Pearson 2009 Interim results


Marjorie Scardino, CEO and Robin Freestone, CFO, hosted a presentation of the results for analysts and investors at 09:00 (BST).

Marjorie and Robin were joined by:

John Makinson, Chairman and Chief Executive, Penguin
Rona Fairhead, Chief Executive, FT Group
Will Ethridge, Chief Executive, North American Education
John Fallon, Chief Executive, International Education

A replay of the presentation is available here.

Download a PDF of the presentation slides.

Photos of the speakers are available here.

Download the full press release and financials in PDF format here.

Press Release (HTML)


  • Strong profit growth: Adjusted operating profit up 25%* and adjusted EPS up 41% in headline terms.
  • Good competitive performances: FT Group and Penguin performing well in challenging markets and trading in line with expectations; Education trading ahead and gaining share.
  • Healthy outlook: Strong positions in growth markets combined with accelerating digital and services businesses underpin confidence for 2009 and beyond.
  • Dividend growth sustained: Interim dividend raised 3.4% to 12.2p.
  • Trading ahead of expectations: Stronger business performance offsets negative currency impact, providing an effective upgrade of 3p to adjusted EPS guidance for 2009. So, full-year adjusted EPS still expected to be at or above the 2008 level of 57.7p per share.

Marjorie Scardino, chief executive, said: "The transformation we've been pursuing for a decade - from 'publishing' company to content, technology and services company - is paying off. Over the past six years, Pearson has delivered substantial growth; this year is about proving our resilience and competitive edge. So far, we've passed the test. Market conditions are tough and may stay that way; but we are confident that we will perform well this year and next."

Healthy Outlook
£ millions Half year 2009 Half year 2008 Headline growth CER growth Underlying growth Full year 2008
Business performance
Sales 2,398 1,965 22% 1% 1% 4,811
Adjusted operating profit 158 124 27% 25% 21% 762
Adjusted profit before tax 111 84 32%     674
Adjusted earnings per share 7.9p 506p 41%     57.7p
Free cash flow (284) (274) (4)%     631
Net debt 1,860 1,682 (11)%     1,460
Statutory results
Sales 2,398 1,965 22% 1% 0% 4,811
Operating profit 109 95 15%     676
Profit before tax 62 55 13%     585
Basic earnings/(loss) 28 (62) --     292
Total basic earnings/(loss) per share 3.5p (7.8)p --     36.6p
Cash (used in)/generated from operations (147) (147) 0%     894p
Dividend per share 12.2p 11.8p 3%     33.8p


* Throughout this announcement, growth rates are stated on a constant exchange rate (CER) basis unless otherwise stated. Where quoted, underlying growth rates exclude both currency movements and portfolio changes. The 'business performance' measures are non-GAAP measures and reconciliations to the equivalent statutory heading under IFRS are included in notes to the attached condensed consolidated financial statement 2, 3, 4, 5, 7 and 16. Profits are quoted on a continuing basis unless otherwise stated.


Pearson makes most of its sales and profits in the second half, due to the seasonal phasing of our education and consumer book businesses.

All of our businesses have faced a tough macroeconomic environment in the first half, and as expected some have seen particularly challenging market conditions. We are planning on the basis that these conditions persist but our strong market positions combined with sustained investment and innovation in digital and services businesses underpin our confidence for 2009 and beyond.

At our preliminary results in March, we stated that we would expect to achieve full-year adjusted earnings at or above the 2008 level of 57.7p per share (based on the prevailing exchange rate of £1:$1.43 and market conditions at that time). We continue to expect to achieve 57.7p or above, after the negative impact of the weakening of the US dollar against sterling of about 3p per share since our previous guidance. This guidance assumes that the current rate of £1:$1.64 prevails in the second half*.

Our Education business traded ahead of expectations in the first half, producing 5% sales growth and a substantial profit increase.

