Pearson Regulatory News (PSON)

Pearson Announces Sale of Local Courseware Business in South Africa

LONDON, 12 August 2022: In March 2021, Pearson, the world's leading learning company, announced a strategic review of its International Courseware local publishing businesses. This transaction forms part of that process and follows the disposal of our K12 business in Brazil and our K12 courseware French Canadian business, as well as agreements to sell our K12 businesses in Italy, Germany, and Hong Kong.

Today, Pearson announces that it has agreed to sell its 75% share of the K12, TVET and local Higher Education Courseware business in South Africa to Novus Holdings Limited ("Novus Holdings"), with its headquarters in Cape Town, South Africa, and listed on the Johannesburg Stock Exchange (JSE). Novus Holdings is a specialised printing and packaging manufacturing group which services customers across sub-Saharan Africa through an extensive and diverse range of products and solutions. The headline consideration of this transaction is £53m, which will be received on completion, subject to typical working capital and net debt changes and adjusted to reflect our 75% share. The transaction remains subject to customary closing conditions, including regulatory and Novus Holdings shareholder approval.

The South African K12, TVET and local Higher Education Courseware business had gross assets of £15m and net assets of £5m as at 30 June 2022. The businesses generated £44.4m of revenue and £10.3m of adjusted operating profit in 2021.

The sale of this business concludes the review of our international courseware local publishing businesses, where we have achieved a blended multiple of 14.1x EV/EBITDA 2021.

As previously stated, the proceeds of this transaction were anticipated in the decision to commence Pearson's £350m share buyback programme, which is progressing well, with over £170m in shares repurchased since launch.

In 2021, the businesses which we put under strategic review ("strategic review businesses") contributed revenue of £252m, and £22m in adjusted operating profit. The impact of disposals of strategic review businesses on Pearson's 2022 adjusted operating profit will depend upon the timing of transaction completions, but is expected to be £15m-£20m, reflecting the second half weighting of their financial contributions. Operating cash flow for these businesses is weighted to Q4 and the timing of completion is therefore also likely to impact operating cash conversion in 2022, with an offset in the transaction working capital adjustment, recorded within cash from investing activities. As we announced recently, we have decided to retain our Australian and English-speaking Canadian K12 Courseware businesses to deliver increased shareholder value as part of the Group. 

BNP Paribas has acted as exclusive financial adviser to Pearson plc regarding the review of its International Courseware local publishing businesses.

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