Pearson 2018 interim results
Revenue up 2% in underlying terms
North America up 3%, Core up 2% and Growth down 4%.
Revenue increased primarily due to US Higher Education Courseware, Online Program Management (OPM), Connections Academy, Professional Certification and Pearson Test of English Academic (PTEA), partially offset by the expected declines in Learning Studio and the expected decline in sales in our South Africa School Courseware business due to a large order in the first half 2017.
As in previous years, Pearson's sales are weighted towards the second half of the year.
Adjusted operating profit up 46% in underlying terms, good growth in EPS
Reflecting sales growth and savings from the 2017-2019 restructuring programme, partially offset by cost inflation and other operational factors.
Strong balance sheet with net debt of £775m (H1 2017: £1,633m)
Reflecting proceeds from disposals and operating cash flow, partially offset by the share buyback.
Net debt increased from £432m at the end of 2017 to £775m at the end of June 2018 in line with typical seasonality of the business.
Interim dividend 5.5p (2017: 5p).
Statutory results
Statutory operating profit of £233m (2017: £16m) with the year on year improvement driven by the profit on disposal of Wall Street English (WSE) and Utel.
Statutory EPS 24.1p (2017: (2.1)p) with the year on year improvement due to lower interest cost and the profit on disposal of WSE and Utel.
Simplification plans on track
Cost savings of £40m delivered in the first half, decommissioned over 200 applications and started the implementation of our new Enterprise Resource Planning (ERP) software system in the US.
US K12 courseware business continues to be held for sale.
Underlying FY 2018 guidance unchanged
US Higher Education Courseware revenue grew modestly in the first half helped by lower returns, as expected. However, in line with our full year guidance for this segment, we continue to expect a decline in net sales in the second half as gross sales continue to be impacted by ongoing underlying market pressures.
We expect Pearson to deliver underlying profit growth in 2018.
