Pearson Interim Results for the six months to 30th June 2025 (Unaudited)
Continued strategic and operational progress against medium term strategy. On track to deliver 2025 guidance with stronger growth expected in H2.
LONDON, Aug. 1, 2025 /PRNewswire/ --
Financial Highlights
£m
H1
2025
vs H1
2024
£m
H1
2025
H1
2024
Business performance
Statutory results
Sales
1,722
+2% 1
Sales
1,722
1,754
Adjusted operating profit
242
+2% 1
Operating profit
240
219
Operating cash flow
126
£(3)m
Profit for the period
166
158
Free cash flow
156
+£129m
Net cash generated from operations
188
185
Adjusted earnings per share
24.5p
(4)%2
Basic earnings per share
24.8p
23.1p
Highlights
Group sales1 up 2% underlying with each business unit performing broadly in line with our expectations.
Adjusted operating profit1 up 2% underlying to £242m.
Strong free cash performance up £129m to £156m, including the receipt of £114m State Aid tax recovery.
Interim dividend up 5% and £350m share buyback well underway, with ongoing balance sheet strength.
On track to deliver 2025 guidance with stronger growth expected in H2.
Continued strategic and operational progress, including:
Strategic partnerships with Microsoft, AWS, and most recently, Google Cloud, progressing AI transformation agenda (link here);
Enterprise business building momentum, with new partners such as HCLTech (link here);
Continuing to develop product suite and apply innovative technologies including new "Go Deeper" feature within our AI-powered study tools and launch of Pearson English Express Test (link here);
Accelerating access to adjacent markets, with a strategic collaboration with McGraw Hill in formative assessments (link here);
Completed the acquisition of eDynamic Learning, adding a core pillar to our Early Careers strategy (link here).
Omar Abbosh, Pearson's Chief Executive, said:"We are on track to deliver the three priorities we set out for the year, with performance to date in line with our expectations, and are confident of stronger growth in the second half. We are making rapid progress with bringing AI-powered products to market and are scaling and enhancing our enterprise business with a range of new partnerships and deals. Our sharp focus on rigorous execution and continuous innovation is driving progress against our strategy, improving Pearson's agility, efficiency and resilience, and positioning us to deliver consistent mid-single digit sales growth over the medium term."
Group sales1 up 2% underlying in H1 2025
Assessment & Qualifications sales were up 2% with strong growth in Clinical Assessments and UK & International Qualifications, partially offset by declines in Pearson VUE and US Student Assessment. Pearson VUE decline was driven by the pause in a contract delivered in 2024 which will recommence in H2 2025, and headwinds in PDRI, which has been impacted by US federal government hiring and spend reductions which we expect to continue in the second half.
Virtual Learning sales were down 1%, as expected, due to the final portion of the impact of previously announced school losses. 2024/25 academic year enrolments increased 5% in the Spring semester on a same school basis, with favourable retention trends, underpinning our confidence in returning to growth in H2.
Higher Education sales were up 4%, benefiting from growth in Inclusive Access of 21% and US digital subscriptions of 3%. We continued to see good monetisation of our Study Prep tool, formerly known as Channels, and ongoing engagement with our AI-powered study tools.
English Language Learning sales were down 3%, in line with expectations, with Institutional impacted by a strong comparator period in H1 2024. Pearson Test of English (PTE) was flat against the prior period, performing well against a tough market backdrop.
Enterprise Learning & Skills sales were up 4%, with another solid performance in Vocational Qualifications and Enterprise Solutions building momentum.
Adjusted operating profit1 up 2% on an underlying basis to £242m
Underlying performance driven by operating leverage on sales growth partially offset by inflation.
On a headline basis, profit was down 3% with positive underlying performance more than offset by translation currency headwinds. First half adjusted profit margin was flat against the prior period at 14% (H1 2024: 14%).
Adjusted net finance costs increased to £24m (H1 2024: £21m). The effective tax rate on adjusted profit before tax increased to 24.5% (H1 2024: 23.6%).
Adjusted earnings per share declined to 24.5p (H1 2024: 25.6p) with positive underlying trading performance, and a reduction in share count due to the share buyback programmes, more than offset by currency headwinds and increased interest.
Good cash performance
Operating cash flow was in line with the prior period at £126m (H1 2024: £129m) with continued good working capital management offsetting currency headwinds.
