Pearson Annual Report and Accounts 2010

Performance

Penguin

Penguin is one of the most famous brands
in book publishing, known around the
world for the quality of its publishing and
its consistent record of innovation.

Over the past five years, Penguin’s profits have increased at an annual average rate of 8%.

In 2010 Penguin achieved record sales and profits in a challenging and rapidly-changing industry environment. Penguin’s profits were struck after making additional provisions for a number of credit exposures in the book retailing sector, including in relation to Borders in the US. Our market share gains and improved profitability were the result of three factors in particular:

1. An outstanding US publishing performance included a record number of bestsellers, an increase in market share and rapid expansion in emerging digital platforms and formats;
2. Penguin in the UK celebrated the best year in its history, leading the bestseller lists and increasing its market share by 2 percentage points to 10%;
3. DK captured the benefits of its 2009 reorganisation, with sales of Lego Star Wars titles boosting revenue and the transfer of cost centres to India enhancing its margin.

Key performance indicators

£ millions	2010	2009	Headline growth	CER growth	Underlying growth
Sales	1,053	1,002	5%	2%	6%
Adjusted operating profit	106	84	26%	10%	26%

Global highlights in 2010 include:

A strong and consistent publishing performance across imprints and territories produced market share gains in the US, UK and Australia, our three largest markets.
Strong growth in developing markets was boosted by the launch of new imprints and the increasing breadth and depth of our local publishing programmes in India, China and South Africa.
Continued investment in global publishing with the launch of Penguin’s Classics in Portuguese and Arabic, joining existing Mandarin and Korean editions; the launch in India of a new imprint in partnership with bestselling author and superstar Shobhaa De; and the continued international roll-out of our non-fiction imprint Allen Lane in Canada.

Digital highlights in 2010 include:

eBook sales were up 182% on the previous year and now account for 6% of Penguin revenues worldwide.
We accelerated our investment in digital products and innovation with new app releases in the children’s market including Spot, Peppa Pig, The Little Engine That Could, Ladybird’s Babytouch and the Mad Libs app, which was named one of the best apps at the 2010 E-Book Summit. For adults, we launched the groundbreaking myFry app, published the amplified ebook of Ken Follett’s international bestselling novel The Pillars of the Earth, featuring video, art and music from the original TV series; and we introduced ten DK Eyewitness Top Ten Travel Guides apps with more to follow in 2011.
Penguin continued to invest to transform its internal publishing processes onto Pearson-wide digital platforms, enabling faster product development and more efficient creation and re-use of content.

Publishing performance highlights in 2010 include:

Penguin performed strongly in the US with a broad range of number one bestsellers from repeat authors such as Charlaine Harris, Nora Roberts, Tom Clancy, Ken Follett and Patricia Cornwell.
Kathryn Stockett’s The Help stayed on the New York Times bestseller list for the whole of 2010 and has sold more than three million copies to date.
Our outstanding performance in the UK, resulting in our market share rising two percentage points to 10%, was led by Jamie Oliver’s 30 Minute Meals. It sold 1.2 million copies to become the UK’s biggest selling non-fiction title of the last decade. Major bestsellers included Stephen Fry’s The Fry Chronicles, Kathryn Stockett’s The Help, and The History of the World in 100 Objects (published in partnership with the BBC and the British Museum), as well as the Percy Jackson and Diary of a Wimpy Kid series.

Jamie Oliver
The UK’s biggest selling non-fiction title of the last decade

Jamie Oliver’s 30 Minute Meals sold 1.2 million copies to become the UK’s biggest selling hardback non-fiction title of the last decade.

DK produced a very good year thanks in part to its top-performing franchise LEGO (Lego Star Wars Visual Dictionary was on the New York Times bestseller list for the whole of 2010 with 18 weeks at number one). Other bestselling titles included The Masterchef Cookbook, Complete Human Body and Natural History. DK continues to benefit from the organisation changes made in 2009 as well as the ongoing development of its publishing centre in India.
Penguin Children’s had an excellent year in the US, with Penguin Young Readers Group achieving a record 39 New York Times bestsellers, and in the UK, where we reclaimed our position as the number one children’s publisher with significant market share gains.
In 2011, we will publish books from some of our leading authors including, in the US, Patricia Cornwell, Sue Grafton, Charlaine Harris, Nora Roberts, Henry Kissinger, Betty White, Richelle Mead, John Grisham and Eric Carle; and, in the UK, Jamie Oliver, Stephen Fry, Rob Brydon, Jeff Kinney, Rick Riordan and David Almond.

The Fry Chronicles
Number one in five categories

Stephen Fry’s The Fry Chronicles made publishing history as the first title to hit number one in five categories: hardback, eBook, enhanced eBook with videos featuring the author, audio book and an innovative app that allows readers to delve in and out of the book by topic.

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