Confident in outlook, guiding to mid-single digit sales growth for 2026 and beyond. Strong financial position, with GBP350m share buyback well underway.
LONDON, Feb. 27, 2026 /PRNewswire/ --
Financial Highlights
GBPm 2025 vs 2024 GBPm 2025 2024
Business performance Statutory results
Sales 3,577 +4%(1) Sales 3,577 3,552
Adjusted operating
profit 614 +6%(1) Operating profit 507 541
Operating cash flow 571 -14%(2) Profit for the period 336 435
Net cash generated
Free cash flow 527 +8%(2) from operations 731 811
Adjusted earnings per 64.5p +4%(2) Basic earnings per 51.4p 64.5p
share share
Highlights
-- Underlying Group sales growth of 4% for the full year. Group adjusted
operating profit of GBP614m, up 6% underlying with margin expansion from
16.9% to 17.2%.
-- Operating cash conversion remained strong at 93%, with an increase in
working capital given high Q4 sales growth. Free cash flow up 8%,
resulting in free cash flow conversion3 of 125%.
-- Adjusted earnings per share increased 9% at constant exchange rates4, and
4% on a headline basis. Full year dividend per share up 5% to 25.2p.
Recently announced GBP350m share buyback programme well underway.
-- Significant strategic progress in delivering our 2025 priorities:
-- Continued to lead with the application of innovative technologies,
deepening and scaling AI across our offering, driving measurable
improvements in learner outcomes and saving educators meaningful
time, whilst embedding AI as a foundational capability within
Pearson.
-- Advanced our enterprise strategy, securing eight partnerships with
industry-leading firms with continued momentum into 2026,
announcing a new strategic partnership with Salesforce.
-- Positive outlook for 2026: mid-single digit underlying sales growth,
adjusted operating profit of GBP640m-GBP685m at FX rates as at the end of
2025 (GBP:$ 1.35), including the impact of the 2025 product development
impairment, and free cash flow conversion of 90%-100%. Medium term
guidance reiterated.
Omar Abbosh, Pearson's Chief Executive, said:
"We delivered on our goals in 2025, making significant progress in scaling AI across our products and services and building tangible momentum in our enterprise offering. The partnerships we secured with leading technology companies are a recognition of Pearson's unique role at the intersection of education, skills and workforce development, underpinned by our unrivalled strength in assessments which positions us to deliver meaningful shareholder value over the medium term. Through our unique competitive positioning, we look to the future with confidence as we meet the growing and urgent need among enterprises and learners to adapt to an AI-enabled world."
Statutory results
-- Sales increased 1% on a headline basis to GBP3,577m (2024: GBP3,552m)
with currency movements partially offsetting underlying business
performance.
-- Statutory operating profit decreased 6% to GBP507m (2024: GBP541m).
Underlying operating profit growth and the reversal of prior property
provisions were more than offset by adverse currency movements and an
GBP87m non-cash, one-off impairment of legacy product development assets
arising from strategic platform convergence. This convergence is expected
to deliver ongoing operational improvements and results in a c.GBP15m per
annum adjusted operating profit improvement, on average, over the next 6
years in Higher Education.
2026 priorities
-- Deliver on 2026 guidance for Group underlying sales growth, adjusted
operating profit and free cash flow.
-- Lead with the application of innovative technologies, including AI
powered learning and assessment products and services, driving better
attainment outcomes and enhanced experiences.
-- Progress core business and enterprise power metrics.
2025 Financial Performance
Underlying Group sales growth of 4% for the full year
-- Assessment & Qualifications sales grew 4% with all sub-business units
contributing to growth.
-- Virtual Learning delivered a strong performance with 8% sales growth for
the full year, and H2 up 18% driven by a 13% increase in 2025/26 Fall
semester enrolments, as well as favourable mix and funding.
-- Higher Education sales grew 2%, with US Higher Education up 3% driven by
enrolments and pricing in core Courseware with adoption share maintained.
-- English Language Learning sales increased 1%, driven by Institutional,
with Pearson Test of English $(PTE)$ performing well against a tough market
backdrop.
-- Enterprise Learning & Skills sales grew 6% with a solid performance in
Vocational Qualifications and continued quarter-on-quarter improvement in
Enterprise Solutions.
Adjusted operating profit up 6% on an underlying basis to GBP614m
-- Underlying performance up 6% driven by sales growth and continued cost
savings, partially offset by investment and inflation. Adjusted operating
profit margin rose to 17.2% (2024: 16.9%).
-- Headline adjusted operating profit growth was 2% reflecting business
performance and portfolio changes partially offset by currency movements.
-- Adjusted net finance costs increased to GBP57m (2024: GBP45m). The
effective tax rate on adjusted profit before tax held broadly flat at
24.5% (2024: 24.4%).
-- Adjusted earnings per share increased 4% to 64.5p (2024: 62.1p)
reflecting adjusted operating profit growth and the reduction in issued
shares due to the 2025 share buyback, partially offset by increased
interest costs. Adjusted earnings per share increased 9% at constant
exchange rates.
Strong cash performance
-- Operating cash conversion remained strong at 93%, with an increase in
working capital given high Q4 sales growth and increased investment
spend. Operating cash inflow decreased on a headline basis from GBP662m
in 2024 to GBP571m in 2025 given these factors as well as currency
movements.
-- Free cash flow increased 8%, resulting in free cash flow conversion of
125%, driven by the GBP0.1bn recovery of State Aid taxes. Free cash flow
conversion excluding the recovery of State Aid taxes was 98%, at the top
end of guidance.
Strong balance sheet supporting continued investment and shareholder returns
-- Year-end net debt of GBP1.1bn (2024: GBP0.9bn), with free cash flow more
than offset by the share buyback, acquisition of eDynamic Learning and
dividends. Net debt / adjusted EBITDA ratio of 1.3x (2024: 1.1x).
-- Proposed final dividend of 17.4p (2024: 16.6p) which equates to a full
year dividend of 25.2p (2024: 24.0p) an increase of 5% compared to 2024.
-- In 2025 we completed a GBP350m share buyback, reducing our share count by
5%. In line with our capital allocation framework and supported by strong
free cash flow, we commenced a further GBP350m share buyback in January
2026.
-- Secured new three-year, $800m revolving credit facility, enhancing our
liquidity and strategic flexibility.
-- Return on capital was 11.3% (2024: 10.5%).
Continued operational and strategic progress, strengthening our core business while expanding into faster growth adjacent markets
-- Assessment & Qualifications:
-- Pearson Professional Assessments continued to lead the global
market in large-scale testing services, securing several new
contracts and maintaining strong customer retention supporting
future growth.
-- US Student Assessment announced an integrated partnership with
McGraw Hill embedding formative assessments into core K12
curricula, and although we lost the contract with New Jersey we
subsequently renewed and extended several key contracts, including
Maryland and others at a late stage of contract completion.
-- In UK & International Qualifications, we commenced the delivery of
the new UK Government Test Operations Services contract and we
expanded our digital offerings, including increased adoption of
onscreen assessment and ActiveHub, our flagship teaching and
learning platform.
-- In Clinical Assessment we have implemented the first statewide
adoption of our digital platform in Tennessee and expanded our
pharmaceutical business.
-- Key innovations included the launch in Clinical Assessment of
Revibe, a wearable device designed to support individuals
experiencing challenges with focus and attention such as those
with ADHD, alongside the integration of AI by Pearson Professional
Assessment to drive efficiencies in assessment generation.
-- Virtual Learning:
-- We completed the launch of a new enrolment portal across our
school network, helping to remove friction in the enrolment
process.
-- During the year, we made targeted marketing investments to
capitalise on strong market demand for virtual schooling.
