Chief Executive’s overview
The Press enjoyed a strong financial performance in 2017–18, giving us greater resources and flexibility to invest in the people and technologies that are positioning us to prosper in a fast-evolving digital world.
A solid financial base underpins our ability to fulfil our central purpose – to advance learning, knowledge and research worldwide – and to meet the changing needs of our customers in academia and education with products that meet the highest standards of excellence.
Our growth in sales and profits came despite the strengthening of sterling against a number of currencies during the year. It was helped by strong control of costs – a tribute to the restructuring work undertaken by the Press over the past few years, which has left us nimbler in responding to changing markets.
Our Academic group had a particularly good year in the North American market, and a very positive year for book sales worldwide. The Cambridge English Language Teaching group recorded strong results in Italy, Turkey, India and Mexico, while Education saw notably fast growth in India and Pakistan.
Our sales of purely digital products, along with those blended with more traditional textbooks, continued to grow very rapidly and by the end of the financial year accounted for close to 40 per cent of sales, up from 15 per cent five years ago.
Digital solutions are now a normal part of all we do, offering students and teachers all the advantages of interactivity and instant feedback, and researchers and librarians many benefits from instant discovery, effective means to sharing evidence and insights, as well as new means to assess value and impact for all our customers. However, physical sales remain robust and our fastest growth remains in products that blend digital and print. The digital and physical worlds are closely linked and our aim is to provide whatever combination best meets the needs of our customers – be they researchers, librarians, teachers or students.
As ever, the most important single ingredient of our success has been our unrelenting focus on excellence, measured in academic, pedagogical and publishing terms. The high quality of our academic output was underscored by our winning six categories in the Professional and Scholarly Excellence (PROSE) Awards, the most prestigious for our industry, which are presented by the Association of American Publishers.
Our focus on excellence was complemented during the year by a marked strengthening of our collaboration with other Cambridge departments. The sharing of knowledge and capabilities across the University creates products that help customers perform to their maximum potential, in turn reinforcing Cambridge’s worldwide reputation for the highest academic and educational standards.
We have long had especially close links with Cambridge Assessment, the exams business of the University, and those ties grew even closer in 2017–18. This was the first full year of new governance arrangements under which the Vice-Chancellor took over as Chair of both Syndicates and a single new Press & Assessment Board was put in place to oversee the two organisations on behalf of the Syndicates.
We were also delighted to see Cambridge Assessment move into its newly constructed headquarters on Shaftesbury Road, across the road from our head office – a further demonstration of our partnership.
I would like to take this opportunity to pay tribute to Simon Lebus, who retired in April after 15 years as Chief Executive of Cambridge Assessment. During Simon’s tenure, Cambridge Assessment’s sales trebled, its international impact hugely strengthened and we laid the foundations of the burgeoning partnership between the Press and Assessment to serve Cambridge’s school customers better than ever before.
I also want to extend my warm thanks to Michael Peluse, who is leaving us after seven years leading Cambridge English Language Teaching. Under his leadership, the business has grown by 50 per cent, it has been given clear strategic focus and its profitability and hence investment has been transformed.
During the year we saw strong growth in Cambridge Exams Publishing, our six-year-old joint unit with Cambridge Assessment English. In Education our shared A-level maths and computing products for the UK were very well received by teachers and students.
We also had very positive feedback about the educational impact of another jointly developed product, Cambridge English Empower, a course for adult learners of the English language, introduced three years ago. A two-year academic study into customer attitudes to Empower, released during the year, showed a high level of enthusiasm for the course among both students and teachers. Students showed particularly significant improvement in areas of weakness after taking Empower progress tests, while almost two-thirds of teachers said Empower’s online activities were the reason that their students had studied more than usual.
There has been a rich new seam of collaboration with our academic University too. The Press’s Academic group launched an online executive education course in partnership with the Judge Business School, attracting participants from across the globe, and worked closely with the University Library and the University administration on a wide range of issues, especially around developments in scholarly communications.
The year also saw important new initiatives by Cambridge Mathematics, a three-year-old collaboration between the Press, Assessment and Cambridge’s Faculties of Mathematics and Education, dedicated to providing an internationally recognised, quality educational framework for mathematics. At a symposium in March its most recent thinking was given strong support by members of the international maths education community.
