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Underlying profit growth driven by continued strategic progress in
2018
Expect to deliver adjusted operating profit of
£540m-£545m for 2018, in line with guidance of £520m
to £560m
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Adjusted earnings per
share of 70.0p-71.0p reflecting one-off tax benefits and a lower
finance charge as disclosed in Pearson's Q3 trading
update.
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Total underlying
revenues were down 1% year on year, with declines in US Higher
Education Courseware (US HECW) of 5% and US K12 courseware largely
offset by the rest of the business growing in aggregate at over 1%.
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Revenue in North America
declined 1%, Core was flat and Growth was up
1%.
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Strong balance sheet
with closing net debt at 31 December 2018 expected to be around
£200m (2017: £432m).
Digital transformation progressing to plan
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US HECW digital revenue
grew 2% to represent 55% of sales (50% in
2017).
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Direct to consumer sales
grew 8% to 23% in US HECW.
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Signed a further 192
Inclusive Access institutions in 2018 taking the total to nearly
700.
Continuing strong performance in structural growth
opportunities
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Online Program
Management (OPM) saw 14% growth in global course registrations and
revenue growth of 9%.
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Connections Academy,
Pearson's K12 virtual schools business, grew revenues
8%.
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In English, Pearson Test
of English Academic grew test volumes by 30%.
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In Professional
Certification revenues grew 4%.
Simplification on course to deliver cost savings slightly ahead of
expectations
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Cost efficiency
programme ahead of plan in 2018 with incremental cost savings of
around £130m and restructuring costs
1
of
around £100m.
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Now expect to deliver
increased annualised cost savings
1
in
excess of £330m by the end of 2019. One-off restructuring
costs will rise with this to around £330m. This is ahead of
our original plan of £300m in savings and
costs.
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US K12 Courseware
continues to be held for sale.
2019
outlook
2
-
further financial and strategic progress
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Expect to deliver 2019
adjusted operating profit of between £590m to
£640m.
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Expect US HECW revenue to be zero to
down 5% as underlying pressures continue, and for the rest of the
business to show continued growth in aggregate with a good
performance in each of the structural growth opportunities: OPM,
Virtual Schools, Professional Certification and
English.
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This guidance is based
on existing portfolio and exchange rates as at 31 December 2018.
Expect a net interest charge of c.£30m, a tax rate of 21% and
adjusted earnings per share of 56.5p to 62.0p.
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