#1Pearson 2023 Interim Results 31st July 2023 11#2Forward-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 costs 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 (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.#3Key messages Excellent H1 financial performance, full year expectations reaffirmed Confident in group guidance for 2023 and the medium-term (8) Significant profit growth and margin expansion reflecting benefits of cost efficiency programme Continued momentum with Pearson+ as paid subscriptions increased c.200% 1 11:01 Pearson+ Channels ✓ Chemistry active learners Learn pearson.com Intro to General Chemistry Classification of Matter Chemistry is the study of matter and the changes it undergoes, with the atom being its basic functional unit. Matter Concept Classification of Matter Beta Q Next Topic > 5GE Sign in wwww 3#4Continued operational and strategic progress English Language Learning Recognition for PTE by Canadian government for both. economic migration and Student Direct Stream increases market opportunity Continue to gain market share with PTE in India Mondly growth particularly strong in MondlyWorks Virtual Learning Launching Connections Academy Career Pathways programmes for middle and high school students Offering a tri-credit approach to career readiness courses Assessment & Qualifications New programme launched for U.S. TSA and next generation nursing licensure (NCLEX) Launched next generation digital platform in Clinical Assessments Progress in offering onscreen exams with roll out of GCSE Computer Science and international GCSEs in English Language and Literature Higher Education Re-organisation of sales force helping to increase retention rates and generate new wins Platform migration to improve customer experience progressing well Good uptake of iLabs products MyLabs IT driving strong takeaway adoptions for Fall Workforce Skills ● Signed contract with Jordanian Ministry of Education to deliver BTECS Won 3 T level contracts in the UK Continued enterprise client growth Re-assessed talent investment platform; focused on delivering modular, personalised approach, through Credly and Faethm 4#5Financial Review & Outlook 5#6Excellent H1 financial results ● ● ● ● ● ● ● Excellent Group performance Divisional results in line with or ahead of expectations Significant profit growth supported by delivery of cost efficiencies Strong operating cash performance Robust balance sheet Dividend up 6% £300m share buyback on track to commence in Q3 Well positioned to support long-term growth ambitions *excluding OPM and Strategic Review businesses Revenue £1,879m up 6% underlying* (2022: £1,788m) Adjusted EPS 25.6p up 14% (2022: 22.5p) Adjusted operating profit £250m up 44% underlying (2022: £160m) Interim dividend 7.0p up 6% (2022: 6.6p) Operating cash flow £79m, up £70m from last year (2022: £9m) Net debt £0.9bn (2022: £0.8bn) 6#7H1 2023 sales £m Assessment & Qualifications Virtual Learning Higher Education English Language Learning Workforce Skills Businesses under strategic review*** Total sales Total excluding OPM** & Strategic Review*** 2023 796 373 379 184 140 7 1,879 2022 710 390 373 122 127 66 1,788 CER growth* 8% (9)% (2)% 50% 9% (89)% 2% *Constant exchange rates are calculated by assuming the average FX in the prior year prevailed through the current year. ** We have completed the sale the Pearson Online Learning Services (POLS) business and as such have removed from underlying measures throughout. Within this specific measure we have excluded our entire OPM business (POLS and ASU) to aid comparison to guidance. ***Strategic Review is revenues in international courseware local publishing businesses being wound down, which will continue to be reported separately until dissipated. Underlying growth 7% (15)% (2)% 44% 9% (50)% 4% 6% 7#8H1 2023 adjusted operating profit £m Assessment & Qualifications Virtual Learning* Higher Education English Language Learning Workforce Skills Businesses under strategic review** Total adjusted operating profit/(loss) 2023 174 47 (1) 8 21 1 250 2022 136 14 (4) (4) 28 (10) 160 Margin (%) 2023 22% 13% 0% 4% 15% 14% 13% * We have completed the sale of the Pearson Online Learning Services (POLS) business and as such have removed from underlying measures throughout. **Strategic Review is revenues in international courseware local publishing businesses being wound down, which will continue to be reported separately until dissipated. Underlying growth 20% 72% 25% 275% (20)% 100% 44% 8#9Strong cash & balance sheet position £m Operating cash flow Net debt Dividend 0 2023 79 (911) 7.0p 2022 9 (810) 6.6p Key takeaways Strong operating cash flow improvement driven by increased profits Higher net debt largely due to dividends, tax, and 2022 share buyback more than offsetting strong operating cash flows • Progressive and sustainable dividend 9#10Capital allocation Strong progress on portfolio reshaping Completed acquisition of PDRI in March. Significantly expanding Pearson's services to the U.S. federal government Completed the disposal of POLS ● Returning excess cash to shareholders Reaffirming commitment to progressive and sustainable dividend On track to commence £300m share buyback in Q3 ● RODUCT LAUNCH Mese 10#112023 Group expectations reaffirmed Group outlook* 2023 Group revenue, adjusted operating profit and profit margin outlook remain in line with expectations. ● We reiterate our guidance of mid-single digit Group revenue growth for 2022-2025 and for margins to rise to upper end of mid-teens in 2025. Divisional guidance and phasing O O O O O O English Language Learning revenue growth raised from high-single digit to c.20% for 2023. Investing a portion of operating leverage to support future growth opportunities. In Workforce Skills, given our focus on delivering modular solutions, our 2023 and 2022 to 2025 growth expectations for this division are likely to be more stretching. Growth in Pearson+ will lead to a shift in Higher Education revenue recognition from Q3 to Q4. Contract timing in A&Q will see delivery in earlier quarters with Q4 revenue growth lower than average. We are confident in achieving our full year revenue growth expectations. In Virtual Learning the termination of the ASU contract will continue to impact growth in H2. Revenue growth expectations for Virtual Schools remain unchanged with H2 enrolments impacted by the loss of a previously cited large school contract. *2023 consensus on the Pearson website as at 19th April 2023; median adjusted operating profit of £568m at £:$ 1.20, interest charge £34m, tax rate 24%. Our Group revenue growth expectation for 2023 is low to mid-single digit, excluding OPM and the Strategic Review businesses.#12Financial highlights: key takeaways Excellent H1 financial performance On track to deliver £120m cost efficiency program Strong balance sheet supports further investment in product innovation and shareholder returns Full year expectations reaffirmed* Strong operating cashflow *2023 consensus on the Pearson website as at 19th April 2023; median adjusted operating profit of £568m at £:$ 1.20, interest charge £34m, tax rate 24%. Our Group revenue growth expectation for 2023 is low to mid-single digit, excluding OPM and the Strategic Review businesses. 12#13Artificial Intelligence Mastering Biology My Courses Course Home Syllabus Assignments Scores User Settings Email Document Sharing Mass-Energy Balance Tro AMA 3 Einstein's famous equation Eme² expresses the relationship between energy E, in joules, and mass m, in kilograms, where c-3.00x10 m/s is the speed of light. The equation is sometimes expressed as AB=Ame where AE is the change in energy for a reaction and Am is the difference in mass between the reactants and products. Part A You carefully clean the teapot and then, out of curiosity, you weigh it. The teapot has a mass of 995g. After some mor silver is on the surface and exposed to the air If the teapot were once again to become completely tamished, how much mass Am is converted to energy? Express your answer to three significant figures and include the appropriate units. View Available Hints) Am-20 4Ag(s)+O₂(g)-2Ag,0(s), AH-622 kJ/mol You have a badly tamished silver teapot. The tamish is a result of the silver metal reacting with the open in the air according to Submit Previous Anwes Part B 0 ? g X Incorrect; Try Again; 5 attempts remaining Al Study Tools Looking for some guidance? Lets work through a few related practice questions before you go back to the real thing s n Substance Units input for part A % 5 "Co-+Ni+8+7 Cobalt-60 is a radioactive isotope that is commonly used for cancer