Free cash flow was again strong up £129m to £156m (H1 2024: £27m) given the operating cash performance and the receipt of £114m State Aid tax recovery, inclusive of interest, in the period.
Strong balance sheet supporting continued investment and shareholder returns
Net debt decreased £0.2bn to £1.0bn at 30th June 2025 (H1 2024: £1.2bn) as free cash flow was partially offset by dividends and the share buyback.
Proposed interim dividend of 7.8p (H1 2024: 7.4p), represents an increase of 5%.
Previously announced £350m share buyback programme well underway and is expected to complete in H2. As at 30th June 2025, £169m of shares had been repurchased representing 48% of the total programme.
Secured new three-year, $800m revolving credit facility, enhancing our liquidity and strategic flexibility.
Statutory results
Sales decreased 2% on a headline basis to £1,722m (H1 2024: £1,754m) with currency movements partially offset by positive underlying business performance.
Statutory operating profit increased 10% on a headline basis to £240m (H1 2024: £219m) driven by operating leverage on sales growth, gains on disposals and the reversal of impairments on property assets, partially offset by inflation and currency headwinds.
Net cash generated from operations of £188m (H1 2024: £185m).
Statutory earnings per share of 24.8p (H1 2024: 23.1p).
Continued operational and strategic progress
Driving performance in the core business
In Assessment & Qualifications, Pearson VUE won several new contracts with continued strong customer retention supporting future growth. US Student Assessment also successfully renewed and extended several key contracts in the period. In UK & International Qualifications we continued to scale internationally. In Clinical Assessments we expanded our customer set with our first statewide adoption of our digital offering. The application of AI across our products continued with the launch of an AI-powered GCSE Exam Practice Assistant, as part of our collaboration with AWS.
In Virtual Learning, we completed the rollout of our new enrolment portal which we expect to support sales growth in the second half of the year. We are also embedding our career academies across the network ahead of fall back to school and are on track to open two new schools in H2 taking our total number of schools up to 42. We also successfully secured all six of our long term school contracts being renewed in H1. We continue to apply innovative technologies through integrating AI into our study tools, driving higher course scores and end-of-semester pass rates.
In Higher Education, we continued to build upon the successful monetisation of our Study Prep tool which we expanded into international markets in the first half of this year. We continue to rollout our AI-powered study tools across disciplines, including our new "Go Deeper" feature, which further supports students with engagement, new cognitive skills and higher order learning outcomes.
In English Language Learning, we announced a partnership with BorderPass, expanding our PTE go-to-market reach for international students and skilled migrants in Canada. We are also launching our new Pearson English Express Test which expands our addressable market, responding to demand for a trusted, accessible test for US-bound learners. Within Institutional we continue to expand internationally with customer wins in LATAM. We continue to make progress on the application of innovative technologies with the recent launch of AI-powered Smart Lesson Generator and Digital Language Tutor.
In Enterprise Learning & Skills, Vocational Qualifications delivered a solid performance in the period with several new contract wins supporting pipeline growth, including apprenticeship courses with the UK Ministry of Defence, T Levels in Health and Science, and International BTEC expansion. Within Enterprise Solutions we announced strategic partnerships with Microsoft, AWS and Google Cloud and are building momentum in our Enterprise approach, with new partners such as HCLTech. We have made enhancements to our talent assessment platform, TalentLens, through combining capabilities with PDRI's secure and scalable Palladium offering. We have also enabled third party credential uploads onto the Credly platform, to advance our goal of Credly becoming the most complete source of verified learning and skills data globally.
Progress in unlocking faster growth adjacent market opportunities
Higher Education recently completed the acquisition of eDynamic Learning, a leading Career and Technical Education (CTE) curriculum solutions provider for an enterprise value of $225m, enabling us to broaden capabilities and scale our position in the fast-growing Early Careers space.
We have operationalised our dedicated K-12 sales team within Higher Education, enabling us to expand and strengthen customer relationships with US school administrators as the demand for college and career readiness programmes grows.
Pearson VUE successfully launched the Pearson Skilling Suite and continues to make progress building out its test prep business.
Within US Student Assessment we announced an exclusive partnership with McGraw Hill to integrate our leading interim assessment capabilities directly into McGraw Hill's K-12 curriculum solutions, unlocking go-to-market opportunities in formative assessment.