In North America, we achieved good growth in Higher Education and Assessment and Information. Our School Curriculum business also gained share, but faced very tough market conditions as a result of the weakness in state budgets. For the year as a whole, we are confident that our strength and breadth in Higher Education and Assessment can offset the challenges in the School Curriculum market. Looking ahead, we are encouraged by the US administration's commitment to education reform and its investment in assessment, student information, teacher development and the use of technology. In 2010, the School Curriculum market will also benefit from a significant rise in the overall new adoption opportunity (estimated total market opportunity of approximately $900m, up from $500m in 2009, with more than half of the total coming from Texas and Florida, which have approved textbook funding within their budgets).

Our International Education business continued its rapid expansion, with double digit underlying sales growth benefiting from a particularly strong first-half performance in testing and qualifications. We expect this business to continue to show good growth as it benefits from global growth trends in education, rolls out our major digital programmes internationally, expands into developing markets, integrates bolt-on acquisitions and achieves further operational efficiencies.

Over the past five years, the FT Group has diversified its revenues, reducing its reliance on advertising and significantly increasing its digital and subscription revenues. This strategy is helping the FT Group to withstand difficult conditions in the financial services industry and a severe advertising downturn.  We do not see the advertising cycle turning any time soon; but we do expect the FT Group's high-quality information and analysis to remain in demand and its subscription businesses to remain resilient. Interactive Data maintained guidance for full-year organic operating profit growth in the mid-single digit percent range, as cost actions offset tough market conditions in the financial services industry. Interactive Data now expects full-year non-GAAP organic revenue growth at the lower end of the low-single digit percent range.

Penguin traded well, and in line with expectations, in the first half. It continued to face challenging market conditions, particularly in the reference category, and also faced tough comparisons against an exceptionally strong first half of 2008. Penguin has a good publishing schedule for the second half, and has announced a series of organisational changes designed to strengthen its publishing, reduce costs and accelerate the transition to digital production, sales channels and formats and to lower cost markets for design and production.

Interest and tax. In 2009, we expect our interest charge to adjusted earnings to be higher than 2008 reflecting the impact of the strength of the dollar on our largely US dollar-denominated debt and the pensions-related credit to interest becoming a debit in 2009. Our tax charge is likely to be in the 26% to 28% range and we expect our cash tax rate to stay close to 2008 levels.

* Exchange rates. Pearson generates approximately 60% of its sales in the US and each five cent change in the average £:$ exchange rate for the full year (which in 2008 was £1:$1.85) would have a translation impact of approximately 1p on adjusted earnings per share. The average rate during the first half of 2009 was £1:$1.49 (£1:$1.97 in H108) and the closing rate at the end of June was £1:$1.65.

For more information:

Luke Swanson / Simon Mays-Smith / Charles Goldsmith + 44 (0) 20 7010 2310

Pearson's results presentation for investors and analysts will be audiocast live today from 09.00 (BST) and available for replay from 12.00 (BST) via

High resolution photographs for the media are available from our website


Pearson's sales at constant exchange rates increased by 1% in the first half of the year and adjusted operating profit increased by 25% to £158m. Adjusted earnings per share increased by 41% to 7.9p, from 5.6p in 2008. Free cash flow was £(284m), reflecting our normal first half outflow ahead of our key trading periods.

Currency movements added £413m to sales and £3m to operating profit. This was largely the result of translation gains from the strength of the US dollar against sterling compared to the same period last year although the strength of other currencies against sterling also contributed. At the operating profit level, transaction foreign exchange losses partially offset these gains. We generated approximately 60% of our sales and profits in US dollars.

Our statutory results show an increase in operating profit to £109m (£95m in 2008). Statutory profit before tax was £62m (£55m in 2008). Statutory earnings for the period show a profit of £28m (from a loss of £(62)m in the first half of 2008).

Our net debt, which reaches a seasonal peak around the half-year and is mainly dollar denominated, was £1,860m (£1,682m in 2008) at 30 June. The year-on-year increase was entirely due to currency movements.

The board has declared an interim dividend of 12.2p per share, a 3.4% increase on 2008, reflecting this strong start to the year and its confidence in the full-year outlook.

