Pearson 2022 Q1 Trading Update (Unaudited)
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29th April 2022 |
Continued momentum with underlying sales growth of 7% in the first quarter |
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Highlights · Ongoing strategic and operational progress, with underlying sales growth of 7%. 2022 adjusted operating profit guidance reaffirmed. · Direct to consumer strategy strengthened with acquisition of Mondly further enhancing our position in English Language Learning. · First tranche of £350m share buyback commenced.
Andy Bird, Pearson's Chief Executive, said: “Pearson has continued to make strong strategic, operational and financial progress through the first quarter. Underlying sales grew by 7%, and we remain on track to deliver on our 2022 financial expectations and medium term guidance. “Our acquisition of Mondly, one of the world's leading online language learning platforms, is another exciting strategic development. It strengthens Pearson's direct to consumer strategy and supports our ambition to become the global leader in English language learning for committed learners. “We remain sharply focused on the successful execution of our strategy and we are encouraged by the momentum we are seeing across the business.” |
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Underlying s ales growth of 7%
- Assessment & Qualifications sales grew 22% with growth across all areas. US Student Assessment delivered a strong performance partially reflecting the normalisation of exam timetables. Clinical Assessment also delivered a strong performance due in part to the phasing of orders.
- Virtual Learning sales increased 3% underpinned by strong retention rates in Virtual schools and growth in OPM. As announced on 19thApril, our OPM contract with ASU will end as of June 2023.
- English Language Learning sales increased 18%, with growth in Pearson Test of English volumes weighted to Q1 from borders re-opening and improving global mobility.
- Workforce Skills sales grew 9% (excluding acquisitions) driven by ongoing growth in BTEC, GED and TalentLens.We made good strategic progress with Pearson's GED Testing Service selected as an education partner for Amazon's Career Choice programme.
- Higher Education sales were down 5% due to expected declines in US Higher Education reflecting the continued decline in enrolments and courses per enrolment combined for the 2021/22 academic year.
- Sales in businesses under strategic review decreased 11% as expected.
Strategically important acquisition of Mondly in English Language Learning announced today
- The acquisition marks another step in our digital strategy, giving us access to the fast growing direct to consumer English language learning market.
- Strategic growth area for Pearson with synergies and cross-selling opportunities, particularly in Institutional, Pearson Test of English and Workforce Skills.
- Full details are available in the press release on our website, https://plc.pearson.com/en-GB/news/pearson-acquires-leading-online-language-learning-platform .
Share buyback programme to return £350m to shareholders
- First tranche commenced in April, of which over £75m already completed.
Financial summary
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Underlying growth |
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Sales |
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Assessment & Qualifications |
22% |
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Virtual Learning |
3% |
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English Language Learning |
18% |
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Workforce Skills |
9% |
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Higher Education |
(5)% |
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Strategic review |
(11)% |
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Total |
7% |
Throughout this announcement growth rates are stated on an underlying basis unless otherwise stated. Underlying growth rates exclude currency movements and portfolio changes.
Financial update
The statute of limitations on a number of tax provisions lapsed in April 2022. This will lead to a one-off impact in 2022, reducing our effective tax rate from current market expectations of c.21% to 15-17%, and our interest charge from c.£57m to £10m-£15m. For 2023, we currently expect our tax rate to be in the range of 23-25%, reflecting our geographical footprint, and our interest charge to be £40m-£45m. We anticipate that a decision regarding the ongoing EU Commission investigation into whether certain aspects of the UK tax system constituted State Aid could be announced over the summer.