-- We continue to enhance our career offering through new and
extended partnerships and also embedded our career programmes
across the school network, supporting students in their transition
to the workforce.
-- We deepened the integration of AI into our study tools,
contributing to higher course scores and end-of-semester pass
rates, and expanded our teacher AI custom assessment tool
network-wide, driving increased adoption and usage allowing
teachers to focus on meaningful student interactions by halving
the time it takes to create custom student assessments.
-- Higher Education:
-- We expanded the successful monetisation of our Study Prep tool,
extending reach into International markets.
-- Our AI powered study tools continue to deliver measurable
improvements in learning outcomes, with our latest research
showing repeat usage of our AI study tools increases the
likelihood of a student becoming an active reader by 24 times.
-- We also saw sustained momentum in our Inclusive Access offerings,
achieving another year of strong double digit sales growth.
-- We made significant strategic progress in expanding into the fast
growing Early Careers space, broadening capabilities in
career-readiness solutions which support learners as they
transition from formal education into the workforce. We
established a dedicated direct sales force to deepen and expand
our relationships with US school administrators and completed the
acquisition of eDynamic Learning -- North America's largest
provider of digital Career and Technical Education.
-- English Language Learning:
-- We launched the PTE Express test, addressing growing demand for
trusted online testing among US-bound learners, and renewed our
agreement with Australia's Department of Home Affairs.
-- Within Institutional, we continued to expand internationally,
securing customer wins in key markets including Latin America and
Asia.
-- We also continued to make progress on the application of
innovative technologies with the launch of Communications Coach -
an AI-powered learning solution integrated into Microsoft 365,
enabling professionals to enhance communication skills seamlessly
within the flow of work, marking our first go-to-market
collaboration with Microsoft.
-- Enterprise Learning & Skills:
-- Vocational Qualifications secured several new contract wins
including apprenticeship courses with the UK Ministry of Defence,
the Uzbekistan Ministry of Education, and the Kingdom of Saudi
Arabia, alongside International BTEC expansion.
-- Within Enterprise Solutions, we launched a global go to market
approach, establishing a dedicated enterprise sales team supported
by marketing and delivery.
-- We also signed strategic partnerships with eight industry-leading
firms, securing sales opportunities and collaborating on joint
go-to market initiatives across a broad range of learning
experiences.
Confident in future thanks to AI trends driving major multi-year demand for upskilling and the validation of skills
-- The advancement of AI drives large scale reconfiguration of industries,
occupations, roles and educational approaches. This is proving a major
demand driver for skilling and the validation of skills. Pearson's core
capability is assessment and verification and we already see resultant
demand from enterprises.
-- Approximately 90% of 2025 adjusted operating profit was generated from
assessments, virtual schools and print. These are operationally complex,
large-scale services with very high quality requirements. These services
often need high levels of security, statistical evidence bases while
meeting regulatory outcomes, where trust in delivery standards is
critical. We use AI and other technologies to enhance the productivity of
our operations and improve services to customers.
-- The remaining approximately 10% of 2025 adjusted operating profit was
generated primarily from digital courseware, where AI technologies play
an important role in personalisation. We have made significant progress
in advancing the application of AI to improve learning outcomes, and this
continues to be a company priority. We benefit from our deep integration
into the learning ecosystem, significant proprietary data, and demand for
trusted pedagogy.
Outlook
2026 guidance
Underlying Group Mid-single digit growth.
Sales
Growth
------------------------ --------------------------------------
Assessment & Low to mid-single digit growth, driven
Qualifications by new contracts, products and
pricing. Q1 to decline due to the loss
of the New Jersey contract and PDRI
headwinds, returning to growth in
subsequent quarters supported by new
business and recently awarded
contracts.
------------------------ --------------------------------------
Virtual Learning Stronger growth than 2025,
particularly in H1, driven by a full
year of enrolment growth.
------------------------ --------------------------------------
Higher Education Will grow more than 2025, supported by
continued product and platform
innovation, pricing and Inclusive
Access in our core US courseware
business, with improvement in the K12
channel.
------------------------ --------------------------------------
English Language Higher growth than 2025 driven by
Learning market share gains and pricing, with
PTE returning to growth. Growth will
again be Q4 weighted given the
seasonality of the business.
------------------------ --------------------------------------
Enterprise Learning & Growth to be driven by a solid
Skills performance in Vocational
Qualifications and strategic account
growth in Enterprise Solutions.
------------------------ --------------------------------------
Group Profit Adjusted Operating GBP640m-GBP685m at FX rates as at the
Profit end of 2025 (GBP:$ 1.35), which
includes lower amortisation in 2026
following the 2025 product development
impairment.
------------------------ --------------------------------------
Interest Adjusted net finance costs of c.GBP80m
-- includes associated costs of
funding the recently announced GBP350m
share buyback.
------------------------ --------------------------------------
Tax rate We expect the effective tax rate on
adjusted profit before tax to be
c.25%.
------------------------ --------------------------------------
Cash flow We expect a free cash flow conversion
of 90%-100%.
--------------------------------------
FX Every 1c movement in GBP:$ rate
equates to approximately GBP5m
adjusted operating profit impact.
-------------------------------------- --------------------------------------
Exchange rates FY 2025 FY 2024
GBP:$
Average rate for profits 1.32 1.28
Period end rate 1.35 1.25
Medium term outlook
-- Over the medium term, Pearson is well 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 conversion, in the region of 90% to 100%, on average,
across the period.
Financial Calendar
-- 2026 Q1 Trading Update will be announced on 1 May 2026.
Executive change
Sally Johnson, Group Chief Financial Officer (CFO), has informed the Board of her decision to leave the company later this year to take up the role of CFO at a large privately owned business. The Board would like to thank Sally for her contribution and leadership during her tenure as Group CFO.
Following a carefully managed succession process, Simon Robson, currently CFO at Sky, will succeed Sally as Group CFO. Simon will join Pearson on 30 March 2026 and assume the role of Group CFO and Executive Director on 8 May 2026, ensuring a smooth and orderly transition.
Simon brings extensive financial leadership from Sky, one of Europe's largest media, technology and connectivity businesses. Having joined Sky in 1997, he has held a number of senior finance and strategy roles, including CFO of Sky Deutschland from 2015 to 2018, followed by Deputy Group CFO, before being appointed Group CFO in June 2020. A chartered certified accountant, Simon brings a strong track record of delivering high--impact financial strategy and operational excellence.
There is no further information to be declared in accordance with LR 6.4.8.
Contacts
Investor Relations Alex Shore +44 (0) 7720 947 853
Steph Crinnegan +44 (0) 7780 555 351
Gemma Terry +44 (0) 7841 363 216 +1
Brennan Matthews (332) 238-8785
ir@pearson.com https://plc.pearson.com/e
n-GB/investors
Media
Edelman Smithfield Latika Shah +44 (0)7950 671 948
Pearson Laura Ewart +44 (0) 7798 846 805
Results event Pearson's prelim results
presentation today at
09:30 (GMT). If you would
like to attend the
in-person session, please
email:
amy.plavecky@pearson.com
Register to join the
session virtually here:
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About Pearson
At 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
Headline Underlying
GBPm 2025 2024(5) growth(2) growth(1)
Sales
Assessment & Qualifications 1,604 1,591 1 % 4 %
Virtual Learning 511 489 4 % 8 %
Higher Education 775 781 (1) % 2 %
English Language Learning 405 420 (4) % 1 %
Enterprise Learning & Skills 282 271 4 % 6 %
Total 3,577 3,552 1 % 4 %
Adjusted operating profit
Assessment & Qualifications 361 368 (2) % 1 %
Virtual Learning 81 66 23 % 29 %
Higher Education 93 96 (3) % 0 %
English Language Learning 50 50 0 % 16 %
Enterprise Learning & Skills 29 20 45 % 40 %
Total 614 600 2 % 6 %
(1) Throughout 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 rates include currency movements, and portfolio changes.