£ millions Half year 2009 Half year 2008 Headline growth CER growth Underlying growth Full year 2008
North American Education 943 713 32% 1% 0% 2,002
International Education 446 365 22% 13% 10% 866
Professional 132 105 26% 2% 2% 244
Pearson Education 1,521 1,183 29% 5% 3% 3,112
FT Publishing 176 188 (6)% (13)% (13)% 390
Interactive Data 249 186 34% 9% 5% 406
FT Group 425 374 14% (2)% (4)% 796
Penguin 452 408 11% (8)% (6)% 903
Total Sales 2,398 1,965 22% 1% 0% 4,811
Adjusted Operating Profit
North American Education 12 (16) -- -- -- 303
International Education 23 20 15% 80% 80% 135
Professional 14 10 40% 10% 10% 36
Pearson Education 49 14 -- -- -- 474
FT Publishing 14 30 (53)% (40)% (40)% 74
Interactive Data 74 54 37% 7% 2% 121
FT Group 88 84 5% (10)% (13)% 195
Penguin 21 26 (19)% (23)% (23)% 93
Total 158 124 27% 25% 21% 762


North American Education
£ millions Half year 2009 Half year 2008 CER growth Underlying growth Full year 2008
Sales 943 713 1% 0% 2,002
Adjusted operating profit 12 (16) -- -- 303

North American Education is Pearson's largest business, with 2008 sales of £2bn and operating profit of £303m. Over the past five years, it has increased sales at a compound annual growth rate of 10% and profits at a rate of 9%.

Our business serves educators and students from early education through elementary, middle and high schools and into higher and vocational education with a wide range of products and services: student assessments, testing and data; curriculum materials, in print and online; educational technologies and teacher certification and development services. Pearson has a leading position in each of these areas and a distinctive strategy of connecting those parts to personalise learning, supporting student success and institutional effectiveness. From this year, the business will benefit from two major integration programmes: the acquisition of Harcourt's US Assessment business and the reorganisation of our US School and US College businesses into a single K-16 organisation.

The new US government has set the goal of renewing America's competitiveness and improving the lives of American families by building a more effective education system. It is focussing on four key areas: college and career-readiness, teaching effectiveness, connected data systems and low-performing schools. The impact of the government's economic stimulus measures on our markets remains unclear, but we are encouraged by the opportunities to play our part in educational reform.

School Curriculum

  • The US School publishing market declined 18% in the first five months of the year, according to the Association of American Publishers, as weak state budgets added to a slower year for new adoptions (total opportunity of $500m in 2009 against $880m in 2008).
  • Pearson significantly outperformed the School publishing market and expects to take approximately 32% of the total new adoption opportunity, and 37% of the adoptions competed for.
  • Pearson's innovative and engaging print-and-digital programmes for elementary schools performed particularly well and continue to gain share. enVisionMATH ( helped Pearson to a market-leading 50% expected share of elementary maths adoptions, including almost 70% share in North Carolina and almost 60% in California. In a smaller adoption year for biology, Miller-Levine Biology (, our new blended print and online high school biology programme, won a 40%+ share in Tennessee.
  • The Association of Educational Publishers honoured two Pearson products, Miller-Levine Biology and Longman Northstar with MyNorthStarLab (an integrated course for English Language Learners: , as the year's "most outstanding" materials in the field of teaching and learning.
  • Seven Pearson products were named as finalists in the Software & Information Industry Association's 24th Annual CODiE Awards including eCollege, MyCompLab, NovaNET, Perspective, PowerSchool Premier and PowerTeacher. DRA2 Handheld - Tango Software edition, a small handheld electronic tool that helps teachers diagnose, assess and improve student reading, won Best Use of a Technology Device.

