Pearson’s preliminary results came as no major surprise with their education business remaining the central engine of both growth and profitability. Educational sales rose by 12% to £2.66b with sector profits rising 22% to £348m. One of the most impressive improvements was in terms of liquidity with operating cash flow surging by 36% to £570m and free cash flow by 52% to £431m!
Over the coming year Pearson’s management expect that education sales will rise by 3-5% with improved margins in the Schools and Professional sectors but Higher Education is expected to be only stable. Underlying the impressive results was the growth of Pearson’s US testing business, which grew by 20% due to mandatory testing as part of the No Child Left Behind policy. In the UK, while the examination marking system has been described as a ‘Victorian cottage industry’, Pearson still managed to mark four million GCSE and A-Level scripts on screen.
They have also won a major new pilot for a national schools testing project in Australia. Why they pulled out of the race to buy Granada Media remains a mystery, as it looked to be a good fit with Pearson’s educational businesses, but perhaps we will see a merged Granada Learning/Sherston entity join Pearson’s stable sometime in the not too distant future?
