From their press release:
Pearson, the world's learning company,
is announcing its preliminary full year results for 2015 which builds on
its 21 January trading statement. Key headlines include:
· 2015 results in line with guidance:
o Sales of
£4,468m declined 2% in underlying terms. Good growth in Pearson VUE,
Connections Education and Wall Street English in China was more than
offset by declines in US Higher Education, UK Qualifications and South
Africa.
o Deferred revenues grew 8% in underlying terms.
o Adjusted
operating profit of £723m was down 2% in underlying terms due to revenue
mix and an operating loss in our Growth segment partly offset by
Penguin Random House.
o Adjusted
earnings per share grew 5% to 70.3p reflecting lower interest and a
lower tax rate of 15.5%, due to the agreement of historical tax
positions and the associated release of accrued interest on tax
provisions.
o Operating
cash flow decreased 33% as a result of challenging trading, disposals
and increased US higher education textbook returns partly offset by an
increased dividend payment from Penguin Random House.
· 2015 statutory results: Statutory
profit for the year of £823m was affected by two significant items:
pre-tax gains on the disposal of the Financial Times, The Economist
Group and PowerSchool of £1,214m; and an impairment of goodwill and
intangibles of £849m, primarily reflecting challenging market conditions
in our Growth and North American businesses.
· Simplification and growth:
As announced in January, we are taking further action to simplify our
business, reduce our costs and position ourselves for growth in our
major markets. We will complete the majority of these actions by
mid-year and incur implementation costs of approximately £320m in 2016
and expect to generate annualised savings of approximately £350m, with
approximately £250m of these savings in 2016 and a further £100m of
these savings in 2017. We have already implemented a number of
associated actions since the announcement of the programme in January.
· 2018 goals:
With the full benefits of our restructuring programme, the launch of
new products, and stability returning to US college enrolments and the
UK qualifications market by the end of 2017, we expect adjusted
operating profit to be at or above £800m in 2018.
· Sustaining the dividend:
We are proposing a final dividend of 34p, level with last year,
resulting in a 2% increase in the overall 2015 dividend to 52p. Pearson
plans to hold its dividend at this 2015 level while it rebuilds cover,
reflecting the Board's confidence in the medium term outlook.
· 2016 outlook:
In 2016, we expect to report adjusted operating profit and adjusted
earnings per share before the costs of restructuring of between £580m
and £620m and between 50p and 55p, respectively, with the in-year
benefits from restructuring offset by the loss of operating profit from
disposals made in 2015, ongoing challenging conditions in our largest
markets, the reinstatement of the employee incentive pool and other
operational factors. We are excluding the one-off cost of this major
restructuring to better reflect the underlying earnings potential of the
business. Operating profit after restructuring charges is expected to
be in the £260m to £300m range.
· Strategy: We
have world-class capabilities in educational courseware and assessment,
based on a strong portfolio of products and services, powered by
learning technology. Our strategy of combining these core capabilities
with related services that enable our partners to scale online, reaching
more people and ensuring better learning outcomes, will provide Pearson
with a larger market opportunity, a sharper focus on the
fastest-growing education markets and stronger financial returns.
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