Outlook
Reaffirm 2025 guidance
We continue to expect sales growth and adjusted operating profit in line with market expectations4 for 2025 with stronger sales growth in H2, in particular in Q4. We outline our 2025 guidance later in this release.
The acquisition of eDynamic Learning is not expected to have a material impact to 2025 guidance given near term integration costs and the acquisition accounting for deferred revenue.
Medium term outlook
Beyond 2025, Pearson is positioned to deliver a mid-single digit underlying sales growth CAGR, sustained margin improvement that will equate to an average increase of 40 basis points per annum and strong free cash conversion5, in the region of 90% to 100%, on average, across the period.
Contacts
Investor Relations
Alex Shore
Steph Crinnegan
+44 (0) 7720 947 853
+44 (0) 7780 555 351
Gemma Terry
Brennan Matthews
+44 (0) 7841 363 216
+1 (332) 238-8785
Media
Teneo
Pearson
Ed Cropley
Laura Ewart
+44 (0) 7492 949 346
+44 (0) 7798 846 805
Results event
Pearson's Interim Results presentation will be held today at 08:30 (BST).Register to joinsession virtually (link here).
About PearsonAt Pearson, our purpose is simple: to help people realise the life they imagine through learning. We believe that every learning opportunity is a chance for a personal breakthrough. That's why our Pearson employees are committed to creating vibrant and enriching learning experiences designed for real-life impact. We are the world's lifelong learning company, serving customers with digital content, assessments, qualifications, and data. For us, learning isn't just what we do. It's who we are. Visit us at pearsonplc.com.
Notes
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 cost 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. They are based on numerous assumptions regarding Pearson's present and future business strategies and the environment in which it will operate in the 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 Pearson's publicly-filed documents and you are advised to read, in particular, the risk factors set out in Pearson's latest annual report and accounts, which can be found on its website (www.pearsonplc.com). 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 based. Readers are cautioned not to place undue reliance on such forward-looking statements.
Operational review
£m
H1 2025
H1 20243
Headline
growth
Underlying
growth1
Sales
Assessment & Qualifications
802
811
(1) %
2 %
Virtual Learning
242
254
(5) %
(1) %
Higher Education
337
336
0 %
4 %
English Language Learning
171
188
(9) %
(3) %
Enterprise Learning & Skills
170
165
3 %
4 %
Total
1,722
1,754
(2) %
2 %
Adjusted operating profit/(loss)
Assessment & Qualifications
170
187
(9) %
(6) %
Virtual Learning
39
31
26 %
32 %
Higher Education
(3)
(7)
57 %
75 %
English Language Learning
(7)
4
(275) %
(200) %
Enterprise Learning & Skills
43
35
23 %
20 %
Total
242
250
(3) %
2 %
1Throughout this announcement: a) Growth rates are stated on an underlying basis unless otherwise stated. Underlying growth rates exclude currency movements, and portfolio changes. b) The 'business performance' measures are non-GAAP measures and reconciliations to the equivalent statutory heading under IFRS are included in notes to the attached condensed consolidated financial statements 2, 3, 4, 6 and 12.
2 Headline growth rate.
3In January 2025, the Group announced that Workforce Skills would evolve to become Enterprise Learning & Skills, incorporating our IT Pro business which was previously in Higher Education. Comparative figures have been restated to reflect the move between segments, resulting in £22m of sales and £6m of adjusted operating profit being transferred from Higher Education to Enterprise Learning & Skills for the six months ended 30 June 2024. The full year 2024 impact is £45m of sales and £12m of adjusted operating profit.
Assessment & Qualifications
In Assessment & Qualifications, sales increased 2% on an underlying basis and declined 1% on a headline basis due to currency movements offsetting trading. Adjusted operating profit decreased 6% in underlying terms due to operating leverage on sales growth more than offset by cost phasing, and 9% in headline terms due to this and currency movements.
Pearson VUE sales declined 3% on an underlying basis driven by the pause in a contract delivered in 2024 which will recommence in H2 2025, and headwinds in PDRI, which has been impacted by US federal government hiring and spend reductions which we expect to continue in the second half.
In US Student Assessment, sales decreased 1% in underlying terms due to changes in timing of delivery.
In Clinical Assessment, sales increased 11% in underlying terms due to the continued traction of our products in the market, pricing and digital product growth.
In UK and International Qualifications, sales increased 10% in underlying terms driven by volume, pricing and strong International growth.
Virtual Learning
Virtual Learning sales were down 1% on an underlying basis, as expected, due to the final portion of the impact of previously announced school losses. On a headline basis sales were down 5% due to this and currency movements. 2024/25 academic year enrolments increased 5% in the Spring semester on a same school basis and grew 7% including new school openings. We have also seen favorable retention trends in H1. Adjusted operating profit increased 32% in underlying terms driven by cost savings and phasing partially offset by trading, and increased 26% in headline terms due to this and currency movements.
Higher Education
In Higher Education, sales increased 4% on an underlying basis, benefitting from growth in Inclusive Access of 21% and US digital subscriptions of 3%. We continued to see good monetisation of our Study Prep tool and ongoing engagement with our AI study tools. Sales were flat on a headline basis as underlying growth was offset by currency movements. Adjusted operating profit increased in underlying terms driven by operating leverage on sales growth, with the headline result also reflecting currency movements.
English Language Learning
In English Language Learning, sales were down 3% on an underlying basis, in line with expectations, with our Institutional business performing well in Q2 but impacted by a strong comparator period in H1 last year. PTE sales were flat, performing well against a tough market backdrop, with volumes decreasing 10%. Sales were down 9% on a headline basis due to this and currency movements. Adjusted operating profit decreased due to the decline in trading and decreased in headline terms due to this and currency movements.
Enterprise Learning & Skills
In Enterprise Learning & Skills, sales were up 4% on an underlying basis and 3% on a headline basis. Adjusted operating profit increased by 20% in underlying terms due to operating leverage on sales and increased 23% in headline terms due to this and currency movements.
Vocational Qualifications delivered solid growth while Enterprise Solutions improved quarter on quarter as we build momentum in our Enterprise approach and related sales capability, including new wins such as HCLTech.
2025 guidance summary
Underlying Sales growth
Group
In line with market expectations4with stronger sales growth in H2, in particular in Q4.
Assessment & Qualifications
Sales to grow low to mid-single digit. Growth will be H2 weighed, in particular to Q4, due to new and renewed contracts and the new test prep business.
Virtual Learning
Return to growth in H2, and for the full year, driven by enrolment increases, partially from new school openings, for the 25/26 academic year.
Higher Education
Sales growth in 2025 will be higher than in 2024 as we build on the successful results of our sales team transformation and product innovations, particularly using AI.
English Language Learning
Sales growth will moderate given the impacts of elections on immigration rates in 2025 affecting our PTE business, which is expected to decline in the year. We expect growth to be H2 weighted, in particular to Q4. We remain confident in the medium term outlook given demographic projections.
Enterprise Learning & Skills
Sales to grow high single digit with Vocational Qualifications seeing solid growth and the addition of several new contracts for Enterprise Solutions. Growth will increase quarter on quarter supported by recent customer annoucements and pipeline activity.
Group Profit
Adjusted Operating Profit
In line with market expectations4.
Interest
Adjusted net finance costs of c.£65m.
Tax rate
We expect the effective tax rate on adjusted profit before tax to be between 24% and 25%.
Cash flow
We expect a free cash flow conversion5 of 90-100% plus the £0.1bn State Aid repayment which was received in full during Q1 2025.
FX
Every 1c movement in GBP:USD rate equates to approximately £5m adjusted operating profit impact.
42025 consensus on the Pearson website dated 27th January 2025; underlying sales growth 4.4%, adjusted operating profit of £656m at £:$ 1.23. Taking the average FX rate for H1 2025 (£:$1.31) and assuming the July 2025 month end rate of (£:$1.32) for the rest of the year, results in an implied FX rate for the full year of £:$1.32. This results in an updated adjusted operating profit of c.£611m.
5Free cash flow conversion calculated as free cash flow divided by adjusted earnings.
Exchange rates
H1 2025
H1 2024
FY 2024
£:$
Average rate for profits
1.31
1.26
1.28
Period end rate
1.37
1.26
1.25
FINANCIAL REVIEW
Operating result
Sales for the six months to 30 June 2025 decreased on a headline basis by £32m or 2% from £1,754m for the six months to 30 June 2024 to £1,722m for the same period in 2025 and adjusted operating profit decreased by 3% on a headline basis to £242m in the first half of 2025 compared to £250m in the first half of 2024 (for a reconciliation of this measure see note 2 to the condensed consolidated financial statements).
The headline basis simply compares the reported results for the six months to 30 June 2025 with those for the equivalent period in the prior year. We also present sales and profits on an underlying basis which excludes the effects of exchange, the effect of portfolio changes arising from acquisitions and disposals and the impact of adopting new accounting standards that are not retrospectively applied, when relevant. Our portfolio change is calculated by excluding sales and profits made by businesses disposed in 2024 or 2025 and by ensuring the contribution from acquisitions is comparable year on year. For prior year acquisitions, the corresponding pre-acquisition period is excluded from the current year. Portfolio changes mainly relate to the disposal of Copp Clark in 2025.
On an underlying basis, sales increased by 2% in the first six months of 2025 compared to the equivalent period in 2024 and adjusted operating profit increased by 2%. Currency movements decreased sales by £58m and adjusted operating profit by £11m, and portfolio changes had no impact on sales and decreased adjusted operating profit by £1m. There were no new accounting standards adopted in the first half of 2025 that impacted sales or profits.
Adjusted operating profit includes the results from discontinued operations when relevant but excludes charges for acquired intangible amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation, when relevant, property charges and one off-costs related to the UK pension scheme. A summary of these adjustments is included below and in note 2 to the condensed consolidated financial statements.
all figures in £ millions
2025
2024
2024
half year
half year
full year
Operating profit
240
219
541
Add back: Cost of major reorganisation
-
-
(2)
Add back: Intangible charges
20
20
41
Add back: UK pension discretionary increase
-
5
13
Add back: Other net gains and losses
(7)
6
7
Add back: Property charges
(11)
-
-
Adjusted operating profit
242
250
600
Costs of major reorganisation, In the first half of 2025 and 2024, there were no costs of major reorganisation. In the second half of 2024, there was a release of £2m relating to amounts previously accrued.
Intangible amortisation charges to the end of June 2025 were £20m compared to a charge of £20m in the equivalent period in 2024.
UK pension discretionary increases in 2024 relate to one-off pension increases awarded to certain cohorts of pensioners in response to the cost of living crisis. There were no such amounts in 2025.
Other net gains and losses in 2025 relate to the gain on disposal of a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to prior year acquisitions and disposals. Other net gains and losses in 2024 relate to costs related to prior year acquisitions and disposals, partially offset by a gain on the partial disposal of our investment in an associate.
Property charges in 2025 are a gain of £11m, relating to reversals of impairments of property assets that were previously impaired through property charges. There are no such amounts in 2024.
The reported operating profit of £240m in the first half of 2025 compares to a profit of £219m in the first half of 2024. The increase has been driven by operating leverage on sales growth, gains on disposals and the reversal of impairments on property assets, partially offset by inflation and unfavourable foreign exchange movements.
Due to seasonal bias in some of the Group's businesses, Pearson typically makes a higher proportion of its profits and operating cash flows in the second half of the year.
Net finance costs
Net finance costs increased on a headline basis from a net cost of £7m in the first half of 2024 to a net cost of £22m in the same period in 2025. The increase is primarily due to increased borrowing costs as a result of the bond issued in September 2024 and losses on derivatives held at fair value through profit and loss (FVTPL) compared to gains in 2024, offset by reduced fees related to drawings on the revolving credit facility and an increase in returns on cash deposits.
Adjusted net finance costs reflected in adjusted earnings to 30 June 2025 was £24m, compared to a net cost of £21m in the first half of 2024. The increase is primarily due to increased borrowing costs as a result of the bond issued in September 2024, offset by reduced fees related to drawings on the revolving credit facility and an increase in returns on cash deposits.
In the period to 30 June 2025, the total of items excluded from adjusted earnings was net income of £2m compared to net income of £14m in the first half of 2024. For a reconciliation of the adjusted measure see note 3 to the condensed consolidated financial statements.
Taxation
The reported tax on statutory earnings for the six months to 30 June 2025 was a charge of £52m compared to a charge of £54m in the period to 30 June 2024. This equates to an effective tax rate of 23.9% (2024: 25.5%), with the reduction from prior year principally being due to an impairment reversal which is not taxable.
The total adjusted tax charge for the period was £54m (2024: £54m), corresponding to an effective tax rate on adjusted profit before tax of 24.5% (2024: 23.6%). For a reconciliation of the adjusted measure see note 4 to the condensed consolidated financial statements.
