Download presentation
Presentation is loading. Please wait.
Published byLillian Andrews Modified over 9 years ago
1
Pearson Merrill Lynch TMT Conference Pearson Merrill Lynch TMT Conference Rona Fairhead 3 June 2003
2
School 27% Higher Education 18% Professional 19% FT Group 17% Penguin 19%
3
Financial priorities Deliver steady earnings growth Improve cash generation Improve return on invested capital
4
Working Capital £0.8bn Working Capital £0.8bn Net Fixed Assets £0.5bn Net Fixed Assets £0.5bn divided by Operating Margin 11% Operating Margin 11% Net Sales £4.3bn Net Sales £4.3bn Cash Tax Effect £0.1bn 15% Cash Tax Effect £0.1bn 15% less Goodwill £5.7bn Goodwill £5.7bn Return on invested capital plus Returns (NOPLAT) £0.4bn Returns (NOPLAT) £0.4bn ROIC 6.0% ROIC 6.0% Invested Capital £7bn Operating Assets £1.3bn Operating Assets £1.3bn Operating Profit £0.5bn Operating Profit £0.5bn
5
Working Capital £0.8bn Working Capital £0.8bn Net Fixed Assets £0.5bn Net Fixed Assets £0.5bn divided by Operating Margin 11% Operating Margin 11% Net Sales £4.3bn Net Sales £4.3bn Cash Tax Effect £0.1bn 15% Cash Tax Effect £0.1bn 15% less plus Goodwill £5.7bn Goodwill £5.7bn Return on invested capital Returns (NOPLAT) £0.4bn Returns (NOPLAT) £0.4bn ROIC 6.0% ROIC 6.0% Invested Capital £7bn £1.3bn Operating Assets £1.3bn Operating Profit£0.5bn £0.5bn
6
Average working capital 2002 av w/c 2001 2002 2002 at constant sales improvement £m £m£m£m£m% penguin / pearson ed % sales 1,09231.9%1,09030.3%1,039535% ft group % sales (35)(4.4)%(38)(5.2)%(41)617% group 1,05725.0%1,05224.4%1,029283%
7
Return on invested capital Working Capital £0.8bn Working Capital £0.8bn Net Fixed Assets £0.5bn Net Fixed Assets £0.5bn divided by Operating Margin 11% Operating Margin 11% Net Sales £4.3bn Net Sales £4.3bn Cash Tax Effect £0.1bn 15% Cash Tax Effect £0.1bn 15% less plus Goodwill £5.7bn Goodwill £5.7bn Operating Assets £1.3bn Operating Assets £1.3bn Returns (NOPLAT) £0.4bn Returns (NOPLAT) £0.4bn ROIC 6.0% ROIC 6.0% Invested Capital £7bn Operating Profit£0.5bn £0.5bn
8
Cash flow through transformation £m200220012000199919981997 operating free cash flow 30523615929826643 non-operating(46)(27)(79)(93)(11)(21) acquisitions & disposals 806(23)(2,017)361(2,020)(182) Integration(44)(69)(61)(110)(23)— dividends * (182)(183)(144)(133)(119)(116) equity6201,9591834727 other(5)(7)(6)(8)(6)(6) net movement of funds 840(53)(189)333(1,566)(255) *includes dividends to minorities
9
Our position The world’s most international business newspaper and website Leading national business newspapers in France, Germany, Spain, South Africa 50% stake in The Economist Leading provider of financial data FT and FT.com 31% Other publishing 14% IDC 34% Recoletos 20% 2002 revenues : £726m
10
Industry drivers Short-term: –corporate confidence & earnings –job losses in financial community Long-term: –appetite for high quality, international business information –connections between political, economic & business news –value in niche audience of leaders in business, finance, politics
11
Agenda Modest investment in UK, US, Asia Tight cost controls, lower internet losses Further progress at IDC and Recoletos
14
Agenda Modest investment in UK, US, Asia Tight cost controls, lower internet losses Further progress at IDC and Recoletos
15
Our position The world’s pre-eminent English language publisher #1 or #2 in the US, UK, Australia, NZ, India and Canada The leading illustrated reference publisher With Pearson Education, the world’s largest book publisher Penguin US 57% Penguin UK & ROW 24% Dorling Kindersley 19% 2002 revenues : £838m
16
Industry drivers Steady growth Bestseller performance Faster-growing categories Benefits of scale
17
The world’s largest book company SOURCE: ANNUAL REPORTS, ANALYST REPORTS NOTE: 2001 MEDIAN GBP / USD EXCHANGE RATE = 1.45 Estimated 2001 book revenues ($m) Harcourt / Reed New Corp (Harper Collins) Holtzbrinck Scholastic Bertelsmann McGraw Hill Pearson Houghton Mifflin
18
Agenda Sales growth ahead of the market Margin improvement as DK’s progress continues Further scale opportunities with Pearson Education
19
Our position The world’s leading education company #1 in US School, US Higher Education and outside the US Leading in publishing, testing and technology School 42% Professional * 30% Higher Educatio n 28% 2002 revenues : £2,756m * FTK revenues included in Professional
20
School: industry drivers Short-term: –the adoption cycle –state budgets Long-term: –standards movement drives spending on: textbookstextbooks testingtesting student informationstudent information
21
Source: National Conference of State Legislatures Estimates * of FY 2004 ** budget shortfalls, $m 0-400 401-800 801-1,500 1,501-3,000 3,000-10,000 10,001-20,000 *As of April 2003 **Most state fiscal years end June 30th
22
School: industry drivers Short-term: –the adoption cycle –state budgets Long-term: –The knowledge economy –standards movement drives spending on: curriculumcurriculum testingtesting student informationstudent information
23
ELHI spending 1981 = 100 Instructional material GDP Enrolment
24
School: our position US Publishing 50% US Testing and Software 27% International and ELT 23% 2002 revenues : £1,151m #1 US school publisher The integrated school company: #1 in publishing, testing and technology World’s #1 publisher in English Language Teaching
25
2002 revenues : £1,151m Adoption States Open Territories Residual Sales New Adoptions
26
School: agenda Grow ahead of the market in ’03; protect margins in ’04 Prepare for rebound in adoption cycle in ’05/ ’06 Use testing and software to help states meet NCLB requirements
27
Higher Education: our position 34% US market share 20%+ US margins US Higher Education 80% International Higher Education 20% 2002 revenues : £775m
28
Higher education: industry drivers Short-term: –authors –publication cycle Long-term: –the value of a college education –demographics –integration of technology –customisation –benefits of scale
29
Higher Education: agenda Further share gains Build on lead in technology Increase lead in custom publishing
30
Professional: our position Technology Publishing 20% 2002 revenues : £784m Government Solutions 44% Other 22% Professional Assessment 14% #1 technology publisher worldwide Leading provider of testing and HR services to US federal government Developing business in professional testing and certification
31
Professional: industry drivers Short-term: –technology downturn –government contracts can be ‘spiky’ (e.g. TSA contract in ’02) –start-up costs in professional testing business Long-term: –licensing/ accreditation of professionals –US federal government outsourcing –technology recovery
32
Professional: agenda Develop pipeline of government contracts Maintain margins in technology publishing Build professional testing business
33
The fundamentals Attractive markets Leading positions Valuable brands Benefits of scale... annual progress in earnings, cash and returns
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.