Assessment and Information

  • Our Assessment and Information businesses continued to be resilient, benefiting from a solid base of long-term contracts and realising the benefits of the Harcourt Assessment integration. It announced a new Assessment for Learning solution in partnership with Promethean and Learning Station to provide classroom teachers with web-based resources and tools to improve instruction and personalise learning.
  • Our National Services assessment business grew and launched the College Board's ACCUPLACER i3, an online adaptive testing system aimed at determining student readiness for college-level coursework, which has delivered more than 1 million tests since launch. Having sold more than 114,000 Algebra II exams in 2008, a further 132,000 Algebra II exams were delivered for The American Diploma Project (ADP) Network, a consortium of 35 states representing approximately 85% of the US public school student population focused on benchmarking student achievement against rigorous, common college readiness standards.
  • Our State Services assessment business gained share in a difficult market environment, winning significant new programmes in Florida and Arizona. We continue to lead the market in helping states move to online testing, delivering almost four million assessments online in the first half of 2009.
  • Our Evaluation Systems teacher certification business secured contract extensions in Illinois, Arizona and Washington; won re-bids in Michigan and New York, for five and six years, respectively; and added new contracts in California, Minnesota and Connecticut. We also launched The National Evaluation Series, a new computer-based testing programme developed by Evaluation Systems and administered via Pearson's professional testing centres, expanding our share in ready-to-use assessment.
  • In Clinical Assessments, our AIMSWeb Response to Intervention data management and progress monitoring service, which monitors children who are having difficulty learning, continued to grow and now has more than two million students on the system. We have also begun to exploit our intellectual property more widely in international markets, opening offices in Denmark and India where we will adapt and publish our leading Clinical and Talent Assessment products.
  • Our Edustructures business, which provides interoperable systems to support data collection and reporting between school districts and state governments, completed the acquisition of the National Transcript Center (NTC). NTC is America's largest national e-transcript and student record exchange provider with statewide transcript exchange contracts in Texas, California, Virginia, Colorado, Wyoming and West Virginia. Edustructures and NTC won a multi-year project with the state of Iowa for a student records and transcript exchange system.
  • Our Student Information Systems business continued to benefit from its transition from a licensing to a recurring revenue business model. It won contracts for new school districts including Macomb MI (133,000 students), Anne Arundel, MD (75,000 students) and the Archdiocese of Chicago (62,000 students). PowerSchool now supports approximately 8 million students in the United States and is growing internationally with students in 50 countries.

Higher Education

  • The US Higher Education publishing market grew 26% in the first half, according to the Association of American Publishers, with the industry benefiting from healthy enrolments and good demand for instructional materials, particularly in those areas that are enhanced with technology and customisation.
  • We continued to see rapid growth in Pearson's 'MyLab' digital teaching, homework and assessment programmes, where North American registrations grew 43% to 2.3 m, and custom publishing, where volumes grew strongly compared to the first half of 2008.
  • We sustained our investment in established and new author franchises, such as Campbell & Reece's Biology; Tro's Chemistry; Lilienfeld, Lynn, Namy & Woolf's Psychology; and Wysocki & Lynch's DK Handbook, all of which are enhanced by digital services.
  • Pearson formed a new strategic partnership with William Penn University to convert all of its courses to a hybrid offline/online environment using customised instructional materials created in partnership with individual instructors; to integrate the use of our MyLab learning technology; and to build and offer new online degree programmes, all hosted on our eCollege Learning Management System. William Penn University focuses on helping working adults achieve undergraduate and masters degrees and is a member of the Consortium for the Advancement of Adult Higher Education (CAAHE) colleges.
  • eCollege increased online enrolments by 23% to 1.6m and benefited from strong renewal rates of 95% by value and strong growth in the usage of the platform. New business wins included Education Online Services Corp, William Penn University and Arizona State University in the United States; as well as a number of new contracts in international markets.


International Education
£ millions Half year 2009 Half year 2008 CER growth Underlying growth Full year 2008
Sales 446 365 13% 10% 866
Adjusted operating profit 23 20 80% 80% 135


Pearson is the leading education company outside the US as well as inside. Over the past five years, our International Education business has increased headline sales at a compound annual growth rate of 16% (from £484m in 2004 to £866m in 2008) and headline operating profit five-fold (from £27m in 2004 to £135m in 2008).

Our strategy is to combine educational content, assessment, technologies and related services in ways that help students to become more successful and educational institutions more effective. We believe that this business can continue to grow strongly, capitalising on four secular growth trends driving demand for education around the world: greater participation in primary, secondary, higher and vocational education; increasing public and private spending on education, combined with a greater focus on effectiveness and ensuring a good 'return' on that investment in terms of student success; the rise of the English language; and the growing technology infrastructure in education institutions.

