2010 half-year results 2010 half-year results 26 July 2010 26 July - PowerPoint PPT Presentation

2010 half-year results 2010 half-year results 26 July 2010 26 July 2010 26 July 2010 26 July 2010

Forward-looking statements Except f Except for the h r the historical information co istorical information conta ntained herein, the m ned herein, the matters discussed in tters discussed in this presentation include forward-look this presentation include forward-looking statements. In particular, all ing statements. In particular, all statements that express fo statements th at express forecasts, exp recasts, expectatio ions and pro ns and projectio ections w s with resp th respec ect to t to future matters, including trends in resu future matters, including trends in results of o lts of opera ratio tions, margins, gro s, margins, growth ra wth rates, tes, overall market trends, the overall market trends, the impac impact of interest or exchange t of interest or exchange rates, rates, the a the availab lability of ility of financ financing, a ing, antic ticipated costs sa ted costs savings vings and sy d synergies and the exec nergies and the executio ution of n of Pearson's strategy, are forward looking Pearson's strategy, are forward looking statements. By their nature, forward statements. By their nature, forward looking statements involve risks and uncert looking statements involve risks and uncertainties because they relate to events ainties because they relate to events and and de depend pend on ci on circumstanc rcumstances th es that will occur in future. at will occur in future. There are a number of factors wh There are a number of factors which co ich could cause ac uld cause actual results and tual results and developments to differ materially from developments to differ materially from those expressed or those expressed or implied by these implied by these forward looking statements, including forward looking statements, including a number of factors outside Pearson's a number of factors outside Pearson's control. These include international, control. These include international, national and local condit national and local conditio ions, as w , as well as ll as competition. They also include other risk competition. They also include other risks detailed fr s detailed from time to om time to time in the time in the company's publicly-filed documents. company's publicly-filed documents. Any for Any forward looking statements speak on ard looking statements speak only as of the date they are made, and ly as of the date they are made, and Pearson gives no undertaking to update Pearson gives no undertaking to update for forward-looking statements to reflect ard-looking statements to reflect any changes in its expectat any changes in its expectations with regard thereto ions with regard thereto or any changes to events, or any changes to events, conditions or circumstances on conditions or circumstances on which any such statement is based. which any such statement is based.

2010 half-year results 2010 half-year results 26 July 2010 26 July 2010 26 July 2010 26 July 2010

Agenda Overview Marjorie Results and outlook Robin Markets and plans CEOs Q&A

Financial highlights Headline Headline CER CER £m £m H1 2010 H1 2009 H1 2009 Growth Growth Growth Growth 2,342 Sales * Sales * 2,149 2,149 9% 9% 9% 9% 178 Operating profit * Operating profit * 84 84 - - 7 79% 16.6p Adjusted EPS Adjusted EPS 7.9p 7.9p - - - - (92) Operating cash flow Operating cash flow (206) (206) 55% 55% - 13.0p Dividend Dividend 12.2p 12.2p 7% 7% - *Continuing operations

Our world in 2010 Economic environment uncertain Economic environment uncertain Public funding shrinking Public funding shrinking Demand for learning and information vigorous Demand for learning and information vigorous Commitment to education reform urgent Commitment to education reform urgent Digital innovation and adoption accelerating Digital innovation and adoption accelerating

Our investments are producing: 1. 1. Growth Growth 2. 2. Share gains Share gains 3. 3. Change Change 4. 4. Returns Returns

Strong growth H1 2010, % H1 2010, % @ CER 7 7 7 7 Underlying 7

Sustained share gains Education Penguin Financial Times US K-16 learning materials US K-16 learning materials US US Rea Readership ership 34.7% 31.0% 24.7% 18.3% 11.8% 11.2% Share of US re of US Sc School and College learni hool and College learning ng Share of US cons of US consumer books market umer books market Share of business readers ( Share of business readers (Sourc ource: Europea e: European, , material materi als market (So s market (Sources rces: : Pe Pearson, arson, AAP) AAP) (Source: Neilsen) (Sourc e: Neilsen) US, Asian Business Re US, Asian Business Readership Surveys) adership Surveys)

Change 2009 2005 2005 $1,641m Services * Services * $837m 837m $1,964m Digital Digital $1,015m $1,015m $648m Developing markets Developing markets $304m 304m 13.8% Margins Margins 11.6% 11.6% Excludes Interactive Data *Services defined as worldwide school + professional testing businesses

