#1Pearson 2021 Full Year Results 25th February 2022 P#2Our Purpose Add life to a lifetime of learning Our Vision Everyone can realise the life they imagine through learning Our Mission Create vibrant and enriching learning experiences designed for real-life impact m#3Achievements in 2021 Strong performance good financial and strategic progress New organisational and reporting structure fully implemented Foundations of Workforce Skills strategy built 30- 30+30 MMM Strong management team in place Digital, consumer grade, strategy underway, launched Pearson+ 4#4Three Factors Underpinning Our Success Scope and scale of business, and our expertise + Great foundation - well managed businesses, strong financial position Focus on delivering digital learning products and services through consumer strategy 5#5Financial Review & Outlook ?#6● ● ● ● ● 2021 Financial Highlights Group performance ahead of expectations Underlying sales up 8%, adjusted operating profit up 33%, EPS up 22% Strong cash conversion Robust balance sheet Dividend up 5% Announcing share buyback of £350m Well positioned to accelerate growth Revenue £3,428m up 8% underlying (2020: £3,397m) Adjusted earnings per share 34.9p up 22% (2020: 28.7p) Adjusted operating profit £385m up 33% underlying (2020: £313m) Full year dividend 20.5p up 5% (2020: 19.5p) Operating cash flow £388m 101% cash conversion (2020: £315m) Net debt £350m (2020: £463m)#7FY2021 Sales £m Assessment & Qualifications Virtual Learning English Language Learning Workforce Skills Higher Education Businesses under strategic review Total sales 2021 1,204 713 238 172 849 252 3,428 2020 1,082 692 218 163 956 286 3,397 *Constant exchange rates are calculated by assuming the average FX in the prior year prevailed through the current year. CER growth* 18% 11% 17% 7% (5)% (9)% 7% Underlying growth 18% 11% 17% 6% (5)% 1% 8% 8#8FY2021 Adjusted Operating Profit £m Assessment & Qualifications Virtual Learning English Language Learning Workforce Skills Higher Education Businesses under strategic review Penguin Random House Total adjusted operating profit/(loss) 2021 216 32 15 27 73 22 385 2020 147 29 1 26 93 16 1 313 Margin (%) 2021 18% 4% 6% 16% 9% 9% 11% Underlying growth 59% 28% >100% 8% (15)% 27% 33%#9Measuring Our Success Strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world ΚΡΙ Digital Growth Consumer Engagement Product Effectiveness *VUE test volumes include GED tests Objective Drive digital revenue growth Create engaging and personalised consumer experiences Improve the effectiveness of our products to deliver better outcomes - KPI Measure Underlying growth in Group digital and digital-enabled sales Virtual Schools US enrolments OPM student enrolments OnVUE volumes Higher Education US digital registrations PTE volume NPS for Connections Academy NPS for PTE Pearson+ registered users PTE speed of score return VUE test volumes* VUE Partner retention Higher Education product usage - text units 2021 Actual 9% 111k 275k 3.0m 11.4m 436k +62 +56 2.75m 1.2 days 16.8m 99% 5.4m 2020 Actual (2)% 109k 245k 2.1m 12.3m 350k +60 +60 n/a 1.5 days 12.9m 96% 5.4m 10#10Measuring Our Success Strategic KPIs Enabling sustainable growth, driving shareholder value and contributing to a more equitable world ΚΡΙ Investing In Talent Inclusion & Diversity Sustainability Strategy Objective Enhance our employee experience and help employees progress through learning Build an inclusive culture and increase diverse representation Achieve net zero carbon by 2030 *Figures have been restated to reflect relevant disposals. - KPI Measure Number of employees upskilling or reskilling Employee NPS % of diverse candidates in leadership development and mentoring programmes % of diverse candidates in leadership succession plans Progress against achieving net zero carbon by 2030, as measured through percentage carbon reduction 2021 Actual 71% +8 100% of programmes have a minimum of 50% diversity Women = 72% BIPOC/BAME = 24% 26% reduction vs re-baselined 2018* 2020 Actual 63% +17 n/a n/a 25% reduction vs re-baselined 2018* 11#11Cash & Balance Sheet £m Operating cash flow Cash conversion % Net debt Net debt: adj. EBITDA ROC Dividend 2021 388 101% (350) 0.6x 7.9% 20.5p 2020 315 101% (463) 0.8x 6.6% 19.5p 12#12Key Cash Flow Movements £m Adjusted operating profit Capex cash Depreciation Net capex investment Product development cash Amortisation Net product development investment Other working capital movements Operating cash flow Operating cash conversion 2021 385 (206) 213 7 (287) 264 (23) 19 388 101% 2020 313 (195) 237 42 (323) 280 (43) 3 315 101% 13#13Financial Expectations Segment Assessment & Qualifications 1,204 Virtual Learning English Language Learning Workforce Skills Higher Education Strategic review Group 2021 Revenue Margins* (£m) 2021 *Adjusted operating profit margins 713 238 172 849 252 3,428 18% 4% 6% 16% 9% 9% 11% Revenue 2022 expectations Margins* Low to mid-single digit Maintained Incremental Low to mid-single digit improvement in Mid-single digit Existing business: Mid-high single digit >40% for Faethm and Credly Down less than 2021 Growth Virtual Learning due to OPM efficiencies Improvement versus 2021 Break-even Stabilisation In line with market expectations Revenue CAGR 2022 to 2025 Low to mid-single digit Mid-high single digit Mid-high single digit 2025 revenues more than double 2021 Low to mid-single digit Mid-single digit Margins* 2025 Maintained Low double digit Mid-teens Low double digit Mid-teens Mid-teens 14#14Balance Sheet Group Capex & product development Cash conversion Return on capital 2021 £206m £287m 101% 7.9% 2022 Capex reduces, reinvested into product development > 90% Improvement 2022-25 Capex reduces, reinvested into product development > 90% Double digit 15#15Capital Allocation Invest in the business Strong balance sheet | Investment grade credit rating Capex and product development for organic growth Value enhancing acquisitions Focused and disciplined approach Dividends Progressive and sustainable Surplus cash returns Buybacks or special dividends as and when appropriate Share buyback commences in 2022 16#16Summary Stronger financial performance and improved ROC in 2021 Key KPIs to highlight drivers of growth Revenue growth and mid- teens margin in 2025 Expect to meet market expectations in 2022* Balance sheet capacity to invest, increase dividend and make a return to shareholders *On the basis of consensus at £416m at USD:GBP 1.37. For reference, each 5c move in USD FX rate equates to £15m of adjusted operating profit 17#17Assessment & Qualifications P ܥܥܝ ככככ 50#18Assessment & Qualifications - Overview Our largest division accounting for more than 50% of Group profits, sits at the heart of Pearson. Clinical Assessment (Global) Understanding if and why a person is having difficulty learning. Student Assessment (US) UK School Qualifications (UK & International) Measuring what students have learned. UK & IT'L SCHOOL US Student Clinical VUE 2021 sub-divisional revenue Pearson VUE (Global) Helping learners & professionals prove what they have learned. 19#19Assessment & Qualifications - Performance Market characteristics Total addressable market: £5.6bn • Market growth - historic & expected 3-5-year CAGR: c.2% ● Segment Assessment & Qualifications Pearson VUE US Student Assessment Clinical Assessment UK & International *Adjusted operating profit margin 2021 Revenue (£m) 1,204 526 278 225 175 2021 financial KPIs ● ● Sales: £1,204m / 2020 £1,082m (+18% UL) Adjusted operating profit: £216m / 2020 £147m (+59% UL) Margin* 2021 18% 2022 expectations Revenue Low to mid-single digit Flat High-single digit Slightly down Exams resume Margin* Maintained 2021 non-financial KPIs ● ● ● VUE test volumes: 16.8m (+30%) OnVue test volumes: 3m (+43%) VUE customer retention: 99% (+3%) Revenue CAGR 2022 to 2025 Low to mid-single digit Low to mid-single digit Flat Low to mid-single digit Growth Margin* 2025 Maintained 20#20Assessment & Qualifications - Opportunities for Growth Growth drivers Long term contracts with high renewal rates ID Large scope and scale of business Well placed to serve increasing demand for upskilling & reskilling Group synergies especially English Language Learning & Workforce Skills Revenue ($m) In focus: VUE's balanced portfolio drives growth 800 700 600 500 400 300 200 100 0 Sales CAGR 2003-2021 = 15% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 21#21Virtual Learning P Ice Secs Se www#22Virtual Learning - Overview We are a leading provider of virtual and blended learning services in K-12 and Higher Education, in the US and globally Virtual Schools (US, Global) ● ● ● c.50 virtual schools in the US and the UK Revenue driven largely by enrolments: c.110k students at $5k p/a Active in 30 US states 163 district partners OPM (US, Global) ● ● OPM ● Virtual Schools 2021 sub-divisional revenue 477 programs managed with 31 partners Revenue driven largely by enrolments: c.90k students at $4k p/a 50%+ of revenue = students starting in prior academic years Transformation underway to