TIDMPSON
RNS Number : 1636P
Pearson PLC
15 October 2021
Pearson 2021 Nine Month Trading Update (Unaudited)
15(th) October Pearson, the world's leading learning company, is today
2021 providing an update on trading for the nine months ending
September 30(th) 2021.
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Andy Bird, Chief Executive said:
"We are encouraged with our strategic, financial and operational progress,
despite the continuing effects of COVID-19 in some markets and its
impact on enrolments in the back to school period. At this important
stage of the year, we are on track to meet market expectations for
the full year.
"Pearson+ has made a promising start following its launch in late July
with over 2m registered users and a strong response from students,
faculty and authors. This is a significant step for Pearson, strengthening
our direct-to-consumer offer that will underpin our drive for sustainable
growth over the coming years. The growing pace and momentum in Pearson
reinforces our confidence going forward."
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Highlights Good strategic progress, full year outlook unchanged. Strong
performance in Assessment & Qualifications helps offset declining
enrolments in Higher Education
Group underlying revenue up 10% for the nine months
* Virtual Learning revenue grew 14% reflecting strong
enrolment growth in Virtual Schools in the 2020/21
school year and flat revenue in Online Program
Management with underlying growth offset by
discontinued programs
* Higher Education revenue was down 7% as growth in
international courseware was offset by a decline in
US Higher Education Courseware
* English Language Learning revenue grew 15% with
strong growth in Pearson Test of English (PTE) and
courseware following test centre and school closures
in 2020
* Workforce Skills revenue grew 5% due mainly to growth
in GED and Talent Lens following COVID-19 impacts in
2020
* Assessment & Qualifications revenue grew 24% with a
strong performance across Pearson VUE, School
Assessment and Clinical Assessment
* Revenue in businesses held under Strategic Review
grew 7% driven by a COVID-19 recovery in courseware
and a phasing benefit in school purchases in South
Africa in Q3 2021
Continued good strategic and operational progress with Pearson+
advancing well
* New organisational structure fully operational;
Pearson reporting against its new divisions
* New US learning app, Pearson+, launched in late July
and is progressing well with over 2m registered users,
and an App store rating of 4.7
* Workforce Skills division strengthened with the
completion of a strategically significant acquisition
in Faethm, the workforce AI and predictive analytics
company
* The disposal of Brazilian K12 Sistemas business
completed on the 1(st) October 2021
* Moving to the next stage of our strategic review, we
have commenced marketing the majority of Pearson's
international courseware local publishing businesses
2021 outlook reaffirmed
* Pearson remains on track to deliver adjusted
operating profit for FY21 in line with market
expectations*
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Financial summary
==========================
Underlying growth for the nine months ended 30(th)
September 2021
Sales
Virtual Learning 14%
(7%)
15%
5%
24%
7%
10%
Higher Education
English Language Learning
Workforce Skills
Assessment & Qualifications
Businesses under strategic review
Total
Notes
* On 8 March 2021 Pearson stated that it expected year on year
revenue growth with adjusted operating profit in line with then
prevailing market expectations according to VUMA published
consensus on 3 March 2021 of GBP377m at USD:GBP 1.36.
Throughout this announcement growth rates are stated on an
underlying basis unless otherwise stated. Underlying growth rates
exclude currency movements and portfolio changes.
Nine-month trading
In Virtual Learning revenue grew 14% with strong growth in
Virtual Schools reflecting enrolment growth in the 2020/21 academic
year and school district partnerships with flat revenue in Online
Program Management.
In Virtual Schools we have seen slight enrolment growth for the
2021/22 academic year due to the continuing uncertainty around
COVID-19 in the US but we expect revenue to be broadly flat in H2
due to pricing mix. This mix pressure has been caused by an uneven
enrolment distribution across the states with a higher rise in
typically lower funded states.
In Online Program Management underlying growth was offset by the
impact of discontinued programs in the US and Australia which we
expect to end this year. Underlying course enrolments (excluding
discontinued programs) grew 8%.
Higher Education revenue was down 7% as growth in international
courseware, including Canada and the UK, was more than offset by a
9% decline in US Higher Education Courseware. While no market data
for the full back to school period is available as yet, Pearson's
internal analysis indicates a decline in enrolments, particularly
in community colleges, following a surge in COVID-19 infections in
the key back to school period, and a strengthening of the US labour
market.
We also saw an impact to our print:digital mix with print and
packages continuing to decline in favour of platform and etexts,
but not as acutely as seen in previous years.