In most markets, the key selling season is in the second half of the year. Even so, we have made a good start to the year, both in financial terms and in pushing ahead on our strategic goals. We have produced rapid growth in testing and qualifications; accelerated the roll-out of our MyLab digital homework and assessment programmes; continued to integrate acquisitions such as Wall Street English, Fronter and Longman Nigeria; and continued to invest in new products and sales and marketing capabilities.

Key highlights in the first half of 2009 include:


  • Growth in the number of international students using our 'MyLab' digital homework and assessment programmes accelerated to almost 80% compared to the first half of 2008, with more than 200,000 student registrations. The MyLabs are now sold into more than 160 countries worldwide.
  • We prepared to launch the new Pearson Test of English. PTE Academic will launch in October 2009 and will be delivered in up to 200 Pearson VUE test centres by the end of 2010. It has seen strong uptake from academic institutions across the globe having already been formally recognised, or in the process of being recognised, by almost 700 institutions worldwide.
  • New contract wins for eCollege in international markets include IBMEC, ABM and Fundepag in Brazil; Educanet in Mexico; OVM in Puerto Rico and MyMathLab hosted on eCollege for 5,000 students at King Abdulaziz University in Saudi Arabia.


  • Edexcel successfully completed the UK Key Stage 2 National Curriculum Tests. 99.9% of results were returned on time to approximately 16,000 schools across England. For 'A'-level and GCSEs, Edexcel again expects to mark 4.1m scripts onscreen, representing 89% of student work marked by examiners.
  • Edexcel made significant investments in supporting the growth of vocational qualifications in schools, and has won almost 70% of the UK government's new Diploma business. Strong growth in its BTEC vocational qualifications has continued, with registrations in schools growing by more than 30% to 940,000 students.
  • In the UK secondary school market, our high quality print and digital publishing helped us to gain share in many key subjects in a year of significant curriculum change. In Higher Education, our strong publishing integrated with our MyLabs, combined with rising enrolments, resulted in good growth ahead of the market.
  • We performed strongly in new adoptions in Italy, with market share gains in English Language Teaching in primary and across the curriculum in secondary. We launched our new digital secondary science programme, Linx, built around content from our North American science programmes customised for the Italian market, ahead of significant curriculum change in 2010.

Africa and the Middle East

  • In South Africa, Pearson received regulatory approval for the acquisition of the majority stake in Maskew Miller Longman (MML) and for the integration of Heinemann South Africa and MML. This will take place in the second half of 2009, creating a broad-based education company to provide traditional textbooks, learning software, assessment and teacher development across Southern Africa.
  • Pearson successfully implemented and expanded the Abu Dhabi Education Council's (ADEC) external assessment programme. The tests cover English, Arabic, maths and science for students in grades three to 11 and were administered to over 160,000 students in Abu Dhabi and the northern United Arab Emirates.
  • In Egypt, the Ministry of Higher Education and State for Scientific Research chose Edexcel as its education partner for the Integrated Technical Education Cluster Project in El Ameeria, Cairo. This project aims to build workforce readiness for college graduates using the BTEC suite of qualifications.


  • We acquired Wall Street English, China's leading provider of premium English language training to adults, for $145m. The combination of Longman Schools and Wall Street English gives Pearson a leading position in the English language teaching market in China, serving students from elementary school to professional levels.
  • Longman Schools, our network of English language schools for children in China, now comprises 26 schools in Beijing and Shanghai, and is expected to grow to 29 schools in Beijing, Shanghai and Suzhou by the end of the year.
  • We stepped up our presence in the Indian education market with two investments totalling $30m: a 50:50 joint-venture with Educomp to offer vocational and skills training; and a 17.2% stake in TutorVista, which provides online tutoring services for K-12 and college students.
  • In Hong Kong, we built on our market leading share in secondary education with our new secondary curriculum, publishing across all key subject areas which also helped to establish Pearson in the Chinese Language market for the first time.
  • In Australia and New Zealand, we launched our BTEC suite of vocational education products and won our first contract with the New Zealand Management Academies (NZMA) based in Auckland and Hamilton.