(3) Free cash flow conversion calculated as free cash flow divided by adjusted
earnings.
(4) Calculated using adjusted operating profit at constant exchange
rates. Constant exchange rates are calculated by assuming the average FX in
the prior year prevailed through the current year.
(5) In 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 GBP45m of sales and GBP12m of
adjusted operating profit being transferred from Higher Education to
Enterprise Learning & Skills in full year 2024.
Assessment & Qualifications
In Assessment & Qualifications, sales increased 4% on an underlying basis and 1% on a headline basis with currency movements partially offsetting trading. Adjusted operating profit increased 1% in underlying terms due to operating leverage on sales growth partially offset by investment and inflation, and decreased 2% in headline terms due to currency movements offsetting trading.
Pearson Professional Assessments sales increased 1% on an underlying basis driven by new contract launches partially offset by the pause in a contract delivered in 2024, which resumed in Q3, and headwinds in PDRI, which has been impacted by US federal government hiring and spend reductions.
In US Student Assessment, sales increased 2% on an underlying basis supported by scope increases with existing customers.
In Clinical Assessment, sales increased 8% on an underlying basis due to the continued traction of our products in the market, pricing and digital product growth.
In UK & International Qualifications, sales increased 9% on an underlying basis driven by volume, pricing and strong International growth.
For Assessment & Qualifications, we expect low to mid-single digit underlying sales growth in 2026. This will be driven by new contracts, products and pricing. 2026 priorities include expansion into adjacent markets, including high stakes test prep and formative assessments, along with key contract renewals and new wins. We will also continue to expand internationally, enhance operational excellence, and accelerate innovation, particularly through AI.
Virtual Learning
Virtual Learning sales grew 8% on an underlying basis, with strong performance in H2 driven by enrolment performance, favourable mix and funding. On a headline basis sales were up 4% with currency movements partially offsetting trading. Adjusted operating profit increased 29% in underlying terms, due to operating leverage on sales growth, and 23% in headline terms due to this partially offset by currency movements.
Enrolments for the 2025/26 academic year increased by 13% in the Fall semester, benefiting from targeted marketing investments to capture demand. We also successfully opened two new schools for the 2025/26 academic year bringing our total number of schools to 41 across 31 states and renewed all six of our long term school contracts.
For Virtual Learning, we expect even stronger underlying sales growth in 2026 than 2025, driven by a full year of enrolment growth. 2026 priorities include continuing to capture growing demand for US virtual schooling, further strengthening of our marketing and enrolment capabilities, targeted school expansion and the ongoing application of AI to personalise teaching and learning.
Higher Education
In Higher Education, sales increased 2% on an underlying basis and decreased 1% on a headline basis due to currency movements more than offsetting trading and portfolio changes. Adjusted operating profit was flat in underlying terms driven by operating leverage on sales growth offset by investment in the business and inflation, and decreased 3% in headline terms due to currency movements more than offsetting trading and portfolio changes.
In US Higher Education, underlying sales grew 3%, driven by enrolment growth and pricing in our core Courseware business, partly offset by expected declines in the K12 channel due to the transitionary period, with adoption share maintained. We delivered strong growth in Inclusive Access, up 19%, and achieved 2% growth in US digital subscriptions. In addition, we continued to see strong monetisation of our Study Prep tool and sustained engagement with our AI-powered study tools. International Higher Education faced ongoing challenging trading conditions in mature markets, declining 7% for the full year.
For Higher Education, we expect underlying sales to grow more in 2026 than 2025, supported by continued product and platform innovation, pricing and Inclusive Access in our core US courseware business as well as improvement in the K12 channel. 2026 priorities include building on our Early Careers offerings, continuing to enhance access and integration across our Inclusive Access offerings in the US, while focusing internationally on emerging markets, digital expansion and content localisation.
English Language Learning
In English Language Learning, sales grew 1% on an underlying basis, driven by Institutional, and decreased 4% on a headline basis due to currency movements more than offsetting trading. Adjusted operating profit increased by 16% in underlying terms due to cost savings partially offset by inflation and was flat in headline terms due to currency movements offsetting trading.
PTE continued to perform well against a challenging market backdrop of tightening migration policies. While volumes declined 5%, sales remained flat and we continued to gain market share. Our Institutional business delivered a solid performance, with strength in key Latin American markets and Asia.
For English Language Learning, we expect higher underlying sales growth in 2026 than 2025, driven by market share gains and pricing, with PTE returning to growth. 2026 priorities include continued strong operational performance, refreshing our Institutional product suite developing next--generation solutions for institutional and government partners, and supporting enterprise customers with advanced upskilling capabilities.
Enterprise Learning & Skills
In Enterprise Learning & Skills, sales were up 6% on an underlying basis and 4% on a headline basis due to currency movements more than offsetting trading. Adjusted operating profit increased by 40% in underlying terms due to operating leverage on sales and increased 45% in headline terms due to trading performance and favourable currency movements.
Vocational Qualifications delivered a solid performance while Enterprise Solutions growth improved quarter-on-quarter as we build momentum in our enterprise approach and related sales capability, driven by the recently announced partnerships.
For Enterprise Learning & Skills in 2026, we expect underlying sales growth to be driven by a solid performance in Vocational Qualifications and strategic account growth in Enterprise Solutions. 2026 priorities include addressing growing demand for trusted talent solutions that help employees work more effectively with AI, deepening value from our strategic partners and broadening our validated skills data to support workforce mobility at scale.
Financial Review
Operating result
Sales increased on a headline basis by GBP25m or 1% from GBP3,552m in 2024 to GBP3,577m in 2025 and adjusted operating profit increased by 2% on a headline basis to GBP614m in 2025 compared to GBP600m in 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 2025 with those for 2024. 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, and for current year acquisitions, the results for the current year are excluded. Portfolio changes mainly relate to the acquisition of eDynamic Learning and disposal of Copp Clark in 2025.
On an underlying basis, sales increased by 4% in 2025 compared to 2024 and adjusted operating profit increased by 6%. Currency movements decreased sales by GBP112m and adjusted operating profit by GBP26m, and portfolio changes increased sales by GBP7m and adjusted operating profit by GBP2m. There were no new accounting standards adopted in 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 and associated property charges, one off-costs related to the UK pension scheme and certain other one-off material items. A summary of these adjustments is included below and in note 2 to the condensed consolidated financial statements.
all figures in GBP millions 2025 2024 Operating profit 507 541 Add back: Cost of major reorganisation - (2) Add back: Product development impairment 87 - Add back: Intangible charges 42 41 Add back: UK pension discretionary increase - 13 Add back: Other net gains and losses 3 7 Add back: Property charges (25) - --------------------------------------------- ---- ---- Adjusted operating profit 614 600
Costs of major reorganisation -- In 2025, there are no costs of major reorganisation. In 2024, there was a release of GBP2m relating to amounts previously accrued.
Product development impairment charges in 2025 relate to the impairment of product development assets as a result of courseware platform convergence. There were no such amounts in 2024.
Intangible amortisation charges in 2025 were GBP42m compared to a charge of GBP41m in 2024. This is due to increased amortisation from recent acquisitions partially offset by decreased amortisation from assets reaching the end of their useful economic lives.
