Pearson Reports 2017 Results

Highlights: Operating performance on track
• 2017 adjusted operating profit of £576m is at the top end of our upwardly-revised October 2017 guidance range, adjusting for currency movements.
• Adjusted earnings per share of 54.1p is above the October 2017 guidance range of 49.0p-52.0p reflecting strong profitability, a lower than expected tax rate of 11.1% and after a net interest charge of £79m.
• Total underlying revenues declined 2%, in line with the performance in the nine-months, due to a decline of 4% in North America partly offset by stabilisation in Core and Growth.
• Statutory operating profit for the year was £451m (2016: a loss of £2,497m).
• Strong cash flow with cash conversion at 116%.
• Robust financial position with net debt of £0.4bn (2016: £1.1bn) benefiting from strong cash flow and the proceeds of disposals in 2017. Reduced leverage at 0.6x net debt to EBITDA (2016:1.4x).
• Returned £153m of capital (repurchasing 22m shares) to 31 December 2017 via the £300m share buyback announced on 17 October 2017. The buyback was completed on 16 February 2018 repurchasing a total of 42.8m shares at an average price of 700p.
• The Board proposes a final dividend of 12p (2016: 34p), which equates to a full year dividend of 17p (2016: 52p).
• As a result of our strategic review announced in May 2017 we are now classifying US K12 courseware as held-for-sale.
• In March, Pearson will publish the first of our fully audited efficacy reports into a series of key products.

John Fallon, Chief Executive said: “Pearson has made good progress against its strategic priorities in 2017 with further simplification of the portfolio, strengthening of our balance sheet and delivering results at the top end of guidance. We are confident we will make further progress against our strategic priorities and grow underlying profit in 2018.”
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