In the first half of 2025, there was a net tax receipt of £35m (2024: £69m net tax payment). This includes a £97m repayment from HMRC in respect of the State Aid matter, with an additional £17m of associated interest also received in the period, classified within interest received in the cash flow statement. This repayment is a result of the Court of Justice of the European Union ('CJEU') handing down its decision on 19 September 2024 determining that the United Kingdom controlled foreign company group financing partial exemption ('FCPE') did not constitute State Aid, thereby resulting in a refund of the £97m of tax paid (plus £17m of interest) under the Charging Notices issued by HMRC in 2021. The balance excluding the State Aid repayment, principally relates to tax payments in the US and the UK.
Other comprehensive income
Included in other comprehensive income are the net exchange differences on translation of foreign operations. The loss on translation of £263m at 30 June 2025 compares to a loss at 30 June 2024 of £9m. The loss in 2025 arises from an overall weakening of the majority of currencies to which the Group is exposed, in particular the US dollar. A significant proportion of the Group's operations are based in the US and the US dollar closing rate at 30 June 2025 was £1:$1.37 compared to the opening rate of £1:$1.25. At the end of June 2024, the US dollar rate was £1:$1.26 compared to the opening rate of £1:$1.27.
Also included in other comprehensive income at 30 June 2025 is an actuarial loss of £12m in relation to retirement benefit obligations. The loss arises largely from losses on assets and experience losses, offset by a decrease in liabilities driven by lower long-term inflation rates. The loss in 2025 compares to an actuarial gain at 30 June 2024 of £1m.
Fair value losses of £6m (2024: losses of £4m) have been recognised in other comprehensive income and relate to movements in the value of investments in unlisted securities held at fair value through other comprehensive income (FVOCI).
Cash flow and working capital
Our operating cash flow measure is used to align cash flows with our adjusted profit measures (see note 12 to the condensed consolidated financial statements). Operating cash flow decreased on a headline basis by £3m from an inflow of £129m in the first half of 2024 to an inflow of £126m in the first half of 2025. The decrease is largely explained by good working capital management offset by unfavourable FX movements.
The equivalent statutory measure, net cash generated from operations, was an inflow of £188m in 2025 compared to an inflow of £185m in 2024. Compared to operating cash flow, this measure includes reorganisation costs but does not include regular dividends from associates. It also excludes capital expenditure on property, plant, equipment and software, and additions to right of use assets as well as disposal proceeds from the sale of property, plant, equipment and right of use assets (including the impacts of transfers to/from investment in finance lease receivable). In the first half of 2025, reorganisation cash outflow was £nil compared to £5m in the same period in 2024.
Free cash flow increased on a headline basis by £129m from £27m in 2024 to £156m in 2025. When compared to operating cash flow, free cash flow includes tax paid/received, net finance costs paid and net costs paid for major reorganisation. The increase year on year is mainly due to the receipt of monies in respect of the State Aid tax matter.
In the first half of 2025, there was an overall decrease of £196m in cash and cash equivalents from £543m at the end of 2024 to £347m at 30 June 2025. The decrease in 2025 is primarily due to the cash inflow from operations of £188m, net tax received of £35m and net proceeds from borrowings of £46m, offset by dividends paid of £110m, share buyback programme payments of £158m, own share purchases of £72m, capital expenditure on property, plant, equipment and software of £62m and payments of lease liabilities of £38m.
Liquidity and capital resources
The Group's net debt increased from £853m at the end of 2024 to £1,027m at the end of June 2025. The increase is largely due to free cash flow of £156m including the State Aid repayment which are more than offset by the share buyback programme, other own share purchases and dividend payments. In May 2025, the Group repaid its €300m bond and closed out various related derivatives. In June 2025, the Group secured a new three-year, $800 million revolving credit facility (RCF). This facility can be utilised for general corporate purposes, enhancing our liquidity, and is in addition to the Group's existing RCF. At 30 June 2025, the Group had drawn £300m on its Revolving Credit Facilities.
At 30 June 2025, the Group had approximately £1.2bn in total liquidity immediately available from cash and its RCFs maturing February and June 2028. In assessing the Group's ability to continue as a going concern for the period until 31 December 2026, the Board analysed a variety of downside scenarios, including a severe but plausible scenario, where the Group is impacted by a combination of all principal risks from H2 2025, as well as reverse stress testing to identify what would be required to either breach covenants or run out of liquidity. The severe but plausible scenario modelled a severe reduction in revenue, profit and operating cash flow from risks continuing throughout 2026. In all scenarios, the Group would maintain comfortable liquidity headroom and sufficient headroom against covenant requirements during the period under assessment even before modelling the mitigating effect of actions that management would take in the event that these downside risks were to crystallise. The directors concluded that the likelihood of the reverse stress test scenario was remote.
