Consolidated income statement Financial statements Year ended 31 December 2023 All figures in millions Notes 2022 2021 Continuing operations Sales 2.3 3,674 3,841 3,428 Cost of goods sold 4 (1,839) (2,046) (1,747) Gross profit 1,835 1,795 1,681 Operating expenses 4 (1,322) (1,549) (1,562) Other net gains and losses 4 (16) 24 63 Share of results of joint ventures and associates 12 1 1 1 Operating profit 2 498 271 183 Finance costs 6 (81) 1) (68) Finance income 6 76 123 62 Profit before tax 493 323 177 Income tax 7 (113) (79) 1 Profit for the year 380 244 178 Attributable to: Equity holders of the company 378 242 177 Non-controlling interest 2 2 1 Earnings per share attributable to equity holders of the company during the year (expressed in pence per share) basic 8 53.1p 32.8p 235p diluted 8 52.7p 326p 233p Consolidated balance sheet As at 31 December 2023 Financial statements Allfigures in millions Notes 2022 All figures in millions Notes 2022 Assets Current liabilities Non-current assets Trade and other liabilities 24 (1,275) (1,254) Property, plant and equipment 10 217 250 Financial liabilities - borrowings 18 (67) (86) Investment property 10 79 60 Financial liabilities derivative financial instruments 16 (5) 11) Intangible assets 1 3,091 3177 Income tax liabilities 7 (32) (43} Investments in joint ventures and associates 12 22 25 Provisions for other liabilities and charges 3 (25) (85) Deferred income tax assets 13 35 57 (1,404) (1,479) Financial assets - derivative financial instruments 16 32 43 Retirement benefit assets 25 499 581 Liabilities classified as held for sale 32 . B Other financial assets 15 143 133 Income tax assets 7 41 41 Total liabilities (2,739) (2,909) Trade and other receivables 22 135 139 Net assets 3,988 4,415 4,294 4,506 Equity Current assets Share capital 27 174 179 Intangible assets - product development 20 947 975 Share premium 27 2,642 2,633 Inventories 2 91 105 Treasury shares 28 (19) (15) Trade and other receivables 22 1,050 1,139 Capital redemption reserve 33 28 Financial assets - derivative financial instruments 16 16 16 Fair value reserve (12) (13) Income tax assets 15 9 Translation reserve 411 709 Cash and cash equivalents (excluding overdrafts) 17 312 558 Retained earnings 745 881 2,431 2,802 Total equity attributable to equity holders of the company 3,974 4,402 Non-controlling interest 14 13 Assets classified as held for sale 32 2 16 Total equity 3,988 4415 These financial statements have been approved for issue by the Board of Directors on Total assets 6,727 7324 13 March 2024 and signed on its behalf by Liabilities Non-current liabilities Sa!lyjphnspn & Financial liabilities - borrowings 18 (1,094) (1,144) Chief Financial Officer r i Pearson plc Financial liabilities - derivative financial instruments 16 (38) (54) Registered number: 00053723 Deferred income tax liabilities 13 (46) (37) Retirement benefit obligations 25 (44) 61) Provisions for other liabilities and charges 23 (15) (14) Other liabilities 24 (98) (120) (1,335) (1,430) Consolidated cash flow statement Year ended 31 December 2023 Financial statements All figures in millions Notes 2022 2021 All figures in millions Notes 2022 2021 Cash flows from operating activities Cash flows from financing activities Profit before tax 493 323 177 Proceeds from issue of ordinary shares 27 9 7 6 Net finance costs/(income) 5 (52) 6 Buyback of equity 27 (186) (353) - Depreciation and impairment - PPE, investment Purchase of treasury shares 28 (35) (37) (16) property and assets held for sale 90 136 241 Proceeds from borrowings 285 _ _ Amortisation and impairment - software 123 125 117 Repayment of borrowings (285) a7 (167) Amortisation and impairment - acquired Repayment of lease liabilities (84) (93) (88) intangible assets o 24 50 Dividends paid to company's shareholders ] (154) (156) (149) Other net gains and losses 13 (24 63) Dividends paid to non-controlling interest - (1) - Product development capital expenditure (300) (357) (287) Net cash used in financing activities (450) 804) (414) Amortisation and impairment - product development 284 303 279 Effects of exchange rate changes on cash and Share-based payment costs 40 35 28 cash equivalents @) 36 ) Change in inventories 9 (34 22 Net decrease in cash and cash equivalents (234) (394) (176) Change in trade and other receivables (24 33 an Cash and cash equivalents at beginning of year 543 937 1,113 Change in trade and other liabilities (20) (84) 37 Cash and cash equivalents at end of year 17 309 543 937 Change in provisions for other liabilities and charges 61) 50 14 Other movements (16) 19 20 Net cash generated from operations 682 527 570 Interest paid (60) (57 (67) Tax paid (97) (109) (177) Net cash generated from operating activities 525 361 326 Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired 30 (171) (228) (55) Acquisition of joint ventures and associates (5) (5) (10) Purchase of investments (8) 12) (4) Purchase of property, plant and equipment and investment property (30) (57) (64) Purchase of intangible assets (96) (90) (112) Disposal of subsidiaries, net of cash disposed 31 (38) 333 83 Proceeds from disposal of investments 7 17 48 Proceeds from disposal of property, plant and equipment 5 14 - Lease receivables repaid including disposals 15 18 21 Interest received 20 22 13 Dividends from joint ventures and associates - 1 - Net cash (used in)/generated from investing activities (301) 13 (80)