drive profitable growth 23#23Virtual Learning - Performance In focus: Virtual Schools - secular growth trends to drive future growth Enrolments (000s) 120 100 80 60 40 20 Enrols. Schools NPS Pre-pandemic growth: +9% CAGR SY16/17 TIM SY17/18 59,036 34 +62 SY18/19 65,253 34 +65 SY19/20 73,391 36 +66 *Enrolments data accurate as of 30 September each year 76,596 42 +60 Trailing 2-year growth: +19% CAGR SY20/21 106,992 43 +62 SY21/22 109,247* 47 n/a Future growth drivers Greater awareness and acceptance of online learning ● ● Increased adoption of digital tools at the K-12 level Increasing penetration in existing states Increasing penetration in new states 24#24Virtual Learning - Performance 2021 financial KPIs Sales: £713m / 2020 £692m (+11% UL) Adjusted operating profit: £32m / 2020 £29m (+28% UL) ● ● Segment Virtual Learning Virtual Schools OPM *Adjusted operating profit margin 2021 Revenue Margin* (£m) 2021 713 449 264 4% 2021 non-financial KPIs Virtual Schools enrolment growth: 2% (2020: +43%) OPM course enrolment growth: 7% (2020: +20%) NPS: Connections Academy: +62 (2020: +60) 2022 expectations Revenue Low to mid-single digit Low-single digit High-single digit Margin* Incremental improvement in Virtual Learning due to OPM efficiencies Revenue CAGR 2022 to 2025 Mid-high single digit Mid-single digit High-single digit Margin* 2025 Low double digit 25#25Virtual Learning - Opportunities for Growth Well placed for growth Secular growth trends towards virtual learning 20 years of expertise, Group synergies Strong market position, 1 of 2 national players OPM complete reset 26#26English Language Learning ?#27English Language Learning - Overview We offer English solutions in 163 countries worldwide with a focus on the 'committed learner.' Institutional Digital & blended ELL solutions for academic institutions Addressable market for institutional assessment and courseware: c.£2.2bn • 1 of 3 biggest players in courseware: (c.11%) • 2021 revenue: £160m (+13% vs PY) High Stakes Assessments Proof of English proficiency for international students & migrants Addressable market: c.£800m PTE: Top 3 player with volume share of c.10% ● ● 2021 revenue: £78m (+23% vs PY) 436k tests delivered in 2021 Online Direct- to-Consumer ● ● Self-study online language learning Market size: £1.5bn+ Double digit CAGR to 2025 28#28English Language Learning - Performance 2021 financial KPIs ● ● Sales: £238m / 2020: £218m (+17% UL) Adjusted operating profit: £15m / 2020: £1m (+1,600%) Segment English Language Learning *Adjusted operating profit margin 2021 revenue (£m) 238 Margin* 2021 6% 2021 non-financial KPIs • PTE score return: 1.2 days (improvement vs 1.5 days PY) PTE volume: 436k tests (+25% vs PY) • PTE NPS: +56 (2020: +60) ● 2022 expectations Revenue Mid-single digit Margin* Improvement versus 2021 Revenue CAGR 2022 to 2025 Mid-high single digit Margin* 2025 Mid-teens 29#29English Language Learning - Opportunities for Growth PTE - a replicable success model Highly differentiated value proposition Available in 118 countries via 389 test- centres OOOO 0000 ooor OOOL Digital, secure, computer based; Al powered Leading share position in Australia Fastest score results at 1.2 days UK market: +42% YOY growth in UK tests taken Global PTE bookings evolution 600000 500000 400000 300000 200000 100000 0 Gained Aus recognition 2011 2012 Gained UK recognition Bounce back commences post- COVID 2013 2014 2015 2016 2017 2018 2019 2020 2021 30#30Workforce Skills P S#31Workforce Skills - Overview 996 1 1 Integrated, end-to-end solutions A leading source of data on skills 8 L Pearson's reach and scale Globally recognised brand 32#32Workforce Skills - Overview Our unique offering helps employers diagnose and fill skills gaps and employees gain and verify skills. Diagnose future skills training needs Faethm (Global) Talent Lens (Global) FÆTHM GED (N America) Skills-based Learning and Assessment Accelerated Pathways (N America) BTEC & HNs (UK & Int) ? Other Pearson (Global) Verify individuals' skills Talent Lens (Global) Credly (N America) Credly 33#33Workforce Skills - Performance Market characteristics TAM ● Global market in 2019: £280bn £100bn in the US Employee learning US market growth - historic & expected 3-5 year CAGR: 7% Segment Workforce Skills *Adjusted operating profit margin 2021 Revenue (£m) 172 2021 financial KPIs ● Sales: £172m/2020 £163m (+6% UL) 16% Adjusted operating profit: £27m/2020 £26m (+8% UL) Margin* 2021 2022 expectations Revenue Existing business: mid-high single digit >40% for Faethm and Credly Margin* Break-even There were no non-financial KPIs for Workforce Skills in 2021. Forward looking KPIs include: Total number of enterprise customers ● 2021 non-financial KPIs ● Enterprise customer net retention rate Number of Workforce Skills registered users Revenue CAGR 2022 to 2025 2025 revenue more than double vs 2021 Margin* 2025 Low double digit 34#34Workforce Skills - Opportunities for Growth G End-to-end solution. in one integrated ecosystem Trusted portfolio of products & services Opportunity to lead in labour & talent data market 35#35Higher Education P#36Higher Education - Overview Market characteristics US TAM c.