Pearson 2025 Preliminary Results (Unaudited)
Rhea-AI Summary
Pearson (LSE:PSO) reported 2025 underlying Group sales up 4% to £3,577m and adjusted operating profit £614m (up 6% underlying) with margin expansion to 17.2%. Free cash flow rose 8% with conversion of 125%. The company completed a £350m buyback in 2025 and began a further £350m programme in Jan 2026. Statutory operating profit fell to £507m after an £87m product development impairment. Management confirmed 2026 guidance of mid-single digit sales growth and adjusted operating profit £640m–£685m at spot FX (£: $1.35).
Positive
- Underlying sales growth of 4%
- Adjusted operating profit £614m (+6% underlying)
- Free cash flow increased 8% with 125% conversion
- Completed £350m share buyback; new £350m buyback started
- 2026 adjusted operating profit guidance of £640m–£685m
Negative
- Statutory operating profit fell to £507m (2024: £541m)
- Profit for the period declined to £336m (2024: £435m)
- Operating cash inflow decreased by 14% to £571m
- One-off £87m non-cash product development impairment
- Year-end net debt rose to £1.1bn (2024: £0.9bn)
Key Figures
Market Reality Check
Peers on Argus
PSO gained 1.48% with several publishing peers also up: NYT +1.27%, WLY +2.45%, SCHL +0.85%. GCI declined 1.09%, and WLYB was flat, indicating a generally supportive but mixed sector backdrop.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Jan 14 | Trading update | Positive | -9.7% | Guided FY2025 sales up 4% and higher adjusted operating profit with strong FCF. |
| Dec 11 | AI partnership | Positive | +1.8% | Global AI learning partnership with IBM using watsonx and Pearson platforms. |
| Dec 04 | AI survey report | Neutral | +0.9% | UK educator survey on AI readiness and training demand for AI in education. |
| Nov 18 | Product launch | Positive | -0.1% | Launch of AI-powered Communication Coach integrated into Microsoft 365. |
| Oct 23 | Education partnership | Positive | -0.4% | Career-connected learning partnership for Connections Academy students with CEWD. |
Recent news often met with mixed-to-negative price reactions, including a sharp selloff on a positive 2025 trading update.
Over the past few months, Pearson has highlighted steady growth and a pivot toward AI-enabled offerings. A Jan 14, 2026 trading update flagged 4% FY2025 underlying sales growth and guided adjusted operating profit to £610–615m, yet the stock fell about 9.73%. Multiple AI initiatives and partnerships, including an IBM collaboration and the AI-powered Communication Coach, drew modest or flat reactions. Today’s preliminary 2025 results confirm sales of £3,577m, adjusted operating profit of £614m, stronger free cash flow and continued investment in AI and enterprise solutions.
Market Pulse Summary
This announcement details FY2025 performance with sales of £3,577m, adjusted operating profit of £614m and a margin of 17.2%. Cash generation remained strong, with free cash flow of £527m and a dividend lifted to 25.2p. Management also issued 2026 guidance for adjusted operating profit of £640m–£685m and free cash flow conversion of 90–100%. Investors may track progress in AI-enabled products, enterprise partnerships and execution against this new guidance.
Key Terms
adjusted operating profit financial
operating cash conversion financial
free cash flow conversion financial
net debt / adjusted EBITDA ratio financial
revolving credit facility financial
basis points financial
AI-generated analysis. Not financial advice.