Change Operating profit Operating profit 1999 2009 FT Group Lazard Penguin 5% 11% 12% TV Education 15% 35% Penguin Education 14% FT 83% 25% £449m £710m UK GAAP IFRS (excludes Interactive Data)

Investing in bolt-on acquisitions Year Year Acquisitions Acquisitions Disposals Disposals 2002 RTL, Forum 2003 Edexcel, LessonLab El Mundo 2004 Altona Ed, Dominie Press, KAT Capella, Business.com 2005 AGS, Co-nect Recoletos, MarketWatch Promissor, NES, PowerSchool, 2006 Chancery, PBM, Mergermarket 2007 Harcourt, eCollege, Edustructures Government Solutions, Les Echos MoneyMedia, MML, 2008 Data Management, FT Deutschland Longman Nigeria 2009 Wall Street English, NTC, Fronter 2010 Melorio $3.4bn $3.6bn List not comprehensive; figures include all completed transactions

Financial review Financial review

Sales H1 H1 H1 Headline Headline CER CER £m £m 2010 2009 2009 Growth Growth Growth Growth 1,017 No North America rth America 943 943 8% 8% 10% 10% 504 International International 446 446 13% 13% 11% 11% 136 Professional Professional 132 132 3% 3% 5% 5% 192 FT G FT Group 176 176 9% 9% 10% 10% 493 Penguin Penguin 452 452 9% 9% 7% 7% 2,342 Total 2,149 2,149 9% 9% 9% 9% 256 Discontinued* Discontinued* 249 249 3% 3% 4% 4% * Interactive Data

Sales growth, £m 44 (6) 31 13 111 F/X Acquisitions Penguin FT Publishing Education 2,342 Organic growth 2,149 2009 2010 Continuing operations

Operating profit H1 H1 H1 Headline Headline CER CER £m £m 2010 2009 2009 Growth Growth Growth Growth 51 North America No rth America 12 12 -- -- -- -- 36 57% 57% 16% 6% International International 23 23 17 Professional Professional 14 14 21% 21% 21% 1% 30 FT G FT Group p 14 14 -- -- -- -- 44 Penguin Penguin 21 21 -- -- 56% 56% 178 Total 84 84 -- -- 79% 79% 70 Discontinued* Discontinued* 74 74 (5)% (5)% (4)% (4)% * Interactive Data

Profit growth, £m 17 15 15 F/X 47 Penguin FT Publishing 178 Education 84 Organic growth 2009 2010 Continuing operations

Summary phasing effects Earlier purchasing in US School Earlier purchasing in US School Earlier marking completion in UK testing Earlier marking completion in UK testing Penguin publishing schedule & restructuring Penguin publishing schedule & restructuring Helpful H1 comparatives, tougher in H2 Helpful H1 comparatives, tougher in H2

Adjusted earnings per share £m £m H1 2010 H1 2009 H1 2009 178 Adjusted operating profit – Adjusted operating profit – continuing ontinuing 84 84 70 Adjusted operating profit – discontinued Adjusted operating profit – iscontinued 74 74 (6) Finance costs – Finance costs – Pensions Pensions (6) (6) (39) Finance costs – Finance costs – Traditional raditional (41) (41) 203 Adjusted profit before tax Adjusted profit before tax 111 111 (53) Taxation Taxation (30) (30) 150 Adjusted profit after Adjusted profit after tax tax 81 81 (17) Minorities Minorities (18) (18) 133 Adjusted ear Adjusted earnings ings 63 63 16.6p Adjusted EPS Adjusted EPS 7.9p 7.9p

P&L – statutory £m £m H1 2010 H1 2009 H1 2009 178 Adjusted operating profit Adjusted operating profit 84 84 (50) Intangible amortisation/acquisition costs Intangible amortisation/acquisition costs (43) (43) 128 Statutory operating profit Statutory operating profit 41 41 (34) Finance costs Finance costs (48) (48) 94 Profit/(loss) before tax Profit/(loss) before tax (7) (7) (25) Taxation Taxation 5 69 Profit/(loss) after tax Profit/(loss) after tax (2) (2) 35 Discontinued Discontinued 46 46 104 Profit for the period Profit for the period 44 44 11.5p EPS (statutory) EPS (statutory) 3.5p 3.5p