Post-retirement benefits
Pearson operates a variety of pension and post-retirement plans. The UK Group pension plan has by far the largest defined benefit section. This plan has a strong funding position and a surplus with a very substantially de-risked investment portfolio including approximately 50% of the assets in buy-in contracts. We have some smaller defined benefit sections in the US and Canada but, outside the UK, most of the companies operate defined contribution plans.
The charge to profit in respect of worldwide pensions and retirement benefits amounted to £21m in the period to 30 June 2025 (30 June 2024: £30m) of which a charge of £33m (30 June 2024: £41m) was reported in operating profit and income of £12m (30 June 2024: £11m) was reported against other net finance costs. In the period to 30 June 2024, a charge of £5m related to one-off discretionary pension increases was excluded from adjusted operating profit, with no such amounts in 2025.
The overall surplus on UK Group pension plans of £484m at the end of 2024 has decreased to a surplus of £482m at the end of June 2025. The decrease has arisen principally due to asset returns being lower than expected and inflation over the period being slightly higher than was expected at the beginning of the year. In total, our worldwide net position in respect of pensions and other post-retirement benefits increased from a net asset of £450m at the end of 2024 to a net asset of £453m at the end of June 2025.
Businesses acquired and disposed
The Group made no acquisitions of subsidiaries in the first half of 2025 or 2024. The cash outflow in the first half of 2025 relating to acquisition of subsidiaries was £4m arising from the payment of deferred consideration in respect of prior year acquisitions. The cash outflow in the first half of 2024 relating to acquisitions of subsidiaries was £38m, arising from the payment of deferred consideration in respect of prior year acquisitions, mainly Credly and Mondly, which were acquired in 2022. In addition, there was a cash outflow relating to investments of £5m (2024: £7m).
The Group disposed of Copp Clark in the first half of 2025 for consideration of £9m, resulting in a gain on disposal of £8m, which has been recorded within other net gains and losses. There were no disposals of subsidiaries in the first half of 2024. In 2025, the cash inflow relating to the disposal of businesses was £9m (2024: outflow of £6m).
On 24 July 2025, the Group completed the acquisition of 100% of eDynamic Holdings LP ('eDynamic Learning'), a leading Career and Technical Education (CTE) curriculum solutions provider, having obtained all necessary approvals. Since the acquisition closed subsequent to the half year date, it has not been reflected in the interim financial statements. For further details, see note 15 to the condensed consolidated financial statements.
Dividends
The dividend accounted for in the six months to 30 June 2025 is the final dividend in respect of 2024 of 16.6p. An interim dividend for 2025 of 7.8p was declared by the Board in July 2025 and will be accounted for in the second half of 2025. The interim dividend will be paid on 15 September 2025 to shareholders who are on the register of members at close of business on 15 August 2025 (the Record Date). Shareholders may elect to reinvest their dividend in the Dividend Reinvestment Plan (DRIP). The last date for receipt of DRIP elections and revocations will be 22 August 2025. A Dividend Reinvestment Plan (DRIP) is provided by our Registrar, Computershare Investor Services. The DRIP enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.computershare.com/Investor
Share buyback
On 27 February 2025, the Board approved a £350m share buyback programme in order to return capital to shareholders. In the first half of 2025, c15m shares have been bought back at a cash cost of £158m. A £18m liability for the remainder of the first tranche of the programme plus related costs has been accrued as at 30 June 2025. The nominal value of the cancelled shares of £3m has been transferred to the capital redemption reserve. In the period from 1 to 30 July 2025, an additional c4m of shares have been repurchased.
Principal risks and uncertainties
In the 2024 Annual Report and Accounts, we set out our assessment of the principal risk issues that face the business under the categories: accreditation risk, artificial intelligence, content and channel risks, capability risk, competitive marketplace, customer expectations, portfolio change, and reputation and responsibility. We also noted in our 2024 Annual Report and Accounts that the Group continues to closely monitor significant near-term and emerging risks which have been identified as climate transition, economic changes, tax, sanctions and geopolitics.
