UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of December, 2002
PEARSON plc
(Exact name of registrant as specified in its charter)
N/A
(Translation of registrant's name into English)
80 Strand
London, England WC2R 0RL
44-20-7010-2000
(Address of principal executive office)
Indicate by check mark whether the Registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes No X
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This Report includes the following documents:
1. A press release from Pearson plc announcing their Trading Statement
13 December 2002
Pearson: Trading update
Pearson today issues its annual December trading update.
Pearson remains on track to deliver a significant earnings recovery for the full
year. We expect adjusted earnings of around 30p per share, which would be an
increase of some 40% on the 2001 level of 21.4p. We also continue to make good
progress in managing working capital and free cash flow.
This earnings recovery is being driven by strong trading by our US College and
consumer publishing businesses, an outstanding year from our government
solutions and professional testing businesses, lower internet losses and reduced
financing costs. These factors are more than offsetting the impact of the
corporate advertising downturn, a weaker year for the US School market and the
strengthening of the pound against the US dollar.
Looking ahead to 2003, we are confident of another year of improved performance
in earnings, cash and returns. At the FT Group, we are planning on the basis
that we will not see any recovery in corporate and financial advertising. We
expect our US School business to return to growth, our US College business to
deliver another strong performance and margins to improve at Pearson Education.
The Penguin Group has another strong publishing line-up and should benefit from
further margin gains at Dorling Kindersley. We will also deliver another steep
reduction in internet losses, which we expect to be no more than GBP20 million
in 2003.
Financial Times Group: The FT Group's business and financial newspapers continue
to face a severe corporate advertising recession. For the second half of the
year, we expect advertising revenues at the Financial Times newspaper to be
around 11% lower (and advertising volumes some 15% lower) than the same period
last year. Compared with the first half of this year, we expect advertising
revenues to be some 8% lower (and volumes approximately 10% lower). As a result
of this weaker advertising environment, we now expect the FT Group's profits,
before internet enterprises, to be around 20% lower than last year.
The FT Group is benefiting from a lower cost base across its publishing
operations, strong performances at IDC and Recoletos, and sharply lower internet
losses. As expected, FT.com will break even in the fourth quarter of this year
and total losses at the FT Group's internet enterprises will be no more than
GBP35 million. Including internet enterprises, we expect the FT Group's profits
to be broadly level with last year.
Pearson Education: We continue to expect Pearson Education to grow underlying
revenues by at least 5%. Operating margins (before taking into account lower
internet losses) will ease a little owing to a change in the revenue mix and
integration and technology costs (which relate to the introduction of shared
back offices and systems across our book publishing operations). These costs
also impact margins at the Penguin Group.
Underlying revenues at our US School business will be some 5-6% lower than last
year, primarily due to the fact that this was, as expected, a quieter year in
the adoption schedule* and that Pearson was participating in fewer adoptions.
Our US College business, helped by a strong publishing schedule and take-up of
its custom publishing and online programmes, should grow its underlying revenues
by more than 10%.
Our US Professional operations, boosted by the performance of the NCS Pearson
Government Solutions and Professional Testing businesses, will deliver
underlying revenue growth of more than 40%. Technology publishing markets both
in the US and around the world remain weak, but with a strong performance in
Asia, our international education business will report revenues around 5% below
last year's level.
Both NCS Pearson and our education internet enterprises are now integrated
within Pearson Education. On a standalone basis, we now expect NCS Pearson to
grow its underlying revenues by some 40%. Losses from our education internet
enterprises will be no more than GBP25 million, as expected.
The Penguin Group: Penguin is also trading in line with expectations. With a
strong Christmas publishing schedule on both sides of the Atlantic and Dorling
Kindersley's return to profitability, Penguin is on track to grow underlying
revenues by at least 3% and to deliver double-digit underlying profit growth.
Interest and exchange rates: Our interest charge for the second half of the year
will be lower than in the first half, due to lower interest rates and the
strengthening of the pound against the US dollar. However, our full year
effective exchange rate will be GBP1: $1.51 (compared to GBP1: $1.44 in 2001)
and this reduces adjusted earnings per share by a little more than one pence.
Pearson will announce its preliminary results for the 12 months ending 31
December 2002 on 3 March, 2003.
Ends
Note: Underlying growth excludes the impact of acquisitions, disposals and
currency movements. With the exception of IDC's acquisition of the Merrill Lynch
Securities Pricing Service, there were no significant acquisitions in 2001 or
2002.
* In the US, 21 'adoption' states buy school textbooks and related programmes to
a planned contract schedule, which means the level of spending varies from
year-to-year according to the schedule. The 'open territory' states are those
that buy textbooks on an as-needed basis, rather than on a published adoption
schedule.
Further information
John Fallon/ Luke Swanson + 44 (0) 20 7010 2313
Investor conference calls
Marjorie Scardino, Chief Executive, and Rona Fairhead, Finance Director, are
holding conference calls today to discuss the trading update.
For European investors and analysts, a conference call will be held at 0930 GMT.
The dial-in number is + 44 20 8410 1215 and the password is Pearson. To
register, please dial in at least five minutes before the call begins.
For US investors and analysts, a conference call will be held at 0930 EST. The
dial-in number is + 1 913 981 5522 and the password is Pearson. To register,
please dial in at least five minutes before the call begins.
A live audio webcast of the European conference call will be available at
www.pearson.com. The webcast will be archived on www.pearson.com later today.
Except for the historical information contained herein, the matters discussed in
this press release include forward-looking statements that involve risk and
uncertainties that could cause actual results to differ materially from those
predicted by such forward-looking statements. These risks and uncertainties
include international, national and local conditions, as well as competition.
They also include other risks detailed from time to time in the company's
publicly-filed documents, including the company's Annual Report on form 20-F for
the period ended December 31, 2001. The company undertakes no obligation to
publicly update any forward looking statement, whether as a result of new
information, future events or otherwise.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PEARSON plc
Date: 13 December 2002
By: /s/ STEPHEN JONES
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Stephen Jones
Deputy Secretary