: Pearson Education :
: profile :
There has never been a better time to be in the business of education. While governments around the world invest more to educate their young people, individuals devote more of their personal hours (and finances) to help their children and to improve their own careers, earnings and life opportunities.
Over the past three years, through acquisitions, strategic alliances and organic growth, we have created the world’s leading learning company. In the US, our largest single market, our educational publishing operations play a key role in meeting the demand for first-class curriculum, both in print and online. This market, valued at some $8bn (a small proportion of the $740bn invested in education in the US each year) is currently growing on average at around 8% per year.
With federal and state governments wanting both to measure academic progress against clear standards and modernise their school systems, we are seeing faster rates of growth in demand for testing and the enterprise software that powers many schools. The acquisition of NCS, completed in September 2000, means we can meet this demand and work with schools to embed assessment as part of the daily curriculum and to tailor learning to the needs of each student. And, as the internet becomes an integral part of both the home and the classroom, our Learning Network links teachers, parents and students in ways never possible before. In addition, by facilitating ‘anytime, anywhere’ learning, it enables us to take a leading role in the faster growing markets of online consumer learning and business education and management development.
The trends in the US are also playing out in developed countries around the world. In developing countries, school rolls are growing even more rapidly as an increasing number of students stays on longer at school. And, around the world, ownership of educational publishing and learning companies is often fragmented, creating major opportunities for consolidation and growth. As the world’s most international education company, we are in a very good position to capitalise on these trends.
We have all the pieces – the most comprehensive range of educational pro-grammes, leadership in testing, assessment and enterprise software and the very best in online consumer and professional learning – to participate in the learning revolution, and to profit from the growth it brings to the business of education.
The acquisition of NCS has transformed Pearson Education into the world’s leading integrated education company, linking curriculum, assessment and data management. The NCS operations have been integrated into our US school, US higher education & professional and international businesses.
US higher education & professional:
: performance :
Sales at Pearson Education increased to £2,044m with underlying sales, held back by softness in the consumer technology markets, increasing by 5.4%. Underlying profits, boosted by integration benefits flowing through from the integration of the Simon & Schuster and AWL education businesses, increased by 13.4%.
After becoming part of Pearson Education on September 8, NCS contributed revenues of £146m and operating profit of £15m, meeting our revenue and profit expectations. It benefited from its leadership both in student testing and delivering enterprise software solutions to schools. The integration of NCS with Pearson Education is on track to deliver $50m of annual cost savings by the end of 2002.
Our US school business increased sales by 10%, excluding revenues from NCS. Building on a very strong performance in 1999, we made significant market share gains in some key adoptions, benefiting from a range of new print and online programmes. In secondary science, Prentice Hall School took a 40% share in the major state adoptions including California and our new Scott Foresman reading programme grew market share from less than 5% to approximately 25% nationwide. We also continued to build on the success of our best selling math programmes and took the leading position in secondary social studies. The US higher education and professional business increased sales by 9% (excluding revenues from NCS), gaining market share and growing margins. The college business delivered particularly strong growth in math, computer sciences, history and developmental English and continued to invest in combined text and online programmes. Its continued leadership in the college business helped to mitigate the impact of weakness in the consumer IT publishing market.
The international business increased sales by 18% (excluding revenues from NCS). Our major international operations all reported double digit revenue growth, with particularly strong progress in Latin America and English language training. We extended our lead in the international education market through a series of acquisitions in France, Brazil, Korea and Japan.
The integration of the Simon & Schuster and Addison Wesley Longman businesses is now completed and in 2001 is expected to deliver the projected $130m in annual cost savings. In the two years since the acquisition of the Simon & Schuster education businesses, our core US school and US college operations have increased revenues by an average of 8% per year on an underlying basis.
FT Knowledge made sales of £43m and losses of £17m as it invested in developing its corporate learning and executive education businesses in a market that is enjoying rapid worldwide growth. FT Knowledge merged successfully with The Forum Corporation; extended its financial training company, New York Institute of Finance, to Europe and Asia; launched FTdynamo, an online service focusing on world-class management thinking; and continued to develop online courses for the finance, investment and marketing professions.
Learning Network was launched successfully in September and is now established as one of the 50 most popular websites in the US. It is moving quickly to translate that traffic into the revenues which will ensure it breaks even by the end of 2003. At the same time, it is helping to drive revenue growth across Pearson’s businesses.
Pearson Broadband, a new initiative to create interactive education television for K-12, higher education, professional and lifelong learning markets, will launch its first products in 2001.