Pearson is the world’s leading education company, with 40,000 employees in more than 70 countries. After the completion of the Penguin Random House merger, Pearson continues to focus on education and still holds the Financial Times Group (not included in this ranking).

In 2013, Pearson announced a new operating and reporting structure that organizes the publisher’s learning operations in two streams: global lines of business and geographic market categories. The global lines of business center includes the School, Higher Education and Professional segments and the geographic streams focus on the North American market, Growth markets and Core markets.

Analysis & Key Developments

Financial

Pearson’s overall corporate revenues dropped from a re-stated 5.07 million GBP in 2013 to 4.87 billion GBP, a decline of 4%. Total adjusted operating profit decreased 2% to 722 million GBP. The lower results are partly due to the strength of the pound compared to the US dollar, as well as restructuring charges of 44 million GBP.

Revenues from the FT Group have traditionally have excluded for this ranking, though FT was integrated into the Professional division in 2014. FT revenues were reported as level at the constant exchange rate, at 341 million GBP in 2013 (excluding ‘mergermarket’ revenues, the combined revenues from all of Pearson’s educational publishing can be estimated at 4.54 billion GBP.

Despite a tough market in North America and the UK, Pearson achieved solid growth for online educational services in those areas as well as English language learning in China. FT Group achieved profitability, which offset publishing declines in South Africa, Brazil (Sistemas), and North America.”

Revenues from North America account for 61% of group totals, a decline of 3%. Pearson’s core market sales in the UK and Europe were down 8%.

Pearson reported 2014 earnings of 69 million GBP after taxes from its 47% stake in Penguin Random House, a drop from 78 million GBP in 2013 due to taxes, though Pearson benefited from the absence of net restructuring charges.

Internal organization

Pearson reorganized its operations and implemented a new operating and reporting structure centered along two business streams: global lines of business and geographic market categories, North America, Core and Growth. Core markets include the UK, Australia, Germany, France, Benelux and Italy. Growth markets include Brazil, South Africa, China, India and other fast-growing economies. The geographical structure is based on a parallel product development strategy, in which Pearson organized its business by learning ages and stages – School, Higher Education and Professional. The Financial Times is now part of Pearson’s professional education business. “We've completed our intense two-year restructuring and reinvestment program,” said Pearson CEO John Fallon, “and performed well competitively despite some challenging market conditions.”

CFO Robin Freestone will step down by the end of 2015 after 10 years with Pearson, including eight as CFO. He is replaced by Coram Williams who currently serves as CFO at Penguin Random House. Williams took over on August 1, 2015.

Pearson acquired Grupo Multi, Brazil’s leading adult English language training company, for 437 million GBP (plus 49 million GBP in net debt). The deal was announced in December 2013 and completed on 11 February 2014. There were no other significant acquisitions for the year.

Digital

Barnes & Noble reached an agreement with Pearson to buy out the publisher’s stake in Nook Media for 13.7 million USD in cash plus 602,927 shares of B&N common stock. The deal was anticipated when B&N bought back Microsoft’s preferred shares in Nook Media earlier in 2014. Pearson paid 89 million USD in December 2012 for a 5% stake.

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