Financial highlights
Sales up 2% at CER to £5.2bn. Good growth in digital, services and emerging markets partly offset by cyclical weakness in US higher education and school curriculum change in the US and UK.
Adjusted operating profit before net restructuring charges 6% lower at £871m (£736m after £135m of net restructuring charges). 2013 profits reduced by accounting impact of the Penguin Random House merger, lower margins in North America, sustained investment, and revenue mix.
Operating cash flow £588m (2012: £788m) reflecting restructuring charges, increased product investment in new education programmes and lower operating profit.
Adjusted EPS of 70.1p after restructuring charges (2012: 82.6p).
Dividend raised 7% to 48p reflecting our confidence in our prospects.
2014 outlook
2014 profits to reflect portfolio changes (Penguin Random House associate accounting; Mergermarket sale; Grupo Multi acquisition) and significant recent strengthening of Sterling against key currencies.
Cyclical and policy-related pressures in our largest markets expected to persist, impacting revenues and margins.
Still expect approximately £50m net restructuring to continue to reshape our publishing businesses; £50m organic investment in structural growth opportunities in digital, services and emerging markets.
At current exchange rates, we expect to report adjusted earnings per share of between 62p and 67p in 2014.
2015 and longer term
Pearson's strategy centres on a significant and exciting long-term opportunity: the sustained and growing global demand for greater access, achievement and affordability in education.
We can meet this demand by accelerating our shift to digital, services and to fast-growing economies, and committing to deliver measurably improved learning outcomes (efficacy).
We are investing in learning services, inside services, direct delivery and assessments and qualifications, and in school, higher education and English language learning. We are organising around a smaller number of global products and platforms, built around a single, world-class infrastructure and common systems and processes.
In 2013 and 2014, we are executing a significant restructuring programme designed to reduce our exposure to structural pressures and to shift resources towards these growth opportunities. Our restructuring expenditure will return to more normal levels in 2015.
In addition, we believe cyclical pressures will begin to ease from 2015 as curriculum change is implemented in the US and UK and US college enrolments stabilise and, in due course, return to growth.
This strategy will enable us to help more people make progress in their lives through learning. It also provides Pearson with a larger market opportunity, a sharper focus on the fastest-growing markets and stronger financial returns in 2015 and beyond.
John Fallon, chief executive said:
"We are in the middle of what we believe will be a short, but difficult, transition - one that through our combined investment and restructuring programs will drive a leaner, more cash generative, faster growing business from 2015.
"We are uniquely positioned to tackle some of the biggest challenges in global education including the transforming power of technology. I am particularly excited about the significant opportunity digital education offers for Pearson and the next generation of learners."