There has been continued momentum in Inclusive Access with sales
to not-for-profit institutions up 21% on last year.
Pearson's new learning app, Pearson+, launched in late July as
part of our strategy to build strong, long-term relationships with
millions of students. The app provides a better user experience for
students with enhanced functionality and will accelerate our
recapture of the secondary market. We have seen encouraging
progress to date, with over 2m registered users, reflecting a
strong uptake from MyLab and Mastering users and more than 100k
paid subscriptions.
In English Language Learning (ELL) revenue grew 15% due mainly
to a COVID-19 recovery from 2020. PTE revenue grew strongly as the
majority of test centres reopened but remains under pressure due to
reduced global mobility and border closures in our key market,
Australia. We see strong future growth opportunities for PTE in the
UK-bound market with the winning of the UK Home Office SELT
contract in 2019. English courseware rebounded strongly driven by
international growth in most markets, although growth in China was
negatively impacted in the third quarter by recent government
reforms.
In Workforce Skills revenue grew 5% mainly due to growth in GED
and Talent Lens which had been impacted by COVID-19 in 2020. BTEC
and apprenticeship revenue was flat.
Pearson announced the small but strategically significant
acquisition of Faethm, the workforce AI and predictive analytics
company in Q3. Faethm's market-leading data, insights and AI
capabilities provide Pearson with the tools to help businesses
understand the skills they have today and those that they will need
for the future. Pearson intends to combine this with its deep
learning expertise to provide content and experiences that help
companies re-skill, re-train and re-mobilise their people.
In Assessment and Qualifications revenue grew strongly, despite
a challenging comparison in the third quarter, up 24%.
In Pearson VUE, sales grew strongly due to a recovery post
COVID-19, as well as ongoing high growth of Pearson's online
proctoring service, OnVue, where test volumes rose to 2.3m compared
with 1.3m in the same period in 2020. Despite a challenging
comparator, Pearson VUE testing volumes grew 3.5% in the third
quarter, driven by growth in the IT and Regulatory segment along
with continued demand for online proctoring.
In Pearson VUE, following a planned review of its driving theory
test contract, the DVSA has disaggregated the contract into a
number of geographical tenders. While Pearson has been awarded a
five year contract to run one of these contracts, as well as
successfully extending our contract for the delivery platform, this
will have a modest negative impact on 2022 revenue in VUE.
US Student Assessment revenue grew well following exam
cancellations in 2020 with a phasing benefit in the third quarter
given a shift in some state testing to the Fall.
In US Clinical Assessment revenue rebounded strongly with the
reopening of schools and the delivery of a backlog of education
assessments.
UK School Assessment revenue was slightly down due to a higher
rebate of exam fees to schools vs 2020, partially offset by growth
in courseware.
Strong financial position
Pearson's financial position remains robust, with low net debt
and strong liquidity. At 30(th) September net debt stood at
GBP0.7bn compared to GBP0.9bn in 2020 with strong operating
cashflow offset by dividends.
Contacts
Jo Russell +44 (0) 7785 451 266
Investor Relations Anjali Kotak +44 (0) 7940 490 442
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Tom Steiner +44 (0) 7787 415 891
Media Gemma Terry +44 (0) 7841 363 216
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Teneo Charles Armitstead +44 (0) 7703 330 269
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Video event Pearson's nine-month trading update virtual presentation
for investors and analysts from 0830 (BST). Register
to receive login details: https://pearson.connectid.cloud/register/
Forward looking statements: Except for the historical
information contained herein, the matters discussed in this
statement include forward-looking statements. In particular, all
statements that express forecasts, expectations and projections
with respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of interest or exchange rates, the availability of
financing, anticipated cost savings and synergies and the execution
of Pearson's strategy, are forward-looking statements. By their
nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that will
occur in future. They are based on numerous assumptions regarding
Pearson's present and future business strategies and the
environment in which it will operate in the future. There are a
number of factors which could cause actual results and developments
to differ materially from those expressed or implied by these
forward-looking statements, including a number of factors outside
Pearson's control. These include international, national and local
conditions, as well as competition. They also include other risks
detailed from time to time in Pearson's publicly filed documents
and you are advised to read, in particular, the risk factors set
out in Pearson's latest annual report and accounts, which can be
found on its website (www.pearsonplc.com). Any forward-looking
statements speak only as of the date they are made, and Pearson
gives no undertaking to update forward-looking statements to
reflect any changes in its expectations with regard thereto or any
changes to events, conditions or circumstances on which any such
statement is based. Readers are cautioned not to place undue
reliance on such forward-looking statements.
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