citigroup european media conference · 9/12/2005 · •mass market innovation. the ft’s...
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Citigroup European Citigroup European Media ConferenceMedia Conference
12 September 200512 September 2005
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Pearson today
2004 revenues: £3.7bn
By region By business
School29%
US 68%
Asia 7%
UK 15%
Europe 8%
Rest of world2%
Higher Education20%
FT Group16%
Professional14%
Penguin21%
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Our advantage
• Growth markets
• Leading brands
• Scale and efficiency
• Steady investment in content and services
• New geographic markets; new market segments
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Strong start to 2005
• Sales up 10%; good growth in all parts
• Operating profit up strongly
• Balance sheet stronger
• Continuing dividend growth
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Our School advantage
Content Assessment Reporting Data/Services Platform
PearsonPearsonPearsonPearson
McGraw-Hill
Harcourt (Reed)
Houghton Mifflin
Significant Some
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Healthy adoption opportunities2005-2007
90%+90%+75%90%Pearson participation
160170100100Reading / literature
707038040Other
17017010050Science
620
170
40
2006E
750900500TotalTotalTotalTotal
13021010Social studies
220110300Math
2007E2005E2004$m
Source: Pearson estimates
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-12%
-8%
-4%
0%
4%
8%
12%
The funding environmentYear-on-year changes in quarterly state tax revenues
2001 2002 2003 2004 2005
Source: US Census Bureau
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The funding environmentAnnual expenditure per child, $000s
Source: US Dept of Education, NCESNote: middle alternative projections as at 2001/02 dollars, not inflation adjusted
8.08.3
8.4 8.5 8.78.8
2005 2006 2007 2008 2009 2010
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The policy environment
• Standards movement a priority
• Materials and assessment required for achievement
• Schools looking for operational improvements
• Technology taking hold
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Outlook
• Adoption cycle strong
• Funding environment healthy
• Policy supports materials, testing and technology
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Our college advantage% change in gross sales vs. prior year
0%
2%
4%
6%
8%
10%
12%
14%
1999 2000 2001 2002 2003 2004
Pearson Education
Rest of industry
Source: Management Practice Data
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A growing college populationTotal enrolment in all degree-granting institutions(’000’s)
Source: US Department of Education, NCES
16,67916,887 17,020
17,16817,374
17,541
2005 2006 2007 2008 2009 2010
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Growth in workforce education
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Our international advantageSales ($bn)
1.2
0.50.4
0.2
PearsonEducation
ThomsonLearning
McGraw-Hill
Harcourt(Reed)
Note: Education revenues from outside the US.
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Penguin’s advantage
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Penguin’s advantage
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Penguin’s advantage
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Novel ideas
• Growth in UK commercial fiction
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Novel ideas
• Growth in UK commercial fiction
• Successful new imprints
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Novel ideas
• Growth in UK commercial fiction
• Successful new imprints
• Mass market innovation
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The FT’s advantage
• Global brand
• Lower costs
• Premium content
• Niche audience
• Leading online service
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Good news: readershipRegular readers in Europe
Source: Europe 2005Universe: 10.157m Sample: 11,002
1.3%
1.4%
1.7%
5.5%
6.7%
Print Online
Financial Times
IHT
Wall Street JournalEurope
USA Today
The Economist
1.5%
2.1%
1.2%
3.1%
8.2%
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Growth in international newsTotal circulation, millions
0
100
200
300
400
500
99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: World Association of Newspapers / ZenithOptimedia
China, India & RoW
EU
Japan
USA
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IDC’S advantageRevenues & margins
00 01 02 03 04 H1 05
$375m
$443m$485m
$340m
25.4%
$314m
29.8% 31.2% 30.5% 30.6% 30.0%
$273m
as reported under US GAAP
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