objective KPI Measure H1 2023 H1 2022 OnVUE volumes 1.7m 1.4m Digital Drive digital Higher Education US digital registrations 4.5m 4.6m* Growth revenue growth P
Slide 18: Measuring our success: strategic KPIs
Measuring our success: strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world KPI Objective KPI Measure H1 2023 H1 2022 NPS for Connections Academy +67 +67 NPS for PTE +56 +51 Create engaging Consumer 4.7m 4.5m and personalised Pearson+ regis
Slide 19: Measuring our success: strategic KPIs
Measuring our success: strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world KPI Objective KPI Measure H1 2023 H1 2022 PTE speed of score return 1.1 days 1.3 days Improve the effectiveness VUE test volumes 12.2m 10.0m Product of our products