As we look to the future, the Press depends overwhelmingly on one thing – our people. To thrive in the digital age, with its constant change, we need to continue to attract and retain colleagues of the highest quality, complementing existing skills with new ones and ensuring we are agile and flexible enough to adapt to a very different world. Competition for such people is particularly high in the fast-growing and technologically orientated economy around Cambridge.
With this in mind, we have been investing heavily in the skills of our colleagues, especially in leadership and digital knowledge. The year saw 168 senior and middle managers from around the world take our latest leadership development programmes. The participants collectively manage the majority of our workforce worldwide, and have consistently said how much the training is already helping them.
As we grow as a global business, with some 50 offices around the world, we also need to ensure that we retain our common culture and values, emphasising the highest academic and ethical standards.
During the year we reviewed the ethical framework under which we operate, particularly in the area of publishing, examining areas such as plagiarism, censorship and the creation of different versions of products for markets with particular cultural sensitivities. There can be tensions for all academic and educational publishers between the wide availability of academic and teaching material in every country and national laws in many countries which restrict some types of content, and no publisher can force any customer to buy content they do not want. For the Press, as part of a world-leading university, we are clear that we will not compromise in the content of research which we publish and will uphold the principle of academic freedom in the way we distribute our material around the globe.
We also published details of our gender pay gap in the UK this year. Our median gap is 19 per cent, close to the UK median for all companies of 18.4 per cent.
We are making more use of sophisticated data analysis to give our communities better insights into their learning and research."
We are committed to the equal treatment of all our people and we are confident male and female colleagues are paid on equal terms for doing the same jobs across the Press. The pay gap exists because we have more male colleagues at senior management level than we do female colleagues, and we are working actively to reduce and eventually eliminate the gap through a variety of initiatives to encourage a higher proportion of women at senior levels and to attract a greater number of men into junior roles.
Community engagement and charitable action are important parts of our culture. Over the past few years we have been changing the balance of our activities to increase the engagement of colleagues, put our emphasis on charities in the field of education and to develop global charitable partnerships. During the year charitable activity by colleagues, together with donations from the Press, raised more than £57,500 for good causes. Volunteering activities were undertaken around the world by 248 colleagues, while the Press Board went back to school for a day, helping students at a Cambridge academy develop their business ideas.
During the year we continued to invest heavily in digital innovation. Author Hub, an online platform to support Academic book authors that was founded in 2013, was this year relaunched and expanded for current and prospective authors across all three of our publishing groups. The services it offers include guides on the publishing process, detailed sales and royalty information and author benefits.
Authors were involved in testing Author Hub throughout its development to ensure it serves their needs – another example of our commitment to strong customer input into our resources.
We consulted extensively with users before launching Cambridge Core, the platform that brought our academic books and journals together in a single online home. Over the past year Cambridge Core followed up its resounding launch success with strong growth in usage and further refinements.
In the world before digital content, the publishing industry often operated at several removes from customers, working via layers of distributors. The digital revolution has changed all that, and one of the keys to our future success will be how close we are to the communities we serve, and how well we understand their changing needs.
Going beyond simple digital formats and basic interactivity, we are making more use of sophisticated data analysis to give our communities better insights into their learning and research. While the maintenance of privacy around customers’ data is paramount, we are employing machine learning in innovative ways to help learners and their teachers. One example is where we are deepening our partnership with English Language iTutoring, whose Write & Improve tool uses powerful machine learning technology.
New skills, technological capability and sophisticated products mean we must continue both to invest and deliver the returns to do that. In the financial year to 30 April 2018, the Press grew operating profits by 25 per cent to £17 million despite currency headwinds. Sales across all of our publishing activities grew and performance in the US was outstanding. Revenues of £316 million were 4 per cent higher than last year at constant exchange rates and we continued to deliver process and cost efficiencies and improve returns.
With a firm financial footing, dedicated people, our passion for the advancement of knowledge, and all the advantages of pan-Cambridge cooperation, I am confident that we have the ingredients to continue our progress in refashioning the Press for a rapidly changing world, while at the same time maintaining our commitment to excellence and passion for serving the teaching and learning communities of which we are a part.