Confident in outlook, guiding to mid-single digit sales growth for 2026 and beyond. Strong financial position, with
Financial Highlights
£m | 2025 | vs 2024 | £m | 2025 | 2024 | |
Business performance | Statutory results | |||||
Sales | 3,577 | + | Sales | 3,577 | 3,552 | |
Adjusted operating profit | 614 | + | Operating profit | 507 | 541 | |
Operating cash flow | 571 | - | Profit for the period | 336 | 435 | |
Free cash flow | 527 | + | Net cash generated from operations | 731 | 811 | |
Adjusted earnings per share | 64.5p | + | Basic earnings per share | 51.4p | 64.5p | |
Highlights
- Underlying Group sales growth of
4% for the full year. Group adjusted operating profit of£614m , up6% underlying with margin expansion from16.9% to17.2% . - Operating cash conversion remained strong at
93% , with an increase in working capital given high Q4 sales growth. Free cash flow up8% , resulting in free cash flow conversion3 of125% . - Adjusted earnings per share increased
9% at constant exchange rates4, and4% on a headline basis. Full year dividend per share up5% to 25.2p. Recently announced£350m 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
£640m -£685m at FX rates as at the end of 2025 (£:$ 1.35 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£3,577m (2024:£3,552m ) with currency movements partially offsetting underlying business performance. - Statutory operating profit decreased
6% to£507m (2024:£541m ). Underlying operating profit growth and the reversal of prior property provisions were more than offset by adverse currency movements and an£87m 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.£15m 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
- 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 up18% driven by a13% increase in 2025/26 Fall semester enrolments, as well as favourable mix and funding. - Higher Education sales grew
2% , with US Higher Education up3% 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
- Underlying performance up
6% driven by sales growth and continued cost savings, partially offset by investment and inflation. Adjusted operating profit margin rose to17.2% (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
£57m (2024:£45m ). The effective tax rate on adjusted profit before tax held broadly flat at24.5% (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 increased9% 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£662m in 2024 to£571m in 2025 given these factors as well as currency movements. - Free cash flow increased
8% , resulting in free cash flow conversion of125% , driven by the£0.1b n recovery of State Aid taxes. Free cash flow conversion excluding the recovery of State Aid taxes was98% , at the top end of guidance.
Strong balance sheet supporting continued investment and shareholder returns
- Year-end net debt of
£1.1b n (2024:£0.9b n), 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
£350m share buyback, reducing our share count by5% . In line with our capital allocation framework and supported by strong free cash flow, we commenced a further£350m share buyback in January 2026. - Secured new three-year,
$800m - 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, includingMaryland and others at a late stage of contract completion. - In
UK & International Qualifications, we commenced the delivery of the newUK 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 andAsia . - 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.
- We launched the PTE Express test, addressing growing demand for trusted online testing among US-bound learners, and renewed our agreement with
- 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 theKingdom 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.
- Vocational Qualifications secured several new contract wins including apprenticeship courses with the
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. |
Assessment & | Low to mid-single digit growth, driven by new contracts, | |
Virtual Learning | Stronger growth than 2025, particularly in H1, driven by a full year | |
Higher Education | Will grow more than 2025, supported by continued product and | |
English Language | Higher growth than 2025 driven by market share gains and | |
Enterprise Learning & | Growth to be driven by a solid performance in Vocational | |
Group Profit | Adjusted Operating |
|
Interest | Adjusted net finance costs of c. | |
Tax rate | We expect the effective tax rate on adjusted profit before tax to | |
Cash flow | We expect a free cash flow conversion of | |
FX | Every 1c movement in £:$ rate equates to approximately | |
Exchange rates | FY 2025 | FY 2024 |
£:$ | ||
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% to100% , 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
There is no further information to be declared in accordance with LR 6.4.8.
