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Pearson Final Results

Practical discussions about equity High-Yield Portfolios (HYP) for income
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idpickering
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Pearson Final Results

#34163

Postby idpickering » February 24th, 2017, 9:00 am

2016 operating profit and eps slightly better than January 2017 guidance. Strong 2016 cash conversion

"o Sales of £4,552m declined 8% in underlying terms. Good growth in Pearson VUE, US Virtual Schools Online Program Management and Wall Street English in China was more than offset by expected declines in US and UK student assessment and US school courseware, and a much worse than expected decline in North American higher education courseware, as detailed in our 18 January trading statement.

o Deferred revenue was broadly level in underlying terms and is now 18% of our revenues (2015: 16.5%).

o Adjusted operating profit of £635m was down 21% in underlying terms due to weaker revenues, the partial reinstatement of incentives and other operational factors, partially offset by cost savings from the restructuring plan announced in January 2016, a larger contribution from Penguin Random House, helped in part by modest one-off benefits from the integration programme, and a return to profit in our Growth segment.

o Adjusted earnings per share fell 16% to 58.8p reflecting weaker operating results, higher interest and a higher tax rate of 16.5%, offset by the strength of the US Dollar and other currencies against Sterling.

o Operating cash flow increased 52% benefitting from tight working capital control, lower cash incentive payments and the weakness of Sterling. Our cash conversion increased to 104% (2015: 60%).

o Net debt increased to £1,092m (2015: £654m) reflecting the strengthening of the US Dollar relative to Sterling and restructuring costs.

o Digital & services revenues now make up 68% of our total revenues (2015: 65%). We have made good progress in simplifying our technology platforms and seen strong growth in key digital products Revel, iLit, Q-Interactive, Connections Education and global wins in Online Program Management"

And later, my bold;

§ Rebasing the dividend: As already communicated in January, we intend to recommend a final dividend of 34p for an overall 2016 dividend of 52p in line with our guidance, but as a result of the factors above we intend to rebase our dividend from 2017 onwards.


And;

Dividends

"The dividend accounted for in our 2016 financial statements totalling £424m represents the final dividend in respect of 2015 (34.0p) and the interim dividend for 2016 (18.0p). We are proposing a final dividend for 2016 of 34.0p bringing the total paid and payable in respect of 2016 to 52.0p. This final 2016 dividend which was approved by the Board in February 2017, is subject to approval at the forthcoming AGM and will be charged against 2017 profits. For 2016, the dividend is covered 1.1 times by adjusted earnings"

http://www.investegate.co.uk/pearson-pl ... 00097401X/

funduffer
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Re: Pearson Final Results

#34166

Postby funduffer » February 24th, 2017, 9:08 am

So, a stay of execution this year, but a cut (aka "re-base") to come next year (presumably starting at next interim in September).

It doesn't make happy reading, and I am glad I have ignored HYPTUSS nagging away at me to top-up!

FD (holds for now)

funduffer
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Re: Pearson Final Results

#34171

Postby funduffer » February 24th, 2017, 9:18 am

Payment date - 12th May:

"The directors are proposing a final dividend of 34.0p per equity share, payable on 12 May 2017 to shareholders on the register at the close of business on 7 April 2017. This final dividend, which will absorb an estimated £278m of shareholders' funds, has not been included as a liability as at 31 December 2016."

FD

toofast2live
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Re: Pearson Final Results

#34199

Postby toofast2live » February 24th, 2017, 11:00 am

You gets good companies in good sectors - Unilever
You gets awful companies in good sectors - Premier Foods
You gets good companies in cyclical/awful sectors - BHP, IMI
You gets awful companies in awful sectors - Pearson.

1 thro' 3 are investable.

4 should be ditched. Hindsight? maybe, but many here smelt a decaying rat well before divestment of FT and Economist...

idpickering
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Re: Pearson Final Results

#34205

Postby idpickering » February 24th, 2017, 11:22 am

toofast2live wrote:You gets good companies in good sectors - Unilever
You gets awful companies in good sectors - Premier Foods
You gets good companies in cyclical/awful sectors - BHP, IMI
You gets awful companies in awful sectors - Pearson.

1 thro' 3 are investable.

4 should be ditched. Hindsight? maybe, but many here smelt a decaying rat well before divestment of FT and Economist...


In typical bizarre market fashion, PSON are up 5.45% as I type. Maybe it's a case such as discussed in the thread about CLLN, here viewtopic.php?f=15&t=2950 , and that is to concentrate on the income, albeit 'rebased', and continue to hold, think long term, and save on the dealing fees should you elect to sell?

I have no position in PSON.

Ian.

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Re: Pearson Final Results

#34207

Postby Geebert » February 24th, 2017, 11:39 am

toofast2live wrote:You gets good companies in good sectors - Unilever
You gets awful companies in good sectors - Premier Foods
You gets good companies in cyclical/awful sectors - BHP, IMI
You gets awful companies in awful sectors - Pearson.

1 thro' 3 are investable.

4 should be ditched. Hindsight? maybe, but many here smelt a decaying rat well before divestment of FT and Economist...

By awful sector do you mean Media? Relx are my best preforming share so this comment surprises me.

Dod1010
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Re: Pearson Final Results

#34210

Postby Dod1010 » February 24th, 2017, 11:44 am

I wonder if Nick Train has baled out yet?

Dod

ReformedCharacter
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Re: Pearson Final Results

#34223

Postby ReformedCharacter » February 24th, 2017, 12:49 pm

Dod1010 wrote:I wonder if Nick Train has baled out yet?

Dod


No, he is apparently looking to buy more!

http://citywire.co.uk/money/lindsell-train-pearson-can-still-be-a-digital-winner/a995036?

I held but reluctantly sold last year. Having worked for many years in IT within the education sector I think that the road to success within their chosen market is full of potential elephant traps. And when I read comments like Horsey's on another Pearson thread:

"Pearson had an online ebook that cost $90, except students could use it free by changing the url from =false to =true."

It makes me wonder if they really understand the digital delivery thing at all.

RC

Dod1010
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Re: Pearson Final Results

#34242

Postby Dod1010 » February 24th, 2017, 1:53 pm

Thanks. If it were not for their track record I would have said that without doubt they were thoroughly misguided on their enthusiasm for Pearson. I hope they are right although my only interest in Pearson is I think through Finsbury Income and Growth.

Dod

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Re: Pearson Final Results

#34250

Postby ReformedCharacter » February 24th, 2017, 2:27 pm

Dod1010 wrote:Thanks. If it were not for their track record I would have said that without doubt they were thoroughly misguided on their enthusiasm for Pearson. I hope they are right although my only interest in Pearson is I think through Finsbury Income and Growth.

Dod


One thing I found interesting regarding Finsbury Income and Growth was the comment in the article:

The decision to look for an opportunity to lift the position in Pearson may surprise investors but is in line with the managers' investment philosophy that there is no such thing as a ‘hold’ stock – rather there are only ‘buys’ and ‘sells’.

I find it difficult to believe that there is no such thing as a 'hold' stock in a portfolio, I have several in my portfolio that I am happy to hold but would neither sell nor buy at the moment. It seems like rather an inflexible attitude to me.

RC


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