UK pension discretionary increases in 2024 related 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 Copp Clark, a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to current and prior year acquisitions and disposals. Other net gains and losses in 2024 related 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 GBP25m relating to reversals of impairments of property assets that were previously impaired through property charges. Impairment reversals have arisen from new sublets on previously vacant space in corporate properties. There were no such amounts in 2024.
The reported operating profit of GBP507m in 2025 compares to a profit of GBP541m in 2024. The decrease has been driven by unfavourable foreign exchange movements, the product development impairment, investment and inflation, partially offset by operating leverage on sales growth and cost savings, as well as a reduction in one-off pension charges and property related impairment reversals.
Net finance costs
Net finance costs increased on a headline basis from a net cost of GBP31m in 2024 to a net cost of GBP50m in 2025. The increase is primarily due to increased net borrowing costs given increased average net debt following last year's share buy back and movements on derivatives.
Adjusted net finance costs reflected in adjusted earnings in 2025 was GBP57m, compared to a net cost of GBP45m in 2024. The increase is primarily due to increased net borrowing costs given increased average net debt following last year's share buy back and movements on derivatives.
In 2025, the total of items excluded from adjusted earnings was net income of GBP7m compared to net income of GBP14m in 2024. For a reconciliation of the adjusted measure see note 3 to the condensed consolidated financial statements.
Taxation
The reported tax on statutory earnings in 2025 was a charge of GBP121m compared to a charge of GBP75m in 2024. This equates to an effective tax rate of 26.5% (2024: 14.7%), with the increase from prior year principally due to the release of the State Aid uncertain tax provision in the prior year.
The total adjusted tax charge in 2025 was GBP136m (2024: GBP136m), corresponding to an effective tax rate on adjusted profit before tax of 24.5% (2024: 24.4%). For a reconciliation of the adjusted measure see note 4 to the condensed consolidated financial statements.
In 2025, there was a net tax payment of GBP2m (2024: GBP119m net tax payment). This includes a GBP97m receipt from HMRC in respect of the State Aid matter, with an additional GBP17m of associated interest also received in the period. The interest element is classified within interest received in the cash flow statement. This repayment is a result of the Court of Justice of the European Union handing down its decision on 19 September 2024 determining that the United Kingdom controlled foreign company group financing partial exemption did not constitute State Aid, thereby resulting in a refund of the GBP97m of tax paid (plus GBP17m 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, and decreased due to lower tax liabilities and installment payments for 2025.
A net deferred tax liability of GBP31m is recognised in 2025 compared to a net deferred tax liability of GBP11m in 2024. The overall amount increased mainly due to the ongoing utilisation of tax losses and other tax attributes. The current tax creditor principally consists of provisions for tax uncertainties.
Other comprehensive income
Included in other comprehensive income are the net exchange differences on translation of foreign operations. The loss on translation of GBP193m in 2025 compares to a loss in 2024 of GBP35m. 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 31 December 2025 was GBP1:$1.35 compared to the opening rate of GBP1:$1.25. At the end of 2024, the US dollar rate was GBP1:$1.25 compared to the opening rate of GBP1:$1.27.
Also included in other comprehensive income at 31 December 2025 is an actuarial gain of GBP10m in relation to retirement benefit obligations. The gain arises largely from a decrease in liabilities driven by lower long-term inflation assumptions and updates to commutation factors. The gain in 2025 compares to an actuarial gain in 2024 of GBP5m.
Fair value losses of GBP7m (2024: losses of GBP2m) 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 GBP91m from an inflow of GBP662m in 2024 to an inflow of GBP571m in 2025 due to an increase in working capital given high Q4 sales growth.
The equivalent statutory measure, net cash generated from operations, was an inflow of GBP731m in 2025 compared to an inflow of GBP811m 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 2025, reorganisation cash outflow was GBPnil compared to GBP8m in 2024.
Free cash flow increased on a headline basis by GBP37m from GBP490m in 2024 to GBP527m 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 offset by the reduction in operating cash flow.
In 2025, there was an overall decrease of GBP210m in cash and cash equivalents from GBP543m at the end of 2024 to GBP333m at 31 December 2025. The decrease in 2025 is primarily due to the net cash generated from operations of GBP731m being more than offset by dividends paid of GBP160m, share buyback programme payments of GBP352m, own share purchases of GBP72m, capital expenditure on property, plant, equipment and software of GBP134m, payments for the acquisition of subsidiaries of GBP167m, and payments of lease liabilities of GBP77m.
Liquidity and capital resources
The Group's net debt increased from GBP853m at the end of 2024 to GBP1,069m at the end of 2025. The increase is largely due to free cash flow of GBP527m being more than offset by the share buyback programme, dividend payments and cash outflows related to acquisitions. In May 2025, the Group repaid its EUR300m 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 31 December 2025, the Group had drawn GBP0.3bn on its Revolving Credit Facilities.
At 31 December 2025, the Group had approximately GBP1.3bn in total liquidity immediately available from cash and its RCFs maturing June 2028 and February 2029. In assessing the Group's ability to continue as a going concern for the period until 30 June 2027, 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 H1 2026, 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 and 2027. 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 GBP43m in 2025 (2024: GBP60m) of which a charge of GBP68m (2024: GBP81m) was reported in operating profit and income of GBP25m (2024: GBP21m) was reported against other net finance costs. In 2024, a charge of GBP13m 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 GBP484m at the end of 2024 has increased to a surplus of GBP514m at the end of 2025. The increase has arisen principally due to asset returns being higher than expected and inflation over the period being slightly lower 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 GBP450m at the end of 2024 to a net asset of GBP482m at the end of 2025.
Businesses acquired and disposed
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 for cash consideration of GBP168m. For further details, see note 10 to the condensed consolidated financial statements.
The cash outflow in 2025 relating to the acquisition of subsidiaries of GBP167m includes GBP4m arising from the payment of deferred consideration in respect of the prior year. The cash outflow in 2024 relating to acquisitions of subsidiaries was GBP39m, 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 GBP5m (2024: GBP7m).
The Group disposed of Copp Clark in 2025 for consideration of GBP9m, resulting in a gain on disposal of GBP8m, which has been recorded within other net gains and losses. There were no disposals of subsidiaries in 2024 with cash outflows relating primarily to prior year disposals. In 2025, the cash inflow relating to the disposal of businesses was GBP8m (2024: outflow of GBP7m).
Dividends
The dividend accounted for in the 2025 financial statements totalling GBP160m represents the final dividend in respect of 2024 of 16.6p and the interim dividend for 2025 of 7.8p. We are proposing a final dividend for 2025 of 17.4p bringing the total paid and payable in respect of 2025 to 25.2p.This final 2025 dividend, which was approved by the Board in February 2026, is subject to approval at the forthcoming AGM. For 2025, the dividend is covered 2.6 times by adjusted earnings.
The final dividend will be paid on 8 May 2026 to shareholders who are on the register of members at close of business on 20 March 2026 (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 16 April 2026. 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 GBP350m share buyback programme in order to return capital to shareholders. The programme completed in 2025. During 2025, c32m shares have been bought back at a cash cost of GBP352m. The nominal value of the cancelled shares of GBP8m has been transferred to the capital redemption reserve.
On 21 January 2026, a further GBP350m share buyback programme was announced. The programme commenced on 21 January 2026. In the period from 21 January to 25 February 2026, an additional c7m of shares have been repurchased.
