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Chief Executive's overview

The digital revolution sweeping through publishing gathered further pace in 2015–16, pushing the industry through fast and sometimes difficult change, but also creating growth opportunities for Cambridge University Press as we invest in new content and technology, as well as strengthening our position in important markets around the world.

All our initiatives during the year – which ranged from the creation of new digital platforms to the streamlining of our production processes – had in mind our aim to serve the changing needs of researchers, teachers and students and to fulfil our core purpose of advancing learning, knowledge and research worldwide.

We saw some underlying growth on a constant currency basis in our overall sales, and in our publishing for teachers and students in 2015–16. This was a pleasing performance when set against difficult market conditions for the publishing industry as a whole. The world economy was fragile and uncertain, weighed down by sluggish expansion in Europe and worries over slowing growth in China, and the strength of sterling in 2015.

Our continued buoyancy amid the challenges facing the industry underlines our belief that the Press, as part of the wider University of Cambridge family, is well placed to flourish in the digital world.

Our continued buoyancy amid the challenges facing the industry underlines our belief that the Press, as part of the wider University of Cambridge family, is well placed to flourish in the digital world.

Customers value distinctive, high-quality products from publishers which answer their needs and offer them clear value for money. The increasing ubiquity of smart phones across much of the world presents an opportunity to reach an ever-widening audience, and digital platforms of many kinds allow us to create richer, personalised products, which help learning and the dissemination of scholarship.

At the same time, governments increasingly see education and academic research as a source of competitive advantage. Slower economic growth may constrain budgets in many countries, but that increases the need for governments to focus spending in areas likely to create more long-term value. So the emphasis is less on learning material as an end in itself but as a means to educational improvement, supported by additional services, such as consultancy, advice on curriculum development, assessment, teacher training, and the analysis of student data.
The opportunities are particularly strong in those developing economies where government spending on research and development has also been rising strongly, notably in China and India.

In response to these changes, the Press has been becoming less of a UK, Cambridge-based publisher and more global, whether in terms of sales or where our staff are located. More than 90 per cent of our revenues are from outside the UK, a number which continues to increase, while developing markets now account for 36 per cent of sales – a figure that has doubled in five years. Yet while our reach may be global, approaches to learning differ across cultures and economies and the solutions we offer are grounded in the needs of the countries we serve.

New opportunities are opening up in markets like India and China where government spending on research and development is rising.
New opportunities are opening up in markets like India and China where government spending on research and development is rising.

Wherever we have a presence, we benefit greatly from being part of the University of Cambridge. We work increasingly closely with its other departments, the largest of our partnerships being with Cambridge Assessment and its three examination boards. Our joint ability to produce effective exam preparation material and to combine assessment tools into cutting-edge thinking about pedagogy is helping teachers and students to perform to their potential.

An example is the success enjoyed during the year by the jointly developed Cambridge English Empower, a new adult English language course which includes sophisticated personalised online feedback. Our partnership will become physically closer when Cambridge Assessment moves into its new headquarters building, currently being built across the road from our Shaftesbury Road head office.

We are working together more and more with academic departments in Cambridge on projects that reinforce Cambridge’s position at the leading edge of education and research. These range from joint projects with the Faculty of Education to support educational reform in Kazakhstan to our launch with Cambridge academics of Open Access journals, including in the field of global health. All this translates into what has been called ‘the Cambridge Advantage’ – the ability to offer schools and universities products and services that build on the University’s breadth and standing, and which reinforce Cambridge’s reputation for excellence.

Among our three publishing groups, Education, which provides teaching materials for schools in the UK and around the world, has been the Press’s fastest growing segment in recent years, and repeated the achievement in 2015–16.

The Press has been becoming less of a UK, Cambridge-based publisher and more global, whether in terms of sales or where our staff are located.

A particular success was in the highly competitive Australian market, based around our very well-received new secondary school mathematics products, blending text and digital content in a way closely tailored to the needs of local schools. In India, a market where we continue to see great potential, we enjoyed a year of exceptional growth. In Africa, we laid the groundwork for our entry into the large Nigerian market in 2016–17.
Another highlight was the continued growth of international exams publishing, while we continued to build our educational reform programme, which works with governments in the developing world to help them make teaching and learning more effective.

Our English language teaching (ELT) group advanced in a tough, competitive market, investing heavily in products for both primary and secondary students. A major focus of attention was on an internal transformation programme, including an increased investment in publishing and sales for our most important markets, and we saw further fruits of that in Latin America, Iberia and China. The programme is also streamlining and standardising our approach and systems for content development.

Our Academic group had a challenging but profitable year. Our journals publishing continued to grow ahead of the market, extending its range of titles, and we reinforced our commitment to Open Access journals – freely available to the reader – reflecting our desire as part of the University of Cambridge to disseminate learning and knowledge widely. This is an area where we are working increasingly closely with the University Library.

Academic books, in common with the industry, faced strong headwinds, particularly in the United States, where changing market dynamics and mergers between distributors affected sales. Library budgets are under pressure, and an increased proportion of spending is being directed towards journals. Universities in North America and Europe have also been moving to payment models based on usage, involving buying a book digitally and paying the publisher when the volume is used, deferring revenue compared to up-front purchase.

This makes the selection of works for publication more critical. So I am delighted that our reputation for the highest scholarly standards was reflected at the Publishers Awards for Professional and Scholarly Excellence (PROSE), the most prestigious academic publishing prizes, where we won 10 categories, our best ever showing, and our 25 citations were significantly more than for any other publishing house.

An important Academic initiative has been preparation for the launch in the Summer of our exciting new digital platform, Cambridge Core, which will bring together our books and journals in one online home, making it much easier for users to cross-refer.

Cambridge Core underscores how digital is now at the heart of all we do. Digital products are growing very strongly and by the end of the year were running at a third of our revenues. Digital demands are central to all our investment decisions.

However, if we are to invest even more heavily in the best products, and continue to attract the best people to work here, we must run our operations as efficiently as possible. To that end, we have made important operational changes during the past year. These included new publishing processes in Academic and ELT, which resulted in the movement of some tasks from Cambridge to our new India Operations Centre in Hyderabad.

Our new digital platform, Cambridge Core, will bring together our books and journals content in one online home.
Our new digital platform, Cambridge Core, will bring together our books and journals content in one online home.

We closed the unprofitable third-party distribution operation in Japan, reflecting the market decline of physical book distribution, and enabling us to concentrate on our core task of marketing and selling Cambridge products. Our office in Manila is now the Press’s second largest, with activities that include software development and testing for digital platforms, customer service, and the processing of digital content. Regrettably, all these changes meant the elimination of some positions in the UK, but the number of people working with the Press globally has been growing as we locate staff closer to our international customers and expand our newer global centres.

The introduction of a new computerised customer ordering system in the US ran into teething problems, which hurt delivery times, but the issues were addressed quickly and customers are once again receiving the high quality service they expect from the Press.

In the financial year to 30 April 2016, Cambridge University Press's sales were £269m. Underlying sales growth on a constant currency basis was 1.5 per cent (though the reported figure including currency movements was flat), reflecting higher growth in Education offset by challenging conditions in Academic books. Operating profit before exceptional one-off costs was flat at £6.5m.

In a world of breathtaking change, I am confident that the Press will continue to prosper, thanks to the quality of our staff, our commitment to the highest quality products, our close cooperation with fellow University departments, and our focus on helping our customers acquire knowledge in the most efficient and enjoyable ways.

Peter Phillips

Peter Phillips

Chief Executive

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