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 Edelman Smithfield Pearson |
Latika Shah Laura Ewart |
+44 (0)7950 671 948 +44 (0) 7798 846 805 |
Results event | Pearson's prelim results presentation today
Register to join the session virtually here: | |
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
£m |
2025 |
20245 | Headline growth2 | Underlying growth1 |
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 |
Assessment & Qualifications
In Assessment & Qualifications, sales increased
Pearson Professional Assessments sales increased
In US Student Assessment, sales increased
In Clinical Assessment, sales increased
In
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
Enrolments for the 2025/26 academic year increased by
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
In US Higher Education, underlying sales grew
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
PTE continued to perform well against a challenging market backdrop of tightening migration policies. While volumes declined
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
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
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
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
all figures in £ 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: | - | 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
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
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
The reported operating profit of
Net finance costs
Net finance costs increased on a headline basis from a net cost of
Adjusted net finance costs reflected in adjusted earnings in 2025 was
In 2025, the total of items excluded from adjusted earnings was net income of
Taxation
The reported tax on statutory earnings in 2025 was a charge of
The total adjusted tax charge in 2025 was
In 2025, there was a net tax payment of
A net deferred tax liability of
Other comprehensive income
Included in other comprehensive income are the net exchange differences on translation of foreign operations. The loss on translation of
Also included in other comprehensive income at 31 December 2025 is an actuarial gain of
Fair value losses of
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
The equivalent statutory measure, net cash generated from operations, was an inflow of
Free cash flow increased on a headline basis by
In 2025, there was an overall decrease of
Liquidity and capital resources
The Group's net debt increased from
At 31 December 2025, the Group had approximately
Post-retirement benefits
Pearson operates a variety of pension and post-retirement plans. The
The charge to profit in respect of worldwide pensions and retirement benefits amounted to
The overall surplus on
Businesses acquired and disposed
On 24 July 2025, the Group completed the acquisition of
The cash outflow in 2025 relating to the acquisition of subsidiaries of
The Group disposed of Copp Clark in 2025 for consideration of
Dividends
The dividend accounted for in the 2025 financial statements totalling
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
On 21 January 2026, a further
CONDENSED CONSOLIDATED INCOME STATEMENT | |||
all figures in £ 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 | |||
all figures in £ 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 | |||
all figures in £ 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 | |||||||||||||||||||
all figures in £ millions | Share | Share | Treasury | Capital | Fair | Translation | Retained | Total | Non-controlling | Total | |||||||||
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 / | - | - | - | - | (7) | (192) | 7 | (192) | (1) | (193) | |||||||||
Total comprehensive income / | - | - | - | - | (7) | (192) | 342 | 143 | - | 143 | |||||||||
Equity-settled transactions1 | - | - | - | - | - | - | 29 | 29 | - | 29 | |||||||||
Taxation on equity-settled | - | - | - | - | - | - | (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 / | - | - | - | - | (2) | (35) | 5 | (32) | - | (32) | |||||||||
Total comprehensive income / | - | - | - | - | (2) | (35) | 439 | 402 | 1 | 403 | |||||||||
Equity-settled transactions1 | - | - | - | - | - | - | 37 | 37 | - | 37 | |||||||||
Taxation on equity-settled | - | - | - | - | - | - | 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 | |||
all figures in £ 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 | 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
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 c
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
all figures in £ millions | 2025 | 20241 | |
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 £ millions | 2025 | 2024 | ||
Adjusted operating profit | 614 | 600 | ||
Cost of major reorganisation | - | 2 | ||
Product development impairment | (87) | - | ||
Intangible charges | (42) | (41) | ||
- | (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
Costs of major reorganisation – In 2025, there are no costs of major reorganisation. In 2024, there was a release of
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.
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
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 £ millions | 2025 | 2024 | |
Interest payable on financial liabilities at amortised cost and associated | (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 £ 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 £ millions | 2025 | 2024 | ||||
Profit before tax | 457 | 510 | ||||
Tax calculated at | (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
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 £ 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 | - | (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
In 2025, a repayment of
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 £ 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 £ 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 £ 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
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 £ 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
There were no significant impairments to acquisition related or other non-current intangibles in 2025 or 2024.
In 2025, impairment charges of
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
This transaction has resulted in the recognition of
all figures in £ 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
Total acquisition-related costs of
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
11. Net debt
all figures in £ 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
In 2025, the movement on borrowings from 31 December 2024 primarily reflects the repayment of the
For the purposes of the cash flow statement, cash and cash equivalents are presented net of overdrafts of £nil (2024: £nil) 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.
all figures in | Statutory | Cost of | Product | Property | Other net gains | Pensions | Intangible | Purchase/disposal | Net addition | Dividends from | Adjusted | |||
2025 | ||||||||||||||
Operating | 507 | - | 87 | (25) | 3 | - | 42 | - | - | - | 614 | Adjusted | ||
Net cash | 731 | - | - | - | 13 | 2 | - | (131) | (45) | 1 | 571 | Operating | ||
2024 | ||||||||||||||
Operating | 541 | (2) | - | - | 7 | 13 | 41 | - | - | - | 600 | Adjusted | ||
Net cash | 811 | 8 | - | - | 5 | - | - | (118) | (46) | 2 | 662 | Operating | ||
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2025
12. Cash flows continued
all figures in £ 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
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
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SOURCE Pearson
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