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Pearson 4 interim results

Pearson 4 interim results. Financial highlights. Headlines. Earnings rebound on track Competitive performances strong Cash and returns a major focus. Pearson 4 financial performance. Financial priorities for 2002. Protect margins Maintain balance sheet strength Increase cash flow.

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Pearson 4 interim results

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  1. Pearson4 interim results

  2. Financial highlights

  3. Headlines • Earnings rebound on track • Competitive performances strong • Cash and returns a major focus

  4. Pearson4 financial performance

  5. Financial priorities for 2002 • Protect margins • Maintain balance sheet strength • Increase cash flow

  6. Sales

  7. Operating profits

  8. Operating profits

  9. Internet enterprises – losses 112 Education FT Group 85 81 55 37 32 7

  10. Deferred taxation

  11. Adjusted earnings per share

  12. P&L

  13. Balance sheet

  14. Balance sheet – key ratios

  15. Cash flow

  16. Average annual working capital FT £1.1bn 100% Pre-publication/authors’ advances Education Inventory Penguin Receivables/payables by value2002 by business2002

  17. Average annual working capital £(17)m £1,115m £1,098m +£48m Pre-publication/authors’ advances £(61)m Inventory Receivables/Payables £(4)m 2001 2002

  18. Progress on 2002 financial priorities • Protect margins • Lower cost base in all businesses offsets advertising downturn at profit line • Maintain balance sheet strength • Improvements on all key ratios • Increase cash flow • Good cash generation and reduced working capital

  19. First half performance • Management agenda • Full-year outlook Pearson

  20. Business priorities for 2002 • Secure earnings rebound • Drive performance in future years • Benefit from more cohesive company

  21. 19%

  22. h1 performance4 management agenda 4 fy outlook Operating profits

  23. advertising revenues (at constant prices) advertising volumes h1 performance4 management agenda4 fy outlook FT NewspaperLong term trends worldwide circulation, 000s - 500 - 400 1987 = 100 - 300 100 - - 200 - 100 0 - - 0 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 H102

  24. International business titlesvolumes, 4 months to April 2002 h1 performance 4 management agenda4 fy outlook FT display advertising volumes 2001 by category Corporate finance 28% 15% B2B 29% Technology 12% 16% Personal finance Other Technology - 40% Corporate finance - 37% Business to business - 35% SOURCE: CMR

  25. h1 performance 4 management agenda4 fy outlook • Manage the cost base • Build the FT’s reach and brand • Make online investments pay • Develop Interactive Data • Broaden into education and books

  26. h1 performance 4 management agenda4 fy outlook Manage the cost base FT NEWSPAPERIndex: H2 00 = 100 circulation486,000 circulation469,000

  27. h1 performance 4 management agenda4 fy outlook Build the FT’s reach and brand FT.COMUNIQUE USERS 2.8m FT CIRCULATIONsix months to June (000’s) JAN 247,743 SOURCE: ABC/ FT.COM

  28. h1 performance 4 management agenda4 fy outlook Make online investments payFT.com revenue sources 2000 content sales 15% advertising 85% 2002E subscriptions 5% content sales 45% advertising 50%

  29. h1 performance 4 management agenda4 fy outlook Develop Interactive Data • Subscription based ‘must-have’ premium services • fixed income as well as equities • 95% renewal rates • Integration on plan • Set for double digit profit growth

  30. h1 performance 4 management agenda4 fy outlook Broaden into education and books • Linking up on campus • Creating new publishing franchises

  31. h1 performance 4 management agenda 4 fy outlook Outlook 2002 • No sign of an advertising recovery • Benefits of a lower cost base • FT.com to meet breakeven target • Double digit growth at Interactive Data

  32. 19%

  33. h1 performance 4 management agenda 4 fy outlook Operating results

  34. h1 performance 4 management agenda4 fy outlook • Work capital harder • Make Dorling Kindersley profitable • Sustain bestseller performance • Deliver back-office savings

  35. h1 performance 4 management agenda4 fy outlook Make DK profitable

  36. h1 performance 4 management agenda4 fy outlook Deliver back office savings • Operating as one company in Australia and Canada • Combining back offices in US and UK

  37. Revenue growth ahead of market DK on track for 5% margin this year Growth in double digits across Penguin h1 performance 4 management agenda 4fy outlook Outlook 2002

  38. USSchool 23% USCollege 14% 11% US Professional 14% International

  39. h1 performance4 management agenda 4 fy outlook Sales

  40. h1 performance 4 management agenda4 fy outlook International • Restore profitability in Latin America • $25m benefit in ’02 • Capitalise on demand to learn English • good growth outside the US • Grow in College and School publishing • strong in Asia and Europe; very strong in Canada and Australia • Enlarge global testing business • UK, Canada and Australia the major priorities

  41. h1 performance 4 management agenda4 fy outlook US Professional • Protect margins in technology publishing • cost management sustains margins • Make corporate training profitable • losses falling in ’02 • Expand certification contracts • sales up 20% at H1 • new testing centers open; more professions moving online • Exploit surge in federal testing and training • $150m in new contracts in ’02 • new opportunities in ’03

  42. h1 performance 4 management agenda4 fy outlook US College • Keep growing market share • on track to outperform industry • Use technology to increase adoptions and sell-through • CourseCompass driving sales • Increase lead in custom publishing • 20%+ growth is achievable

  43. h1 performance 4 management agenda4 fy outlook Our US School business • Basal & supplemental publishing • Testing & assessment • Software & online learning

  44. h1 performance 4 management agenda4 fy outlook Our US School business • Market growth through the cycle? • Market prospects for ’02 and ’03? • Our performance?

  45. h1 performance 4 management agenda4 fy outlook Standards movement drives school spending

  46. h1 performance 4 management agenda4 fy outlook US School market 2002 – 2003 • The adoption cycle • Budgets under pressure • Education remains the #1 priority • Services that deliver results being protected: • curriculum • testing • assessment and learning tools

  47. h1 performance 4 management agenda4 fy outlook US School • Gain share profitably in publishing • Build on leadership in testing • Target early learning revenues • Make leadership in online learning pay

  48. h1 performance 4 management agenda4 fy outlook US SchoolGain share profitably in publishing – ’02 • Match market growth in open territories • Stronger growth in supplemental publishing • 35%+ share of adoption dollars competed for

  49. h1 performance 4 management agenda4 fy outlook

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