Presentation is loading. Please wait.

Presentation is loading. Please wait.

ARCOURT: FINANCING ACCELERATED REVENUE AND PROFIT GROWTH Preliminary Results 2000 Execution and Delivery on Strategy.

Similar presentations


Presentation on theme: "ARCOURT: FINANCING ACCELERATED REVENUE AND PROFIT GROWTH Preliminary Results 2000 Execution and Delivery on Strategy."— Presentation transcript:

1 ARCOURT: FINANCING ACCELERATED REVENUE AND PROFIT GROWTH Preliminary Results 2000 Execution and Delivery on Strategy

2 HIGHLIGHTS Results ahead of target Execution and delivery of strategy on track across all businesses Acquisition of Harcourt is major opportunity Confidence in future growth targets

3 Financial Results 2000 Mark Armour Chief Financial Officer

4 ADJUSTED PROFIT AND LOSS Adjusted figures exclude amortisation of goodwill and intangibles and exceptional items Turnover Adjusted operating profit Operating margin Net interest expense Adjusted profit before tax % % % % change constant 1999 m 2000 m 1999 £m 2000 £m % (125)(82) months to 31 December % (103) % (169)

5 SCIENCE & MEDICAL Underlying revenues up 8%; operating profit up 12% Strong take up of ScienceDirect and lower attrition ScienceDirect adds 2% pts to revenue growth Additional investment funded by cost savings REVENUES UP 7% - OPERATING PROFIT UP 12% - MARGIN 36.4% Revenues m £m Operating profit m £m

6 LEGAL Underlying revenues up 3%; operating profit down 19% Substantial investment programme; major cost savings LEXIS online up 5%; NEXIS online up 4% LEXIS-NEXIS International solid performance REVENUES UP 5% - OPERATING PROFIT DOWN 19% - MARGIN 19.7% m £m m Revenues Operating profit

7 EDUCATION Rigby US supplementary revenues up 37% UK secondary revenues up 23% Reduced funding for UK elementary literacy REVENUES UP 9% - OPERATING PROFIT UP 15% - MARGIN 19.8% m £m m Revenues Operating profit

8 BUSINESS Underlying revenues up 4%; operating profit up 3% Revenue recovery at Cahners and restructuring benefits Good growth in other markets; exhibitions adverse show cycling Significant increase in investment; cost savings delivered REVENUES UP 12% - OPERATING PROFIT UP 7% - MARGIN 15.8% m£m m Revenues Operating profit

9 ADJUSTED PROFIT BEFORE TAX : RECONCILIATION Adjusted figures exclude amortisation of goodwill and intangibles and exceptional items 1999 Adjusted profit before tax Acquisitions Currency translation effect % changem months to 31 December 2000 £m 2000 adjusted profit before tax Base business (8) (1) -1% 0% 1079 (12) Disposals Equity issue (8)-1% (12) 5 +1% 8 82 (8)-1%(13) -1% +1% +8% % %

10 CASH FLOW Adjusted operating cash flow % conversion Free cash flow Acquisition spend 1999 m 2000 m 1999 £m 12 months to 31 December 2000 £m Total cash outflow Other exceptional items % % (167) (1499) % (914) (254) (41) (803) (490) (61) Disposals (63)(64)(103)(98)

11 EARNINGS AND DIVIDENDS Adjusted EPS Equalised dividends +4% ElsevierReed International % 0% 23.3p 10.0p -5% 0% change constant

12 HARCOURT REPORTED 2000 RESULTS Notes: Segment analysis adjusted from reported figures to reallocate revenues to respective businesses Adjusted operating profit is stated before amortisation of goodwill/intangible assets Businesses to be on-sold excluded; also corporate expenses of $26 million (1999 $21 million) Revenue Year to 31 October STM Education and Testing Adjusted Operating Profit Growth Growth $m $m % $m $m % % % % % % %