£5bn US Student enrolment 17M (Fall 2021 NSC) P Market Leader — Win course adoptions Faculty Institutions Demand Generation Assign required course materials Students Increasingly consumer and more digital Consumption 37#37Higher Education - Performance 2021 financial KPIs ● ● Sales: £849m / 2020: £956m (-5% UL) Adjusted operating profit: £73m/2020: £93m (-15% UL) Segment Higher Education *Adjusted operating profit margin 2021 revenue (£m) 849 Margin* 2021 9% 2021 non-financial KPIs ● ● ● HE digital registrations: 11.4m (12.3m) HE product usage- text units: 5.4m (5.4m) Pearson+ registered users: 2.75m 2022 expectations Revenue Down less than 2021 Margin* Stabilsation Revenue CAGR 2022 to 2025 Low to mid-single digit Margin* 2025 Mid-teens 38#38Higher Education - Opportunities for Growth Traditional business Enhance our Core Products Invest in our platform products more reliable, responsive to customer needs, easy to access and use, and support business stability and growth ● Secondary Recapture The upside opportunity to recapture secondary consumption remains substantial Consumer choice trending to digital, leaving print with diminishing downside. Print units down from 6m in 2018 to 2m in 2021, of which bundles represent 0.5m units. We will drive recapture by continuing to reduce secondary supply and shift delivery to Inclusive Access and Pearson+ 39#39Higher Education - Opportunities for Growth ? Pearson+ Pearson+ metrics Registered Users 2.75M ● ● ● Titles 1600+ Apple Store Rating* 4.8 Positive momentum from current performance International roll-out in 2023 with Canada and other International regions Introduce Pearson+ Channels & Social as student-centric product feature expansion Scale Channels with additional short form video content *As at mid-February 2022 40#40Summary P#41Summary Assessments & Qualifications A source of strength and stability Workforce Skills Strategy operational Virtual Learning Poised for further growth Higher Education Stability and digital growth English Language Learning The destination for committed English learners 0000000#42Priorities for 2022 00 Deliver sales and profit growth Embed customer & consumer insights Focus on execution, quality and trust Scale and grow Pearson+ 43#43Р Pearson+#44Appendix P#45Financial Expectations - Detailed Overview Segment Assessment & Qualifications Pearson VUE US Student Assessment Clinical Assessment UK & International Virtual Learning Virtual Schools OPM English Language Learning Workforce Skills Higher Education Strategic review Group *Adjusted operating profit margins 2021 Revenue Margins* (£m) 2021 1,204 526 278 225 175 713 449 264 238 172 849 252 3,428 18% 4% 6% 16% 9% 9% 11% Revenue Low to mid-single digit Flat High-single digit Slightly down Exams resume 2022 expectations Margins* Low to mid-single digit Low-single digit High-single digit Mid-single digit Existing business: Mid-high single digit >40% for Faethm and Credly Down less than 2021 Growth Maintained Incremental improvement in Virtual Learning due to OPM efficiencies Improvement versus 2021 Break-even Stabilisation In line with market expectations Revenue CAGR 2022 to 2025 Low to mid-single digit Low to mid-single digit Flat Low to mid-single digit Growth Mid-high single digit Mid-single digit High-single digit Mid-high single digit 2025 revenues more than double 2021 Low to mid-single digit Mid-single digit Margins* 2025 Maintained Low double digit Mid-teens Low double digit Mid-teens Mid-teens 46#46US Higher Education Courseware College Units Units by format Print Bundles Platforms Rental eText and Pearson+ Total KEY Print: College textbooks Bundles: College textbooks + platform 2021 units (m) 1.5 0.5 6.1 0.3 3.6 12.0 Platforms: MyLab, Mastering and Revel Rental: Print textbook rental 2020 units (m) 1.5 0.7 6.3 0.2 3.7 12.4 Year on year change (1)% (29)% (2)% 46% (4)% (3)% 47