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Preliminary Results 1999

Preliminary Results 1999. Record performances Investing for growth Delivering on the internet. Financial Highlights. £m. 1999. Sales 3,332 + 39 % Operating profit 549 +41% Pre-tax profit 402 +15%

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Preliminary Results 1999

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  1. Preliminary Results 1999

  2. Record performances Investing for growth Delivering on the internet

  3. Financial Highlights £m 1999 Sales 3,332 +39% Operating profit 549 +41% Pre-tax profit 402+15% Earnings per share- pre internet enterprises53.3p +27%- post internet enterprises48.5p +15% Dividend per share 22.5p +7% After internet, before S&S integration costs

  4. Financial Analysis

  5. 7.3% 6.7% 1998 6.5% 1997 5.6% 1996 2.3% 1995 Strong Underlying Sales Growth 1999

  6. 15.2% 1999 13.1% 1998 11.5% 1997 9.2% 1996 8.5% 1995 Improving Trading Marginpre internet enterprises

  7. Improving Trading Marginpost internet enterprises 14.0% 1999 13.1% 1998 11.5% 1997 9.2% 1996 8.5% 1995

  8. 92% High Cash Conversion 1999 101% 1998 74% 1997 78% 1996 55% 1995

  9. Identifying Internet Enterprises £m 1999 1998 Sales 3,332 2,395 + 39% Operating profit 588 389 + 51% before: Internet enterprises (39) - Goodwill (131) (12) Exceptional items (100) (127) Total operating profit 318 250 + 27%

  10. Increased interest costs £m 1999 1998 Total operating profit 318 250 Non-operating items 309 418 Profit before interest 627 668Interest (147) (39) Profit before tax 480 629 Taxation (180) (188) Profit after tax 300 441Minorities (6) (4) Profit for the financial year 294 437

  11. Lower Tax Rate 1999% 1998% UK tax rate30.2 31.0 Benefit of US tax losses (7.7) (2.7) Other items2.5 (0.3) Tax rate reflected in adjusted earnings 25.0 28.0

  12. Higher Earnings and Dividends Per share (p) 1999 1998 Adjustedearnings - pre internet53.3 42.0 +27% - post internet 48.5 42.0 +15% Dividend 22.5 21.0 + 7%

  13. Operating Cash Flow Tops £500m £m 1999 1998 Operating profit 588 389 Working capital (7) 40 Net tangible fixed assets (81) (113)Depreciation 81 66Other movements (41) 10 Operating cash flow*540 392 Internet enterprises(34) - Total operating cash flow* 506 392 * Before S&S integration costs

  14. Focus on Capital Employed £m 31 Dec 1999 31 Dec 1998 Intangible assets 2,457 2,330 Tangible assets 405 435 Working capital 766 824 Other net (liabilities)/assets (79)47 Net trading assets3,549 3,636 Shareholders’ funds 1,321 1,048 Provisions and minorities 233 309 Net debt 1,995 2,279 Capital employed 3,549 3,636

  15. Reduced Borrowings £m Opening net debt (2,279) Inflows Operations 540 Disposals 677 Equity 18 Outflows S&S integration costs (110) Internet enterprises (34) Acquisitions (327) Interest, tax, dividends, exchange (480) Closing net debt (1,995)

  16. Improved Gross Debt Profile£m 2,624 2,323 1,637 54% 10% Banks 82% 90% 46% Bonds 18% Proforma 4.4 years 5.1 years 7.0 years Average maturity :

  17. Key Messages • Acceleration in top line growth • All-round progress on profits and margins • Another year of high cash conversion • Significantly strengthened balance sheet

  18. Sales £m 687 1999 1999 683 1998 676 1997 Operating profit 150 1999 118 1998 108 1997

  19. Operating Profits £m 1999 1998 FT Newspaper 56 42 +33%FT Interactive Data 31 22 +41%FT Business 1 1 -FT businesses sold (2) (2) -Les Echos 18 10 +80%Recoletos 34 30 +13%Associates 12 15 - 20% Total 150 118 +27%

  20. Newspapers’ growth makes headlines • FT Interactive Data twice the size • Business portals double traffic

  21. FT +44% +41% +19% 130 Expansion 120 110 Les Echos 100 1997 1998 1999 Increase in advertising revenues ’99 vs. ’98 Europe’s Leading Business Newspapers – Circulation Growth

  22. FT Interactive Data • Doubled the size of the business • Burst into new markets • Grew on the web

  23. 60m 40m 20m 0 Jan Dec 1999 Europe’s Leading Business PortalsCombined monthly traffic (page-views)

  24. 1m 0.5m 0 Jan 1999 Dec FT.com Trebles Traffic in 1999Unique monthly visitors 70% visit 2x per week

  25. CBS MarketWatch Sitesvs. major competitors marketwatch.com Index 600 yahoo finance 400 cnnfn.com fool.com 200 thestreet.com wsj.com 0 Jul 99 Oct 99 Oct 98 Apr 99 Jan 99 Source: DoubleClicks

  26. Ads, e-commerce Licence fees, subscriptions, ads Ads, e-commerce Subscriptions, fees Ads, fees Licence fees, subscriptions Ads, subscriptions

  27. Sales £m 355 1999 343 1998 247 1997 Operating profit 68 1999 61 1998 26 1997

  28. Operating Profits £m 1999 1998 1997 Pearson TV 74 71 46 BSkyB 1 4 4 Channel 5 (7) (14) (24) Total 68 61 26

  29. Dramas pull in big crowds • New shows, evergreen formats • C5 gets bigger • Game shows go online

  30. Sales £m 1999 565 1998 523 1997 525 Operating profit 65 1999 48 1998 58 1997

  31. More best-sellers • Supply chain efficiency • More niche markets • Internet sales treble

  32. £m Sales 1,725 1999 702 1998 563 1997 Operating profit 257 1999 99 1998 60 1997

  33. Sales 1998 Proforma £m 1999 US School 586 537 +9%US Higher Ed/Professional 666 593 +12%International 446 423 +5%Discontinued 8 22 Pearson Education sales 1,706 1,575 +8%FT Knowledge 19 - 1,725 1,575

  34. No.1 in school math and social studies • Higher Education moves ahead • International recovers strongly

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