13 Strategy and Execution Crispin Davis Chief Executive Officer

14 KEY STRATEGIC FOUNDATIONS Focus on core businesses Upgrade management effectiveness Deliver demonstrably superior Internet products Substantial upgrade of marketing and sales Significant increase in investment spend Aggressive cost savings programme Build global capability and leadership Target infill acquisitions/alliances

15 CLEAR STRUCTURE AND MANAGEMENT Group CEO Crispin Davis CEO Andrew Prozes CFO Mark Armour CTO Keith McGarr EDUCATION HR Director Jean Luc Augustin LEGAL CEO Andrew Prozes BUSINESS CEO Gerard van de Aast SCIENCE CEO Derk Haank EDUCATION

16 SCIENCE & MEDICAL: DELIVERY OF STRATEGIC MILESTONES ScienceDirect successful rollout Customised products launched and well received Sales force expanded New pricing policy affirmed Investment programme executed as planned Targeted cost savings exceeded Acquisition of Harcourt STM announced +

17 SCIENCE & MEDICAL: PROVEN BUSINESS MODEL UPGRADED SCIENCEDIRECT PRODUCT HIGHER PENETRATION HIGHER USAGE INTERNET MIGRATION CUSTOMER PREFERENCE MODERATE PRICING POLICY AGGRESSIVE SALES AND MARKETING LOWER ATTRITION ACCELERATED REVENUE GROWTH

18 % SCIENCE & MEDICAL: REVERSAL IN ATTRITION

19 % SCIENCEDIRECT: INCREASE IN PENETRATION

20 SCIENCEDIRECT: INCREASE IN USAGE m

21 HARCOURT: STM Excellent fit with Elsevier Science Outstanding portfolio in Science and Medical Strong platform for faster internet growth Well positioned to take on integration and expansion ACCELERATE REVENUE AND PROFIT GROWTH

22 SCIENCE & MEDICAL: 2001 PRIORITIES Further upgrade of ScienceDirect - new customised products - enrich content, including backfiles - add navigation tools Broaden user base - upsell existing users - expand to new users - increase overall usage Successfully integrate Harcourt STM - reorganise medical operations on key clinical disciplines - realise $40 million of synergies - accelerate online solutions

23 LEGAL: DELIVERY OF STRATEGIC MILESTONES Deliver competitive online product v West Achieve parity preference in US Law Schools Introduce US small law turnaround programme Launch of legal portal Launch of significantly improved nexis.com product Investment in upgraded products, sales, marketing Targeted cost savings delivered Acquisitions to expand global capability and reach

24 LEGAL: SOUND BUSINESS MODEL ACCELERATED MIGRATIONACCELERATED IGRATION ACCELERATED REVENUE GROWTH CUSTOMER PREFERENCE INTERNET MIGRATION US LAW SCHOOL PREFERENCE SMALL LAW PROGRAMME UPGRADED SALES AND MARKETING COMPETITIVE PRODUCT lexis.com nexis.com HIGHER USAGE NEW SALES STRONGER RENEWALS

25 LEGAL : PRODUCT UPGRADE PROGRAMME TAX CCH/Tax Analysts LEGAL Expanded E-treatises Improved Linkages CITATOR Functionality Upgrade CASE SUMMARIES Editors $19m Investment in 2001 WEB RELIABILITY Private Nodes EASE OF USE New lexis.com New WebSphere Platform NEWS & BUSINESS FT Profile/ Company Dossier PUBLIC RECORDS Riskwise/Corp America Acquisitions

26 LEGAL: US LAW SCHOOL PROGRAMME % LEXIS Preference Overall

27 LAUNCH OF LEGAL PORTAL FOR US SMALL LAW +13% REVENUE; STRONG SHARE GROWTH OUTSTANDING REVERSAL: REVENUE GROWTH: 2000: +4%; 1999: -5% JANUARY 2001: 43,500 REGISTERED USERS, 8.2M PAGE VIEWS, AVERAGE TIME 18 MINUTES LexisONE.com Paid Legal Research Legal and Business News Client Development Community Legal Firm Supplies Practice Management Professional Development Travel, Sports Entertainment etc Legal Internet Guide Free Case Law, Forms etc

