Pearson, the world's leading learning company, is today
holding its Annual General Meeting and providing an interim
management statement for the first three months of 2012.
Pearson is trading in line with the expectations set out in
our full-year results announcement on 27 February. In the
first three months of the year, we increased sales by 11%
at constant exchange rates to £1.16bn (an underlying
increase of 3% and a headline increase of 12%). Though the
external environment remains challenging and we are yet to
see signs of improvement, we continue to expect Pearson to
achieve growth in sales and operating profits for the year
as a whole. This guidance is struck at an exchange rate of
£1:$1.59. Pearson's profits are heavily weighted to the
second half and, as a result of the phasing of revenues,
organic investment and restructuring, and the sale of our
stake in FTSE International, we expect our first-half
operating profits to be lower this year than in 2011.
In education, we have made a good start to the year. Though
the US education market remains generally weak, we continue
to benefit from our strong position and the rapid growth in
our digital and services businesses. International
Education is growing well, particularly in developing
markets and helped by recent acquisitions and sustained
organic investment. Our professional testing and publishing
businesses continue to perform well but our UK training
business has been adversely affected, as expected, by
change in government funding policy related to
apprenticeships. We are planning on the basis that trading
remains weak in this business and we are taking appropriate
steps to change our services and our business model.
Despite the tough environment for corporate advertising and
deal-making, the Financial Times and Mergermarket are
showing good sales growth. The FT's paid print and digital
circulation was 605,000 in the first quarter of 2012,
including 285,000 digital subscribers, and the FT is taking
further actions in the first half to accelerate its shift
from print to digital formats and from advertising to
subscription revenues. The FT Group's profits in 2012 will
also reflect the sale of our 50% stake in FTSE
International in December 2011.
Following several years of particularly strong performance
relative to the overall consumer books market, we expect
Penguin to perform in line with its industry this year. It
will benefit from its consistently strong publishing
schedule, which is more concentrated in the second half
this year, and its strong position in the fast-growing
market for digital books. The industry continues to face
significant structural change and, as one example, we
intend to mount a robust defence of our actions in the
civil proceedings recently announced by the US Department
of Justice against Apple and several consumer book
publishers including Penguin.
At the end of 2011, Pearson's net debt was £499m, giving a
net debt/ EBITDA ratio of 0.5x and interest cover of 18.1x.
Our net debt increased during the first quarter by £206m to
£705m, level with the first quarter of 2011, as a result of
the normal seasonal build-up of working capital ahead of
our key selling periods in education and acquisition spend.
That strong balance sheet gives us headroom of
approximately £1bn available to invest in bolt-on
At our AGM today, we are proposing a final dividend of
28.0p, giving a total dividend for 2011 of 42.0p, up 9%.
For the 20th consecutive year, Pearson has declared a
dividend increase above the rate of inflation.
Pearson generates approximately 60% of its sales in the US.
A five cent move in the average £:$ exchange rate for the
full year (which in 2011 was £1:$1.60) has an impact of
approximately 1.3p on adjusted earnings per share.
Pearson's AGM takes place today at the Institute of
Engineering and Technology, 2 Savoy Place, London WC2R 0BL
at 12 noon.
For more information
Luke Swanson/ Simon Mays-Smith/ Charles Goldsmith + 44 (0)
20 7010 2310
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 costs 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. 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 the company's publicly-filed documents. 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