Dear colleagues,
Today we’re publishing our full year financial results for 2015.
As you all know, it was a tough year for Pearson. We’re still a strong, profitable company – we’re reporting a profit of £723 million, in line with the expectations we set out in January. But that’s 25% below the targets we set at the start of the year – and, as Coram Williams explains, most parts of the company failed to meet our own expectations.
We are also reporting a decline in sales of 2%. That may not sound like a big decline, but our revenues have remained flat over the past five years while our costs have increased – so our profits are under pressure.
We should still be proud of the many great things we did achieve last year. You can read more details in our press release, and Don Kilburn, Rod Bristow and Tom ap Simon will be sharing more details about our performance in North America, Core and Growth in the next few days.
What does this mean for us?
We have to focus on improving our revenues and controlling our costs and, as you know, we put in place a strong plan in January. We're restructuring many parts of Pearson to be more efficient and effective. We're making good progress and are already a quarter of the way through the restructuring work.
We expect a decline in profits across the company, as we invest in making these changes. As a result of what we’re doing now, we expect the business to stabilise into 2017 and return to growth in 2018.
Education remains an important and attractive sector. The value of an education has never been higher. But the cost of education is going up, without any real improvement in learning outcomes, and there is still a significant mismatch between the expectations of educators and employers.
This creates a huge opportunity for us, to help provide high quality, affordable and accessible education that leads to a better job and a better life.
Seizing the opportunity
We are taking action to provide better jobs and better lives by:
Developing new qualifications and certifications that help students to translate education into employment, by assessing against career-relevant criteria, and providing quality assurance to schools, universities and employers.
Growing our online degree and virtual school programmes – areas where Pearson had no presence five years ago and which now represent 10% of our business. Both these areas will grow rapidly in the next decade and we are well placed to play a leading role.
Investing in adaptive, personalized courseware, which helps teachers to be more productive and students to be more successful.
Underpinning all our new products and services with efficacy, which assures our customers and learners that everything we provide really does improve learning outcomes.
There’s a lot of work in progress that will help us succeed – from greater investment in our brand, to plans to prioritise the five big growth opportunities, about which you’ll hear more in the coming weeks.
The targets we are setting for 2016 are realistic and achievable, and we all need to play our part in ensuring we deliver on our individual goals in every part of the business.
When we combine our global expertise in content and assessment with new teaching and learning services, underpinned by great technology and efficacy, we’ll weather the short-term challenges, and emerge as a simpler, stronger company.
I know from the conversations I have with parents and students that they want education to provide better skills and better jobs for themselves and their families. Everything we’re doing now to refocus our business will help Pearson seize that opportunity and make an impact on millions of lives around the world.
I know I can count on you to help us get there.
John