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Pearson flags return to growth

Within its full-year results, the group said it has now insured around half of its pension liabilities
February 22, 2019

Pearson (PSON) had already revealed that its “cost efficiency programme” ran ahead of schedule in 2018, but further annualised savings of at least £330m are now anticipated by the end of 2019, with one-off restructuring costs expected to rise in kind to around £330m.

IC TIP: Hold at 888p

Revenues fell by 1 per cent on an underlying basis, due to declines of 5 per cent in US Higher Education Courseware (US HECW) and US K12 courseware, although the latter has been sold to Nexus Capital Management for a headline consideration of $250m (£192m).

Statutory operating profits rose more than a fifth to £553m – although this was due largely to proceeds from disposals. Adjusted operating profits climbed 8 per cent on an underlying basis to £546m and management is guiding towards £590-640m for 2019 – though this estimate does not reflect new accounting rules pertaining to leases. Pearson’s UK pension plan has also purchased a further insurance buy-in policy with Legal & General (LGEN) amounting to around £0.5bn, with around half the plan’s liabilities now insured.

According to Bloomberg consensus estimates, analysts expect adjusted EPS of 58.1p for 2019 (from 70p in 2018).

PEARSON (PSON)   
ORD PRICE:888pMARKET VALUE:£ 6.94bn
TOUCH:888-889p12-MONTH HIGH:1,030pLOW: 687p
DIVIDEND YIELD:2.1%PE RATIO:12
NET ASSET VALUE:578p*NET DEBT:3.2%
Year to 31 DecTurnover (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)
20144.540.2624.751.0
20154.47-0.43-43.352.0
20164.55-2.56-28752.0
20174.510.4249.917.0
20184.130.5075.618.5
% change-9+18+52+9
Ex-div:04 Apr   
Payment:10 May   
*Includes intangible assets of £3bn or 385p a share