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Pearson Interim Results 31 July 2000. Interim results to 30 June 2000. Acquisition Announcement. Record performances Investing for growth Delivering on the internet. Record performances Investing faster Delivering faster. Sales 1,545 + 18% Operating profit * 156 + 17%
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Pearson Interim Results 31 July 2000
Interim results to 30 June 2000 Acquisition Announcement
Record performances Investing for growth Delivering on the internet
Record performances Investing faster Delivering faster
Sales1,545 + 18% Operating profit*156 + 17% Pre-tax profit123 n/a Earnings per share (p)- pre internet enterprises10.0 + 41%- post internet enterprises (0.6) n/a Dividend per share (p) 9.2 + 7% Record performances£m 2000 Half year *before goodwill, internet enterprises and other items
H1 H1 Full year 2000 1999 1999 Online delivery 60 35 90 Online channels 30 15 50 Composite 140 110 375education products Internet at the heart of Pearson£m
Investing faster… … delivering faster • Net H1 investment £84m • FT internet enterprises • stable costs, rising revenues • profit two years ahead of plan • Learning Network • speed, reach, depth • launch in September
Sales1,545 1,306 Operating profit156 133 beforeInternet enterprises (84) (7) Goodwill (72) (63) Other items (11) (17) Total operating profit/(loss) (11) 46 Profit & Loss£m 2000 Half year 1999 Half year
Sales growthContinuing operations before internet enterprises£m 17% 54 12% 10 225 161 Totalgrowth Portfoliochanges Foreignexchange Underlyinggrowth
FT Group 408 330 + 24% Pearson Education647 554 + 10% Penguin326 263 + 9% Pearson TV164 159 + 3% Continuing operations1,545 1,306 + 12% Outstanding sales growth£m 2000 Half year 1999 Half year Underlying Change
Operating profit growthContinuing operations£m 33% 32% 4 6 3 37 36 Totalgrowth Portfoliochanges Foreignexchange Other Underlyinggrowth
FT Group 109 86 29%Pearson Education (26) (38) 27%Penguin 33 31 16%Pearson TV 32 33 - 3% Continuing operations 148 112 33%Discontinued operations 8 21 Total operating profit*156 133 33% Underlying profits rise by a third £m 2000 Half year 1999 Half year Underlying Change *before goodwill, internet enterprises and other items
FT Group 16 64 Learning Network - 19 Pearson Television - 1 16 84 Accelerated internet investmentSix months to June 2000 £m NetInvestment Sales
Operating profit/(loss) (11) 46Non-operating items 218 5 Profit before interest 207 51 Net finance costs (84) (71) Profit/(loss) before tax 123 (20)Taxation (32) (18) Profit/(loss) after tax 91 (38)Minorities (3) (3) Profit/(loss) for the half year 88 (41) Profit enhanced by Lazard sale £m 2000 Half year 1999 Half year
NCS tax opportunity • Tax rate held at 25% • Likely benefit from NCS transaction
Adjusted earningsPre internet enterprises 10.0 7.1After internet enterprises (0.6) 6.3 Interim dividend 9.2 8.6 Pre internet eps up 41%pence per share 2000 Half year 1999 Half year Before goodwill, exceptional and non operating items
Operating profit 156 133(pre goodwill and other items) Partnerships and associates 29 (2) Working capital increase (286) (129) Net tangible fixed assets (58) (37) Depreciation 42 41 Other movements 13 (14) Operating cash flow*(104) (8) Working capital phasing £m 2000 Half year 1999 Half year *before effect of integration costs
Sales half year £m 392 2000 328 1999 335 1998 Operating profit half year 109 2000 86 1999 69 1998 Pre internet enterprises
Operating profits£m 2000 Half year 1999 Half year Change FT Newspaper 50 34 + 47%FT Interactive Data 26 15 + 73%FT Business 3 (1)Les Echos16 13 + 23%FT joint ventures (9) (1) Associates 4 8 - 50% 90 68 + 32%Recoletos 19 18 + 6% 109 86 + 27% Pre internet enterprises
Increasing ad revenues£m Jan - June
FT.com growth • H1 revenue growth 300% • 75% visit at least twice per week • Averages 8 pages per user per day • CPM ad rates of £40 – £100
FT business portals Million page views per month 100 75 50 25 0 6/99 6/00
FT business portals Million page views per month 100 75 50 25 0 6/99 6/00
FT Group internet revenues e-commerce Syndication/licensing Subscriptions Advertising
Generating returnsFT.com £ Revenues Costs 0 1999 2000 2001 2002 2003
Strong performance in local currency • sales up 18% • operating profit up 12% • #2 Spanish internet portal • Flotation planned
294i 37i Sales half year £m 2000 1999 263 1998 232 Operating profit half year 2000 31 1999 16 1998 Pre Dorling Kindersley
More Bestsellers 2000 Half year 1999 Half year New York Times 58 34Sunday Times 31 22
Sales half year £m 2000 326 1999 263 1998 232 Operating profit half year 33 2000 31 1999 16 1998 Post Dorling Kindersley
DK integration Consolidated supply chain Brand group established to exploit content across Pearson Combined UK Sales & Marketing Finance systems merged New DK Operating Board Warehousing reorganised DKFL closure DEALCLOSED Offer accepted Office integration March 00 April 00 May 00 June 00 July 00 Oct 00 Nov 00 Jan 01 May 01 May 02
London listed company worth £16 bn € 200 - London listing 150 - 100 - Deal announced 50 - 0 - Jan Feb Mar Apr 2000 May Jun Jul
The value of television Net value created £3.8 bn Net value created £3.8 bn £3.5bn £0.3bn Net realisation since 1990 Value of RTL stake Net realisation since 1990 Value of RTL stake
Sales half year £m 647 2000 554 1999 180 1998 Losses half year 2000 (26) 1999 (38) 1998 (19) Pre internet enterprises
Pearson Education£m 2000 Half year 1999 Half year Sales US School 222 187 +19%Higher Ed & Professional 215 178 +21%International 197 169 +17%Discontinued 2 12 Pearson Education 636 546 +16% FT Knowledge 11 8 647 554 Change
Revenue Operating Profit On track for full year % of Total Year 100% 75% 50% 25% 0% -25% Cash Flow -50% -75% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec