"The board has been fully engaged with the management’s review of the business and our plans to return Pearson back to growth."
Sidney Taurel, Chairman
2016 has been a difficult year for Pearson shareholders.
The challenges facing the business that we thought would begin to dissipate have become more acute, and as a consequence, we have cut both the short-term outlook for our profits and the future dividends we can return to shareholders. Clearly, this is disappointing for everyone involved in the company.
The management team has a clear view of the issues we face, particularly in our largest division, US higher education courseware. There is a rigorous plan to address the challenges, and to accelerate the transition to a more digital, more sustainable organisation. As we complete this transition, we will create more stable and predictable revenues for Pearson, and ultimately create growth opportunities.
|Total adjusted earnings per share||58.8p|
|Return on invested capital||5.0%|
|Total share return*||-15.6|
|Dividend per share||52p|
*Five year % change
"The long-term opportunity in education remains hugely significant."
John Fallon, Chief executive
2016 was a challenging year for Pearson.
We have been hit hard by pressures in US higher education, which will continue into 2017 and 2018. We are acting quickly to build a more sustainable, digital business less exposed to volatility.
This is challenging, but exciting work. Pearson will continue to focus on fewer, larger opportunities, to manage our cost base tightly and to make Pearson a simpler, more efficient company. Over time, we will deliver a more sustainable, more profitable business, delivering better educational outcomes for learners.
Thank you for your support of Pearson.
Our strategy in action
Over time, our strategy will provide us with a larger market opportunity, a sharper focus on faster-growing markets, and stronger financial returns. Below we outline how our strategy creates value.
Our strategy is to improve access and outcomes in education through our world-class capabilities in educational content and assessment, and services powered by technology. This will be focused on where we see the greatest potential for growth and scalability, and increasingly driven by our expertise in adaptive and personalised learning, enabling educators to be even more effective in reaching their students.
|Digital and services revenues (% of sales)||68%|
One of our key strategic drivers is to build our market-leading presence in North America, the UK and other key markets. We also aim to build our leading presence in select developing markets to meet the growing global demand for education, while reducing the geographical complexity of Pearson in order to focus on fewer, bigger opportunities in education.
|US Higher education courseware market share*||40.4%|
|Online programme management market share**||26%|
|UK qualification (GCSE) market share***||28.7%|
*Source: MPI, BMO
**Source: Deutsche Bank Online Higher Education report, Capital IQ, company websites, Eduventures, Pearson
Our strategy is to improve access and outcomes in education. In other words, we want to help more learners learn more. Efficacy is becoming more deeply embedded into our strategy and is helping drive faster improvement in our content, assessment, services and technology. We are the only education company committed to efficacy with such rigour and at such scale and depth.
|Product improvements identified by efficacy reviews are being implemented on track with plans||82%|
|Product impact evaluations are progressing in line with study plans||94%|