CONDENSED CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2025 all figures in GBP millions note 2025 2024 Continuing operations Sales 2 3,577 3,552 Cost of goods sold (1,717) (1,741) ------------------------------------------------------ ---- ------- ------- Gross profit 1,860 1,811 Operating expenses (1,351) (1,265) Other net gains and losses 2 (3) (7) Share of results of joint ventures and associates 1 2 ------------------------------------------------------ ---- ------- ------- Operating profit 2 507 541 Finance costs 3 (98) (112) Finance income 3 48 81 ------------------------------------------------------ ---- ------- ------- Profit before tax 457 510 Income tax 4 (121) (75) ------------------------------------------------------ ---- ------- ------- Profit for the period 336 435 ------------------------------------------------------ ---- ------- ------- Attributable to: Equity holders of the company 335 434 Non-controlling interest 1 1 ------------------------------------------------------ ---- ------- ------- Earnings per share from continuing operations (in pence per share) Basic 5 51.4p 64.5p Diluted 5 50.7p 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 year ended 31 December 2025 all figures in GBP millions 2025 2024 Profit for the period 336 435 Items that may be reclassified to the income statement Net exchange differences on translation of foreign operations (193) (35) Attributable tax - 2 Items that are not reclassified to the income statement Fair value loss on other financial assets (7) (2) Attributable tax - - Remeasurement of retirement benefit obligations 10 5 Attributable tax (3) (2) --------------------------------------------------------------- ----- ---- Other comprehensive expense (193) (32) --------------------------------------------------------------- ----- ---- Total comprehensive income 143 403 --------------------------------------------------------------- ----- ---- Attributable to: Equity holders of the company 143 402 Non-controlling interest - 1 --------------------------------------------------------------- ----- ---- CONDENSED CONSOLIDATED BALANCE SHEET as at 31 December 2025 all figures in GBP millions note 2025 2024 Property, plant and equipment 210 216 Investment property 91 77 Intangible assets 9 3,009 3,026 Investments in joint ventures and associates 8 12 Deferred income tax assets 58 52 Financial assets -- derivative financial instruments 14 20 Retirement benefit assets 518 491 Other financial assets 125 141 Income tax assets - 4 Trade and other receivables 105 125 ------------------------------------------------------ ---- ------- ------- Non-current assets 4,138 4,164 Intangible assets -- product development 9 822 947 Inventories 66 74 Trade and other receivables 1,082 1,030 Financial assets -- derivative financial instruments 2 31 Current income tax assets 15 103 Cash and cash equivalents (excluding overdrafts) 333 543 ------------------------------------------------------ ---- ------- ------- Current assets 2,320 2,728 Assets classified as held for sale - - ------------------------------------------------------ ---- ------- ------- Total assets 6,458 6,892 Financial liabilities -- borrowings (1,419) (1,157) Financial liabilities -- derivative financial instruments (2) (4) Deferred income tax liabilities (89) (63) Retirement benefit obligations (36) (41) Provisions for other liabilities and charges (12) (13) Other liabilities (76) (83) ------------------------------------------------------ ---- ------- ------- Non-current liabilities (1,634) (1,361) Trade and other liabilities (1,043) (1,054) Financial liabilities -- borrowings (62) (315) Financial liabilities -- derivative financial instruments (1) (54) Current income tax liabilities (47) (32) Provisions for other liabilities and charges (8) (23) ------------------------------------------------------ ---- ------- ------- Current liabilities (1,161) (1,478) Liabilities classified as held for sale - - ------------------------------------------------------ ---- ------- ------- Total liabilities (2,795) (2,839) ------------------------------------------------------ ---- ------- ------- Net assets 3,663 4,053 Share capital 158 166 Share premium 2,658 2,649 Treasury shares (9) (7) Reserves 841 1,230 ------------------------------------------------------ ---- ------- ------- Total equity attributable to equity holders of the company 3,648 4,038 Non-controlling interest 15 15 ------------------------------------------------------ ---- ------- ------- Total equity 3,663 4,053
The condensed consolidated financial statements were approved by the Board on 26 February 2026.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2025
Equity attributable to equity holders of the company
------------------------------------------------------------------------------------- --------------- -------
Capital Fair
all figures in Share Share Treasury redemption value Translation Retained Non-controlling Total
GBP millions capital premium shares reserve reserve reserve earnings Total interest equity
2025
------------------------------------------------------------------------------------------------------------------------- -------
At 1 January 2025 166 2,649 (7) 41 (14) 376 827 4,038 15 4,053
----------------- -------- -------- --------- ----------- -------- ------------ --------- ------ --------------- -------
Profit for the
period - - - - - - 335 335 1 336
Other
comprehensive
income /
(expense) - - - - (7) (192) 7 (192) (1) (193)
----------------- -------- -------- --------- ----------- -------- ------------ --------- ------ --------------- -------
Total
comprehensive
income /
(expense) - - - - (7) (192) 342 143 - 143
Equity-settled
transactions(1) - - - - - - 29 29 - 29
Taxation on
equity-settled
transactions - - - - - - (1) (1) - (1)
Issue of ordinary
shares - 9 - - - - - 9 - 9
Buyback of equity (8) - - 8 - - (347) (347) - (347)
Purchase of
treasury shares - - (63) - - - - (63) - (63)
Release of
treasury shares - - 61 - - - (61) - - -
Dividends - - - - - - (160) (160) - (160)
----------------- -------- -------- --------- ----------- -------- ------------ --------- ------ --------------- -------
At 31 December
2025 158 2,658 (9) 49 (21) 184 629 3,648 15 3,663
2024
----------------------------------------------------------------------------------------------------------------------------------
At 1 January 2024 174 2,642 (19) 33 (12) 411 745 3,974 14 3,988
----------------- -------- -------- --------- ----------- -------- ------------ --------- ------ --------------- -------
Profit for the
period - - - - - - 434 434 1 435
Other
comprehensive
income /
(expense) - - - - (2) (35) 5 (32) - (32)
----------------- -------- -------- --------- ----------- -------- ------------ --------- ------ --------------- -------
Total
comprehensive
income /
(expense) - - - - (2) (35) 439 402 1 403
Equity-settled
transactions(1) - - - - - - 37 37 - 37
Taxation on
equity-settled
transactions - - - - - - 11 11 - 11
Issue of ordinary
shares - 7 - - - - - 7 - 7
Buyback of equity (8) - - 8 - - (204) (204) - (204)
Purchase of
treasury shares - - (33) - - - - (33) - (33)
Release of
treasury shares - - 45 - - - (45) - - -
Dividends - - - - - - (156) (156) - (156)
----------------- -------- -------- --------- ----------- -------- ------------ --------- ------ --------------- -------
At 31 December
2024 166 2,649 (7) 41 (14) 376 827 4,038 15 4,053
1. Equity-settled transactions are presented net of withholding taxes that
the Group is obligated to pay on behalf of employees. The payments to the
tax authorities are accounted for as a deduction from equity for the
shares withheld.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2025
all figures in GBP millions 2025 2024
Cash flows from operating activities
Profit before tax 457 510
Net finance costs 50 31
Depreciation and impairment -- PPE, investment property and
assets held for sale 54 77
Amortisation and impairment -- software 112 117
Amortisation and impairment -- acquired intangible assets 41 41
Other net gains and losses 3 5
Product development capital expenditure (285) (284)
Product development amortisation and impairment 364 291
Share-based payment costs 39 44
Change in inventories 5 15
Change in trade and other receivables (104) 32
Change in trade and other liabilities 35 (99)
Change in provisions for other liabilities and charges (19) (1)
Other movements (21) 32
-------------------------------------------------------------- ----- -----
Net cash generated from operations 731 811
Interest paid (73) (65)
Tax paid (2) (119)
-------------------------------------------------------------- ----- -----
Net cash generated from operating activities 656 627
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (167) (39)
Purchase of investments (5) (7)
Purchase of property, plant and equipment (29) (33)
Purchase of intangible assets (105) (91)
Disposal of subsidiaries, net of cash disposed 8 (7)
Proceeds from sale of property, plant and equipment 3 6
Lease receivables repaid including disposals 18 18
Interest received 33 20
Dividends received 1 2
-------------------------------------------------------------- ----- -----
Net cash used in investing activities (243) (131)
Cash flows from financing activities
Proceeds from issue of ordinary shares 9 7
Buyback of equity (352) (318)
Settlement of share based payments (72) (40)
Repayment of borrowings (974) (921)
Proceeds from borrowings 1,017 1,265
Repayment of lease liabilities (77) (78)
Dividends paid to company's shareholders (160) (156)
-------------------------------------------------------------- ----- -----
Net cash used in financing activities (609) (241)
Effects of exchange rate changes on cash and cash equivalents (14) (21)
-------------------------------------------------------------- ----- -----
Net (decrease) / increase in cash and cash equivalents (210) 234
Cash and cash equivalents at beginning of period 543 309
-------------------------------------------------------------- ----- -----
Cash and cash equivalents at end of period 333 543
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
1. Basis of preparation
The condensed consolidated financial statements have been prepared in accordance with the accounting policies set out in the 2024 Annual Report, which has been prepared in accordance with UK-adopted International Accounting Standards and have also been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB). There are no changes to accounting standards that have a material impact on the condensed consolidated financial statements for the year ended 31 December 2025. The condensed consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) at fair value.