radiation therapy. The cobat-60 atom decays to the energy in the form of gamma rays If you captured the energy from the decay of a 0.380 g pellet of isotopically pure coball-60, how long could you run a 70 The relevant masses are as follows: Mass (g/mol) Y Hi, Twelfth Sign Out G V A D D A Study Tools I Constants Periodic Table Al Study Tools Beta 8 U H B To help you work through this problem, I will ask you a series of questions, guiding you step by step. One mole of silver is equivalent to 107.9 g of silver. The solid silver teapot weights 751g. How many moles of silver is this? Express your answer to three significant figures and include the appropriate units. " : Help 9 Sols > J N ✓X Or ask a question Don't share personal data. This Al uses Pearson learning materials, but it may produce inaccurate information sation 10:42 N Send Conversation 13#14Al is a long-term positive for Pearson 1. Value of our proprietary IP and data sets will increase over time 2. We have deep Al experience and expertise across company 3. Starting to introduce new, Al-enabled products across the business 4. Al can unlock further opportunities for cost efficiencies Course Home CAI Tutor Assignment 1 Mass-Energy Balance Einstein's famous equation expresses the relationship between energy E, in joules, and mass m, in kilograms, where c 3.00x10 m/s is the speed of light. The equation is AE-Ame² where AE is the change in energy for a reaction and Am is the difference in mass between the reactants and products 4Ag(s)+O₂(g)-2A You carefully clean the teapot and then, out of curiosity, y measuring and calculating, you also determine that 6.901 If the teapot were once again to become completely tami Express your answer to three significant figures and View Available Hint(s) Am--98 10-1 Submit Previous A Pearson You 6.96 Xool 2063 Al Chat silver is this? Express you three significant figures a the appropriate units. X Incorrect; Try Again; 5 attempts remaining Or ask a question... It looks like you can use some help. We can help you leam this concept using a Would you like to try ? Yes, Sure How many moles of silver will tar on the teapot if 4% of the total ma 751g) is exposed to air? Express y answer to three significant figures an include the appropriate units. Don't share personal data. This Al uses Pearson learning materials, but it may produce inaccurate information Send 14#15Pearson well positioned for the future of learning Optimistic about growth prospects going forward Stable, growing and more evenly distributed portfolio, with learning and certification at its heart Executing on our strategy with excellent financial performance Opportunities to leverage our IP and data sets to create innovative products incorporating generative Al 15#16Appendix 16#17Measuring our success: strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world ΚΡΙ Digital Growth Objective Drive digital revenue growth KPI Measure OnVUE volumes Higher Education US digital registrations PTE volume * H1 2022 US digital registrations restated from 4.8m to 4.6m due to recategorising 0.2m of registrations from US to International Note: For a full list of KPI measure definitions, please refer to: https://plc.pearson.com/en-GB/purpose/our-targets-kpis H1 2023 1.7m 4.5m 606k H1 2022 1.4m 4.6m* 344k 17#18Measuring our success: strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world ΚΡΙ Consumer Engagement Objective Create engaging and personalised consumer experiences KPI Measure NPS for Connections Academy NPS for PTE Pearson+ registered users Workforce Skills registered users Mondly paid subscriptions Note: For a full list of KPI measure definitions, please refer to: https://plc.pearson.com/en-GB/purpose/our-targets-kpis H1 2023 +67 +56 4.7m 5.3m 473k H1 2022 +67 +51 4.5m 4.1m 336k 18#19Measuring our success: strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world ΚΡΙ Product Effectiveness Objective Improve the effectiveness of our products to deliver better outcomes KPI Measure PTE speed of score return VUE test volumes Higher Education product usage - text units Workforce Skills number of enterprise customers Note: For a full list of KPI measure definitions, please refer to: https://plc.pearson.com/en-GB/purpose/our-targets-kpis H1 2023 1.1 days 12.2m 2.0m 1,556 H1 2022 1.3 days 10.0m 2.1m 1,387 19