Highlights
Underlying revenue flat year on year
• Core grew 5% and Growth 4%, offset by 3% decline in North America.
• Growth of 4% in the businesses excluding US Higher Education Courseware offset by declines in US Higher Education Courseware of 12%.
Adjusted operating profit up 6%
• Adjusted operating profit of £581m for 2019 (2018: £546m).
• Adjusted earnings per share of 57.8p (2018: 70.3p) reflecting an effective tax rate charge of 16.5% in 2019 compared to a credit of 5.2% in 2018.
Strong balance sheet
• Closing net debt at 31 December 2019 of £1,016m (2018: £809m on post-IFRS 16 basis) resulting in net debt to adjusted EBITDA of 1.3x (post-IFRS 16).
• Operating cash flow decreased by £95m with a conversion rate of 72% largely due to timing of disposals, incentive payments and working capital movements.
• The Board proposes a final dividend of 13.5p (2018: 13p), an increase of 4%, which equates to a full year dividend of 19.5p (2018: 18.5p).
Statutory results
• Sales decreased by 6%, or £260m, in headline terms. This was primarily due to portfolio changes reducing sales by £347m partially offset by currency movements increasing revenue by £97m.
• Statutory operating profit was £275m (2018: £553m). The decrease is largely due to the reduced gains on disposals together with increased intangible and restructuring charges which more than offset the increase in adjusted operating profit.
• Statutory EPS of 34.0p (2018: 75.6p) with the decrease due to a lower statutory operating profit, a lower tax benefit following one-off benefits in 2018 and higher net interest payable following the adoption of IFRS 16.
Digital transformation and simplification programme
• Further progress on Pearson’s digital transformation with revenue split 36% digital (2018: 34%), 30% digitally-enabled (2018: 28%) and 34% non-digital (2018: 38%).
• Efficiency programme delivered incremental cost savings of £130m in 2019. Annualised savings of £335m at the end of 2019. Pearson’s simplification programme enables ongoing efficiencies over time.
• Sale of remaining 25% stake in Penguin Random House announced on 18th December 2019. Transaction expected to close in H1 2020.
2020 outlook
• Expect to deliver 2020 adjusted operating profit of between £410m to £490m (based on December 2019 exchange rates) after excluding the 25% stake in Penguin Random House.
• Expect the businesses excluding US Higher Education Courseware to sustain low single digit sales growth in aggregate.
• Expect 2019 US Higher Education Courseware trends to continue with heavy declines in print partially offset by modest growth in digital as more products are added to the Pearson Learning Platform (PLP), previously known as the Global Learning Platform.
• PLP product road map accelerating: 60% of all Revel fall subscriptions on PLP by the end of the year; over 100 MyLab and Mastering titles on PLP in 2021; new “Pearson eText” to be launched in 2020 to enhance text and platform offerings. As product releases accelerate, digital growth is expected to increase.
And later;
Dividend.
The directors are proposing a final dividend of 13.5p per equity share, payable on 7 May 2020 to shareholders on the register at the close of business on 27 March 2020. This final dividend, which will absorb an estimated £106m of shareholders’ funds, has not been included as a liability as at 31 December 2019
https://www.pearson.com/content/dam/one ... ncials.pdf
RNS here; https://www.investegate.co.uk/pearson-p ... 00046790D/