In assessing the Group's ability to continue as a going concern for the period to 30 June 2027, 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 by all principal risks in both 2026 and 2027, adjusted for probability weighting, as well as reverse stress testing to identify what would be required to either breach covenants or run out of liquidity. The net impact of the risks modelled in the severe but plausible scenario was to reduce free cashflow during the period under assessment by c41%.
At 31 December 2025, the Group had available liquidity of cGBP1.3bn, comprising central cash balances and the undrawn element of its $1.8bn Revolving Credit Facilities maturing June 2028 and February 2029, but which have options to extend the maturities until 2030. Even under a severe downside case, the Group would maintain comfortable liquidity headroom and sufficient headroom against covenant requirements during the period under assessment. That is, 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.
The directors have confirmed that they have a reasonable expectation that the Group has adequate resources to continue in operational existence and to meet its liabilities as they fall due for the assessment period to 30 June 2027. The condensed consolidated financial statements have therefore been prepared on a going concern basis.
The preparation of condensed consolidated financial statements requires the use of certain critical accounting assumptions. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the condensed consolidated financial statements, have been set out in the 2024 Annual Report. In 2025, the valuation of acquired intangible assets recognised on the acquisition of a business is also determined to be a key area of estimation.
The Group has also assessed the impact of the uncertainty presented by the volatile macro-economic and geo-political environment on the condensed consolidated financial statements, specifically considering the impact on key judgements and significant estimates along with other areas of increased risk including financial instruments, hedge accounting and translation methodologies. No material accounting impacts relating to the areas assessed were recognised in 2025. The Group has assessed the impacts of climate change on the condensed consolidated financial statements. The assessment did not identify any material impact on the Group's significant judgements or estimates, the recoverability of the Group's assets at 31 December 2025 or the assessment of going concern for the period to 30 June 2027. The Group will continue to monitor these areas of increased judgement, estimation and risk for material changes.
The financial information for the year ended 31 December 2024 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The independent auditors' report on the full consolidated financial statements for the year ended 31 December 2024 was unqualified and did not contain an emphasis of matter paragraph or any statement under section 498 of the Companies Act 2006.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
1. Basis of preparation continued
This preliminary announcement does not constitute the Group's full consolidated financial statements for the year ended 31 December 2025. The Group's full consolidated financial statements will be approved by the Board of Directors and reported on by the auditors in March 2026. Accordingly, the financial information for 2025 is presented unaudited in the preliminary announcement.
Operating segments -- In January 2025, the Group announced that Workforce Skills would evolve to become Enterprise Learning and Skills, incorporating our IT Pro business which was previously within Higher Education. Comparative figures for 2024 segment information have been restated to reflect this move between segments (see note 2).
2. Segment information
The Group has five main global business units, which are each considered separate operating segments for management and reporting purposes. These five business units are Assessment & Qualifications, Virtual Learning, English Language Learning, Higher Education and Enterprise Learning and Skills. In January 2025, the Group announced that Workforce Skills would evolve to become Enterprise Learning and Skills, incorporating our IT Pro business which was previously within Higher Education. Comparative figures have been restated to reflect the move between segments, resulting in GBP45m of sales and GBP12m of adjusted operating profit being transferred from Higher Education to Enterprise Learning and Skills for the year ended 31 December 2024.
all figures in GBP millions 2025 2024(1) Sales Assessment & Qualifications 1,604 1,591 Virtual Learning 511 489 English Language Learning 405 420 Enterprise Learning and Skills 282 271 Higher Education 775 781 --------------------------------- ----- ------- Total sales 3,577 3,552 --------------------------------- ----- ------- Adjusted operating profit Assessment & Qualifications 361 368 Virtual Learning 81 66 English Language Learning 50 50 Enterprise Learning and Skills 29 20 Higher Education 93 96 --------------------------------- ----- ------- Total adjusted operating profit 614 600 --------------------------------- ----- ------- (1) Comparative amounts have been restated to reflect the move between operating segments.
There were no material inter-segment sales.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
2. Segment information continued
The following table reconciles the Group's measure of segmental performance, adjusted operating profit, to statutory operating profit:
all figures in GBP millions 2025 2024 Adjusted operating profit 614 600 Cost of major reorganisation - 2 Product development impairment (87) - Intangible charges (42) (41) UK pension discretionary increases - (13) Other net gains and losses (3) (7) Property charges 25 - ------------------------------------ ---- ---- Operating profit 507 541 ------------------------------------- ---- ----
Adjusted operating profit is one of the Group's key business performance measures. The measure includes the operating profit from the total business but excludes charges for acquired intangibles amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation and associated property charges, one off-costs related to the UK pension scheme and certain other one-off material items.
Costs of major reorganisation -- In 2025, there are no costs of major reorganisation. In 2024, there was a release of GBP2m relating to amounts previously accrued.
Product development impairment charges in 2025 relate to the impairment of product development assets as a result of courseware platform convergence. There were no such amounts in 2024.
Intangible charges -- These represent charges relating to intangibles acquired through business combinations. These charges are excluded as they reflect past acquisition activity and do not necessarily reflect the current year performance of the Group.
UK pension discretionary increases -- Charges in 2024 related 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 -- These represent profits and losses on the sale of subsidiaries, joint ventures, associates and other financial assets and are excluded from adjusted operating profit in order to show the performance of the Group on a more comparable basis year on year. Other net gains and losses also includes costs related to business closures and acquisitions. Other net gains and losses in 2025 relate to the gain on disposal of Copp Clark, a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to current and prior year acquisitions and disposals. Other net gains and losses in 2024 related 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, a gain of GBP25m relates to reversals of impairments of property assets that were previously impaired through property charges. Impairment reversals have arisen from new sublets on previously vacant space in corporate properties. There are no such charges in 2024.