The principal risks and uncertainties are summarised below. The selection of principal risks will be reviewed in the second half of the year alongside the Group's long-term strategic planning process. However, these risks have not changed materially from those detailed in the 2024 Annual Report.
Accreditation Risk
Termination or modification of accreditation due to policy changes or failure to maintain the accreditation of our courses and assessments by states, countries, and professional associations, reducing their eligibility for funding or attractiveness to learners. Awarding bodies may also require modification of tests to continue to receive accreditation which may reduce the convenience to learners or increase the cost of delivery.
Artificial Intelligence, Content and Channel Risk
The risk that our intellectual property is harder to protect as a result of increased content generation through artificial intelligence and that our content and method of delivery (channel) is, or is perceived to be, insufficiently differentiated in terms of outcomes or learner experience.
Capability Risk
Inability to meet our contractual obligations or to transform as required by our strategy, due to infrastructure, systems or organisational challenges.
Competitive Marketplace
Significant changes in our target markets could make those markets less attractive. This could be due to significant changes in demand or in supply, which impact the addressable market, market share and margins (e.g. changes in enrolments, in-sourcing of learning and assessment by customers, open educational resources, a shift from in-person to virtual learning or vice versa, or innovations in areas such as generative AI).
Customer Expectations
Rising end-user expectations increase the need to offer differentiated value propositions, risking margin pressure to meet these expectations and potential loss of sales if not successful.
Portfolio Change
Failure to effectively execute desired or required portfolio changes to promote scale or capability and increase focus on key business units and geographic markets, due to either execution failures or inability to secure transactions at appropriate valuations.
Reputation and Responsibility
Reputational and responsibility risks involve failing to meet obligations and demands of key stakeholders, including legal, regulatory, ethical and behavioural expectations. These risks extend beyond direct consequences to include broader societal and cultural perceptions.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the period ended 30 June 2025
all figures in £ millions
note
2025
2024
2024
half year
half year
full year
Continuing operations
Sales
2
1,722
1,754
3,552
Cost of goods sold
(843)
(875)
(1,741)
Gross profit
879
879
1,811
Operating expenses
(645)
(654)
(1,265)
Other net gains and losses
2
7
(6)
(7)
Share of results of joint ventures and associates
(1)
-
2
Operating profit
2
240
219
541
Finance costs
3
(47)
(57)
(112)
Finance income
3
25
50
81
Profit before tax
218
212
510
Income tax
4
(52)
(54)
(75)
Profit for the period
166
158
435
Attributable to:
Equity holders of the company
164
157
434
Non-controlling interest
2
1
1
Earnings per share from continuing operations (in pence per share)
Basic
5
24.8p
23.1p
64.5p
Diluted
5
24.5p
22.8p
63.5p
The accompanying notes to the condensed consolidated financial statements form an integral part of the financial information.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 June 2025
all figures in £ millions
2025
2024
2024
half year
half year
full year
Profit for the period
166
158
435
Items that may be reclassified to the income statement
Net exchange differences on translation of foreign operations
(263)
(9)
(35)
Attributable tax
(1)
-
2
Items that are not reclassified to the income statement
Fair value loss on other financial assets
(6)
(4)
(2)
Attributable tax
-
-
-
Remeasurement of retirement benefit obligations
(12)
1
5
Attributable tax
3
-
(2)
Other comprehensive expense
(279)
(12)
(32)
Total comprehensive (expense) / income
(113)
146
403
Attributable to:
Equity holders of the company
(114)
145
402
Non-controlling interest
1
1
1
CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 June 2025
all figures in £ millions
note
2025
2024
2024
half year
half year
full year
Property, plant and equipment
203
207
216
Investment property
74
75
77
Intangible assets
9
2,809
3,050
3,026
Investments in joint ventures and associates
11
11
12
Deferred income tax assets
48
34
52
Financial assets, derivative financial instruments
16
4
20
Retirement benefit assets
488
491
491
Other financial assets
126
141
141
Income tax assets
-
41
4
Trade and other receivables
108
134
125
Non-current assets
3,883
4,188
4,164
Intangible assets, product development
873
941
947
Inventories
71
89
74
Trade and other receivables
999
1,081
1,030
Financial assets, derivative financial instruments
38
55
31
Current income tax assets
14
23
103
Cash and cash equivalents (excluding overdrafts)
347
332
543
Current assets
2,342
2,521
2,728
