Pearson 2024 Preliminary Results (Unaudited)

Core Insights - The company demonstrated strong financial performance in 2024, with underlying sales growth of 3% and adjusted operating profit increasing by 10% to £600 million [5][8][12] - A new strategic partnership with AWS aims to enhance AI capabilities and expand the company's presence in the Enterprise skills market [4][8] - The company announced a £350 million share buyback program, reflecting confidence in its financial position and future growth [5][10] Financial Performance - Total sales decreased by 3% to £3,552 million in 2024, primarily due to currency movements and portfolio changes [44][46] - Adjusted operating profit rose by 10% to £600 million, with a margin expansion from 15.6% to 16.9% [8][12] - Free cash flow increased by £103 million to £490 million, representing a conversion rate of 117% [8][65] Strategic Initiatives - The company is focusing on the accelerated rollout of AI across its product offerings, which remains a key priority for 2025 [8][12] - The partnership with AWS will enhance the company's learning products and services through expanded cloud infrastructure and AI capabilities [4][8] - The company aims to bridge the skills gap in the economy by expanding its presence in the Enterprise skills market [4][8] Business Unit Performance - Assessment & Qualifications saw a 3% increase in sales, while Virtual Learning sales decreased by 4% due to the final impact of previous school losses [23][28] - Higher Education returned to growth with a 1% increase in sales, driven by gains in adoption share and pricing [31][32] - English Language Learning experienced strong performance with an 8% sales growth, particularly in the Institutional segment [34][35] Outlook and Guidance - The company expects to deliver low to mid-single digit underlying sales growth in 2025, with a focus on contract renewals and new customer acquisitions [12][26] - Adjusted operating profit is anticipated to align with current market expectations, with a projected effective tax rate of 24% to 25% [12][58] - The medium-term outlook remains unchanged, with expectations for sustained margin improvement and strong free cash flow conversion [13][12]