Adjusted operating profit should not be regarded as a complete picture of the Group's financial performance. For example, adjusted operating profit includes the benefits of major reorganisation programmes but excludes the significant associated costs, and adjusted operating profit excludes costs related to acquisitions, and the amortisation of intangibles acquired in business combinations, but does not exclude the associated revenues. The Group's definition of adjusted operating profit may not be comparable to other similarly titled measures reported by other companies.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
3. Net finance income / costs
all figures in GBP millions 2025 2024 Interest payable on financial liabilities at amortised cost and associated derivatives (51) (48) Interest on lease liabilities (20) (22) Interest on deferred and contingent consideration (1) (2) Fair value movements on investments held at FVTPL (7) (11) Net foreign exchange losses (7) (3) Fair value movements on derivatives (9) (19) Interest on provisions for uncertain tax positions (3) (7) --------------------------------------------------------------- ---- ----- Finance costs (98) (112) Interest receivable on financial assets at amortised cost 14 25 Interest on lease receivables 3 4 Net finance income in respect of retirement benefits 25 21 Fair value movements on derivatives 6 26 Interest on provisions for uncertain tax positions - 5 --------------------------------------------------------------- ---- ----- Finance income 48 81 Analysed as: Net interest payable reflected in adjusted earnings (57) (45) Other net finance income 7 14 --------------------------------------------------------------- ---- ----- Net finance costs (50) (31)
Net interest payable is the finance cost measure used in calculating adjusted earnings. The table below reconciles statutory net finance costs to net interest payable .
all figures in GBP millions 2025 2024 Net finance costs (50) (31) Net finance income in respect of retirement benefits (25) (21) Interest on deferred and contingent consideration 1 2 Fair value movements on investments held at FVTPL 7 11 Net foreign exchange losses 7 3 Fair value movements on derivatives 3 (7) Interest on provisions for uncertain tax positions - (2) ------------------------------------------------------ ---- ---- Adjusted net finance costs (57) (45)
Net finance income relating to retirement benefits has been excluded from our adjusted earnings as we believe the income statement presentation does not reflect the economic substance of the underlying assets and liabilities. Also excluded are interest costs relating to acquisition or disposal transactions as it is considered part of the acquisition cost or disposal proceeds rather than being reflective of the underlying financing costs of the Group. Foreign exchange, fair value movements on investments classified as FVTPL and other gains and losses on derivatives are excluded from adjusted earnings as they represent short-term fluctuations in market value and are subject to significant volatility. Other gains and losses may not be realised in due course as it is normally the intention to hold the related instruments to maturity. Interest on certain tax provisions is excluded from our adjusted measure in order to mirror the treatment of the underlying tax item.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
4. Income tax
all figures in GBP millions 2025 2024 Profit before tax 457 510 Tax calculated at UK rate of 25% (2024: 25%) (114) (127) Effect of overseas tax rate (3) (1) Non-deductible expenses (5) 3 State Aid provision release - 63 Other tax items 1 (13) ---------------------------------------------- ------ ------ Income tax charge (121) (75) Tax rate reflected in statutory earnings 26.5 % 14.7 %
The increase in the statutory rate of tax in 2025 is principally due to the release of the State Aid uncertain tax provision in the prior year.
In 2025, other tax items of GBP1m consists primarily of movements in provisions for tax uncertainties and the recognition of previously unrecognised tax losses. In 2024, other tax items of GBP13m consists primarily of movements in provisions for tax uncertainties.
Adjusted income tax is the tax measure used in calculating adjusted earnings. The table below reconciles the statutory income tax charge to the adjusted income tax charge.
all figures in GBP millions note 2025 2024 Income tax charge (121) (75) Tax on cost of major reorganisation - 1 Tax on product development impairment (22) - Tax on intangible charges (10) (10) Tax on UK pension discretionary increases - (3) Tax on other net gains and losses (1) - Tax on property charges 7 - Tax on other net finance income 2 5 Tax amortisation benefit on goodwill and intangibles 4 4 State Aid provision release - (63) Movement in provision for tax uncertainties 3 6 Other tax items 2 (1) ----------------------------------------------------- ---- ------ ------ Adjusted income tax charge (136) (136) Adjusted profit before tax 6 557 555 Tax rate reflected in statutory earnings 26.5 % 14.7 % Tax rate reflected in adjusted earnings 24.5 % 24.4 %
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
4. Income tax continued
The adjusted income tax charge excludes the tax benefit or charge on items that are excluded from the profit or loss before tax (see notes 2 and 3).
The tax benefit from tax deductible goodwill and intangibles is added to the adjusted income tax charge as this benefit more accurately aligns the adjusted tax charge with the expected rate of cash tax payments.
The Group is within the scope of the UK legislation in relation to Pillar Two which was effective from 1 January 2024. Based on the most recent financial information available for the constituent entities in the Group, the Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%. There are a limited number of jurisdictions where the transitional safe harbour relief does not apply, including jurisdictions that may not meet the 16% effective tax rate threshold required to qualify for the effective tax rate safe harbour test in FY25. However, the Group does not expect a material exposure to Pillar Two income taxes in those jurisdictions.
In 2025, a repayment of GBP97m was received from HMRC in respect of State Aid. This repayment is a result of the Court of Justice of the European Union handing down its decision on 19 September 2024 determining that the United Kingdom controlled foreign company group financing partial exemption did not constitute State Aid, thereby resulting in a refund of the GBP97m of tax paid (plus interest) under the Charging Notices issued by HMRC in 2021.
5. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity shareholders of the company (earnings) by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to take account of all dilutive potential ordinary shares and adjusting the profit attributable, if applicable, to account for any tax consequences that might arise from conversion of those shares.
all figures in GBP millions 2025 2024 Earnings for the period 336 435 Non-controlling interest (1) (1) -------------------------------------------------------------- ----- ----- Earnings attributable to equity shareholders 335 434 Weighted average number of shares (millions) 651.3 673.0 Effect of dilutive share options (millions) 9.0 11.0 Weighted average number of shares (millions) for diluted earnings 660.3 684.0 Earnings per share (in pence per share) Basic 51.4p 64.5p Diluted 50.7p 63.5p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
6. Adjusted earnings per share
In order to show results from operating activities on a consistent basis, an adjusted earnings per share is presented which excludes certain items as set out below.
Adjusted earnings is a non-GAAP financial measure and is included as it is a key financial measure used by management to evaluate performance and allocate resources to business segments. The measure also enables users of the accounts to more easily, and consistently, track the underlying operational performance of the Group and its business segments over time by separating out those items of income and expenditure relating to acquisition and disposal transactions, major reorganisation programmes and certain other items that are also not representative of underlying performance (see notes 2, 3 and 4 for further information and reconciliation to equivalent statutory measures). The adjusted earnings per share includes both continuing and discontinued businesses on an undiluted basis when relevant. The company's definition of adjusted earnings per share may not be comparable to other similarly titled measures reported by other companies.
all figures in GBP millions note 2025 2024 Adjusted operating profit 2 614 600 Adjusted net finance costs 3 (57) (45) ---------------------------------------------------------- ---- ----- ----- Adjusted profit before tax 557 555 Adjusted income tax 4 (136) (136) Non-controlling interest (1) (1) ---------------------------------------------------------- ---- ----- ----- Adjusted earnings 420 418 Weighted average number of shares (millions) 651.3 673.0 Weighted average number of shares (millions) for diluted earnings 660.3 684.0 Adjusted earnings per share (in pence per share) Basic 64.5p 62.1p Diluted 63.6p 61.1p
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
7. Dividends
all figures in GBP millions 2025 2024 Amounts recognised as distributions to equity shareholders in the period 160 156
The directors are declaring a final dividend of 17.4p per equity share, payable on 8 May 2026 to shareholders on the register at the close of business on 20 March 2026. This final dividend, which will absorb an estimated GBP109m of shareholders' funds, has not been included as a liability as at 31 December 2025.