28 LEGAL: NEXIS.COM RELAUNCH SUBSTANTIAL REVENUE PROGRESS: +18% +13% REVENUE; STRONG SHARE GROWTH OUTSTANDING REVERSAL: REVENUE GROWTH: 2000: +4%; 1999: -5%REVENUE GROWTH TURNAROUND: 2000: +4%; 1999: -4% Plain English Search Simple Search Results Reports Point and Click Access to News, Company, Legislative Sources Tailored Results

29 LEGAL: ACQUISITIONS AND ALLIANCES +13% REVENUE; STRONG SHARE GROWTH OUTSTANDING REVERSAL: REVENUE GROWTH: 2000: +4%; 1999: -5% US Legal Mealeys CCH alliance Tax Analysts alliance State code publishing Long term license US Corporate/Federal FT Profile Riskwise Press Access FT archive and license Online validation Media database and planning software International Publitecsa Eclipse Conosur THC Press Chile UK Chile Hong Kong BUILDING GLOBAL CAPABILITY

30 LEGAL: 2001 PRIORITIES Continued product upgrade: content, customisation, functionality Build targeted marketing/sales efforts behind upgraded products Monetise increased usage Improve print performances within on-line migration strategy Adopt Lexis Nexis as global brand and product platform Expand geographical presence in key markets

31 EDUCATION: 2001 PRIORITIES Maintain momentum in existing business - continued share progress in UK - capitalise on new Rigby supplemental programmes Integrate Harcourt Education and Testing businesses - maintain momentum in US state adoptions - combine Steck-Vaughn and Rigby - step up investment in US secondary - accelerate Testing through Internet delivery and services - expand e-learning programme : +18%

32 Investment programme driving print growth Successful launch of Internet portals Expansion of portfolio through acquisitions and launches Major cost savings delivered Global division established Focus on fewer, faster growing sectors BUSINESS: DELIVERY ON STRATEGIC MILESTONES

33 BUSINESS: NEW AND UPGRADED PORTALS LAUNCHED

34 INTERNET B2B REVENUE GROWTH SUBSTANTIAL REVENUE PROGRESS: +18% +13% REVENUE; STRONG SHARE GROWTH Traffic and revenues building Size of market opportunity smaller Investment slightly reduced and reprioritised Organic Including Acquisitions £m

35 BUSINESS: PORTFOLIO REFOCUS AND EXPANSION +13% REVENUE; STRONG SHARE GROWTH OUTSTANDING REVERSAL: REVENUE GROWTH: 2000: +4%; 1999: -5% FEWER, FASTER GROWING, HIGHER QUALITY SECTORS Construction Entertainment Global Chemicals European Exhibitions Travel US Auto, Metals, Food Processing Tuition Businesses Bowker Directories Non Core Titles, Exhibitions, Reference + - Electronics

36 Maintain print momentum through upgraded product/sales programmes Maximise revenues and returns from internet programme Drive global strategy: organisation, portfolio, platforms, acquisitions/disposals Complete integration of CMD Group and Miller Freeman Europe Respond quickly to changing economic environment BUSINESS: 2001 PRIORITIES

37 INTERNET REVENUES +13% REVENUE; STRONG SHARE GROWTH OUTSTANDING REVERSAL: REVENUE GROWTH: 2000: +4%; 1999: -5% 2000 TARGET EXCEEDED Target Actual £m

38 PROGRESS ON HARCOURT ACQUISITION Results (year to October 2000) reaffirmed very positive momentum Meetings with management encouraging and confirmed opportunity Integration plans well advanced Strategies and programmes for growth developing well

39 CONCLUSIONS: 2000 Organisational issues addressed Clear, customer led growth strategies and targets Investment programme showing real benefits Increasing evidence of business turnaround Harcourt acquisition is substantial opportunity

40 KEY OBJECTIVES FOR 2001 Drive benefits from strengthened management structure Continue to execute effectively against strategic milestones Accelerate revenue growth, exceeding market growth in 75% of businesses Grow operating margin through increased efficiency Accelerate profit growth strongly towards double digit Integrate Harcourt successfully

41 ARCOURT: FINANCING ACCELERATED REVENUE AND PROFIT GROWTH Preliminary Results 2000 Execution and Delivery on Strategy

42 Appendices

43 % £m change m change 1999 Turnover Base businesses 146+5% % 1999 & 2000 acquisitions205+6% % Disposals(59)-2% (97) -2% Currency translation effect 86 +2% % 2000 Turnover3,768+11% % TURNOVER: RECONCILIATION

44 INVESTMENT SPEND £35m/57m £126m/205m £105m/171m 2000 TOTAL: £270m/440m Applied to product upgrade, sales and marketing £10m/16m higher than budgeted Additional £20m/32m budgeted in 2001 £4m/7m

45 COST SAVINGS 2000 TOTAL: £143m/235m £19m/31m £53m/87m £61m/100m £8m/13m £2m/3m Principally production, infrastructure and support staff £13m/21m ahead of plan On track to deliver targeted £170m/278m savings in 2001

46 InterimFinal % change % change Reed Int (p) % % UK tax credit rate 10%10% 10%10% Reed Int (gross) (p) % Equalisation ratio Exchange rate (:£) Elsevier () % % DIVIDEND EQUALISATION

47 £m Adjusted profit attributable Amortisation of goodwill and intangible assets (468) (373) (768) (567) Exceptional items (10) (217) (16) (329) Reported profit attributable 33 (63)54 (95) Reed International EPS 1.0p (3.4)p Elsevier EPS 0.04 (0.07) m m REPORTED PROFIT ATTRIBUTABLE

48 ACQUISITIONS Science Endeavor Afferent Legal Conosur and Publitecsa Eclipse Riskwise FT Profile Mealey Press Access CorpAmerica Business CMD e:Logic Market Cast/LA411 Schnell Institut Verlag Miller Freeman Europe TOTAL ACQUISITION SPEND £952M/1562m; CONTRIBUTION AHEAD OF PLAN

49 DISPOSAL PROGRAMME Science Springhouse Legal RTIS Business Tuition businesses REZsolutions KG Saur US Exhibitions TOTAL 2000 DISPOSAL PROCEEDS: £153M/251M In ProgressOAG Worldwide Cahners Travel Group Bowker

50 EXCEPTIONAL ITEMS months to 31 December £m £m m m Reorganisation costs (77) (161) (126) (244) Acquisition related costs (38) (28) (63) (43) Year 2000 compliance costs - (50) - (76) Charged to operating profit (115) (239) (189) (363) Net profit on sale of businesses and fixed asset investments Total exceptional charge (30) (232) (49) (352) Net tax credit

51 Sales by Market Sales by Source SALES BY MARKET AND SOURCE

52 Exchange rate to £1: US Dollar Euro CURRENCY PROFILE: ADJUSTED PROFIT BEFORE TAX Exchange rate to 1: US Dollar Sterling

53 BALANCE SHEET Goodwill/intangible assets Tangible fixed assets Working capital/other net liabilities 2000 £m mm Shareholders funds Provisions and minorities Net debt (934) Capital Employed (744) (1504) (1196)

54 £m £m m m Adjusted operating cash flow Interest (104)(81)(171)(123) Tax(141)(173)(231)(262) Dividends(196)(339)(321)(515) Free cash inflow FREE CASH FLOW 12 months to 31 December


Download ppt "ARCOURT: FINANCING ACCELERATED REVENUE AND PROFIT GROWTH Preliminary Results 2000 Execution and Delivery on Strategy."

Similar presentations


Ads by Google