8. Exchange rates
Pearson earns a significant proportion of its sales and profits in overseas currencies, the most important being the US dollar. The relevant rates are as follows:
2025 2024
Average rate for profits 1.32 1.28
Year end rate 1.35 1.25
9. Intangible assets
all figures in GBP millions 2025 2024 Goodwill 2,425 2,437 Other intangibles 584 589 ------------------------------------------ ----- ----- Non-current intangible assets 3,009 3,026 Intangible assets -- product development 822 947 ------------------------------------------ ----- ----- Current intangible assets 822 947
Acquisitions resulted in the recognition of additional goodwill of GBP102m (2024: GBP1m) and intangible assets of GBP71m (2024: GBP1m) (see note 10 for further details).
There were no significant impairments to acquisition related or other non-current intangibles in 2025 or 2024.
In 2025, impairment charges of GBP87m were recorded (2024: GBPnil) related to the impairment of product development assets as a result of courseware platform convergence.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
10. Acquisitions
On 24 July 2025, the Group completed the acquisition of 100% of eDynamic Holdings LP ('eDynamic Learning'), a leading Career and Technical Education curriculum solutions provider, for cash consideration of GBP168m, with a further GBP3m paid into an escrow account in relation to a provision provided for on the opening balance sheet. The acquired business will form part of the Higher Education division. Net assets acquired of GBP66m were recognised on the Group's balance sheet including GBP71m of intangible assets, comprising customer relationships, technology, content and the brand, that will be amortised over periods up to 16 years.
This transaction has resulted in the recognition of GBP102m of goodwill, which represents the expected growth of the business, the workforce and know-how acquired and the anticipated synergies, none of which can be recognised as separate intangible assets. The goodwill is not deductible for tax purposes. Details of the fair values of the assets and liabilities recognised at the acquisition date and the related consideration is shown in the table below.
all figures in GBP millions 2025 2024 Intangible assets 71 1 Trade and other receivables 7 - Cash and cash equivalents 8 - Trade and other liabilities (4) - Deferred revenue (10) - Provisions for other liabilities and charges (5) - Deferred tax (1) - ----------------------------------------------- ----- ---- Net assets acquired 66 1 Goodwill 102 1 ----------------------------------------------- ----- ---- Total 168 2 Satisfied by: Cash consideration 168 1 Contingent or deferred consideration - 1 ----------------------------------------------- ----- ---- Total consideration 168 2 Cash flow from acquisitions Cash -- current year acquisitions (168) (1) Cash paid into escrow account (3) - Cash and cash equivalents acquired 8 - Deferred payments for prior year acquisitions (4) (38) ----------------------------------------------- ----- ---- Net cash outflow (167) (39)
eDynamic Learning generated revenues of GBP10m and a loss after tax of GBP1m for the period from acquisition date to 31 December 2025. If the acquisition of eDynamic Learning had occurred on 1 January 2025, the Group's revenue and profit after tax would have been GBP18m higher and GBP1m higher, respectively. The quoted profit numbers include the impact of purchase price adjustments made on acquisition, including the amortisation of acquired intangibles and reduced revenue and profit following fair value adjustments to the acquired deferred revenue balance.
Total acquisition-related costs of GBP7m (2024: GBP5m; 2023: GBP12m) were recognised within other net gains and losses.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
11. Net debt
all figures in GBP millions 2025 2024 Non-current assets Derivative financial instruments 14 20 Trade and other receivables -- investment in finance lease 45 64 Current assets Derivative financial instruments 2 31 Trade and other receivables -- investment in finance lease 21 19 Cash and cash equivalents (excluding overdrafts) 333 543 Non-current liabilities Borrowings (1,419) (1,157) Derivative financial instruments (2) (4) Current liabilities Borrowings (62) (315) Derivative financial instruments (1) (54) ---------------------------------------------------------- ------- ------- Net debt (1,069) (853)
Included in borrowings at 31 December 2025 are lease liabilities of GBP478m (non-current GBP416m, current GBP62m). This compares to lease liabilities of GBP517m (non-current GBP452m, current GBP65m) at 31 December 2024. The net lease liability at 31 December 2025 after including the investment in finance leases noted above was GBP412m (2024: GBP434m). Net debt excluding net lease liabilities is GBP657m (2024: GBP419m).
In 2025, the movement on borrowings from 31 December 2024 primarily reflects the repayment of the EUR300m bond offset by the drawdown of GBP0.3bn on the RCF.
For the purposes of the cash flow statement, cash and cash equivalents are presented net of overdrafts of GBPnil (2024: GBPnil) which are repayable on demand. When relevant, these overdrafts are excluded from cash and cash equivalents disclosed on the balance sheet.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
12. Cash flows
Operating cash flow and free cash flow are non-GAAP measures and have been disclosed as they are part of the Group's corporate and operating measures. These measures are presented in order to align the cash flows with corresponding adjusted profit measures. The table below reconciles the statutory profit and cash flow measures to the corresponding adjusted measures. The table on the next page reconciles operating cash flow to free cash flow to net debt.
Other Net
net addition Dividends from
all figures Product gains Purchase/disposal of right joint ventures
in GBP Statutory Cost of major development Property and Intangible of PPE of use and Adjusted
millions measure reorganisation impairment charges losses Pensions charges and software assets associates measure
2025
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted
Operating operating
profit 507 - 87 (25) 3 - 42 - - - 614 profit
Net cash
generated Operating
from cash
operations 731 - - - 13 2 - (131) (45) 1 571 flow
2024
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted
Operating operating
profit 541 (2) - - 7 13 41 - - - 600 profit
Net cash
generated Operating
from cash
operations 811 8 - - 5 - - (118) (46) 2 662 flow
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
12. Cash flows continued
all figures in GBP millions note 2025 2024 Operating cash flow 571 662 Tax paid (2) (119) Net finance costs paid (40) (45) Special pension contributions (2) - Cost paid for major reorganisation - (8) -------------------------------------------------------------- ------- ----- Free cash flow 527 490 Dividends paid (including to non-controlling interest) (160) (156) -------------------------------------------------------------- ------- ----- Net movement of funds from operations 367 334 Acquisitions and disposals (177) (58) Net equity transactions (415) (351) Other movements on financial instruments 9 (34) -------------------------------------------------------------- ------- ----- Movement in net debt (216) (109) Opening net debt (853) (744) -------------------------------------------------------------- ------- ----- Closing net debt (1,069) (853)
13. Contingencies, tax uncertainties and other liabilities
There are Group contingent liabilities that arise in the normal course of business in respect of indemnities, warranties and guarantees in relation to former subsidiaries and in respect of guarantees in relation to subsidiaries, joint ventures and associates. In addition, there are contingent liabilities of the Group in respect of unsettled or disputed tax liabilities, legal claims, contract disputes, royalties, copyright fees, permissions and other rights. None of these claims are expected to result in a material gain or loss to the Group.
The Group is under assessment from the tax authorities in Brazil challenging the deduction for tax purposes of goodwill amortisation for the years 2012 to 2020. Similar assessments may be raised for other years. Potential total exposure (including possible interest and penalties) could be up to BRL 1,423m (GBP193m) for periods up to 31 December 2025, with additional potential exposure of BRL 92m (GBP12m) in relation to deductions expected to be taken in future periods. Such assessments are common in Brazil. The Group believes that the likelihood that the tax authorities will ultimately prevail is low and that the Group's position is strong. At present, the Group believes no provision is required.
14. Related parties
There were no material related party transactions in the period that have materially affected the financial position or performance of the Group and no guarantees have been provided to related parties in the year.
15. Events after the balance sheet date
On 21 January 2026, a GBP350m share buyback programme in order to return capital to shareholders was announced. The programme commenced on 21 January 2026.
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SOURCE Pearson
(END) Dow Jones Newswires
February 27, 2026 02:06 ET (07:06 GMT)
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