Latin America

  • We saw strong growth in the sales of English Language Teaching materials across Latin America, particularly in Mexico, Colombia, Ecuador, the Caribbean and Venezuela.
  • In Brazil, we saw very strong growth supported by our provision of custom publishing services to leading for-profit universities in the higher education market.
  • In Colombia, we delivered our first professional development solution for public school teachers, training over 700 teachers both in the classroom and online.


£ millions Half year 2009 Half year 2008 CER growth Underlying growth Full year 2008
Sales 132 105 2% 2% 244
Adjusted operating profit 14 10 10% 10% 36


Our Professional education business is focused on publishing for professionals in business and technology, and on testing and certifying adults to become professionals.

Over the past five years, on a continuing business basis we have increased sales at a compound annual rate of 11% and operating profit from a loss of £5m in 2004 to a profit of £36m in 2008. Over that period, we significantly re-oriented our professional publishing businesses towards digital formats and long-term growth markets and built our professional testing unit into a profitable industry leader. We see good growth opportunities in professional education markets, which will benefit from growing demand for work-related skills and qualifications in both developed and developing economies; and where we have a broad range of professional content and customers across Pearson.

Professional Testing

  • Registration volumes for the Graduate Management Admissions Council (GMAC) test rose 4% worldwide in the first half of 2009, including an 11% increase outside the US.
  • Pearson VUE won a number of new contracts including exclusive test delivery for Citrix, Novell, VMWare, and Adobe; administration of the National Registry of Food Safety Professionals (NRFSP) exam for Environmental Health Testing; and administration of examinations for California Certified Medical Assistant (CCMA) and National Institute for Certification in Engineering Technologies (NICET) qualifications.
  • We successfully renewed a number of contracts including those for Texas Nurse Aides, the Board of Registered Polysomnographic Technologists (BRPT), the Linux Professional Institute (LPI) and Tennessee Insurance.
  • Pearson VUE signed an agreement with the Road and Transport Authority of Dubai to deliver a new, high-tech Driver Testing System.
  • In India, Pearson VUE successfully launched the Law School Admission Test - India, a special version of the Law School Admission Test (LSAT) developed specifically for use by law schools in India.

Professional Publishing

  • Our Professional education business continued to benefit from the increased breadth of its publishing and range of revenue streams, from online retail through digital subscriptions, which is helping us to weather tougher trading conditions in the retail market.
  • FT and Wharton School Publishing, our business publishing imprints, saw good growth from best selling authors such as Roxanne Emmerich with Thank God It's Monday.
  • Our digital photography books continued to see strong demand for titles such as Hot Shoe Diaries by Joe McNally and two more titles by Scott Kelby, digital photography's all-time best selling author.
  • We continued to see strong growth in high-end technology ebooks from Safari Books Online, our subscription-based digital library joint-venture.
  • Pearson developed and published CCNA Network Simulator, 250 digital networking labs designed to help candidates successfully pass the Cisco CCNA certification exam.


Financial Times Group
£ millions Half year 2009 Half year 2008 CER growth Underlying growth Full year 2008
FT Publishing 176 188 (13)% (13)% 390
Interactive Data 249 186 9% 5% 406
Total 425 374 (2)% (4)% 796
Adjusted Operating Profit
FT Publishing 14 30 (40)% (40)% 74
Interactive Data 74 54 7% 2% 121
Total 88 84 (10)% (13)% 195

In recent years, the FT Group has significantly shifted its business towards digital and subscription revenues. We have sold largely print and advertising-based national media companies (Recoletos in Spain, Les Echos in France, FT Deutschland in Germany); acquired digital businesses with international opportunities (Mergermarket,, Money-Media); and invested steadily in our global and digital businesses including the Financial Times,, Interactive Data and FTSE.

As a result of this strategy, in 2008 digital services accounted for 67% of FT Group revenues, up from 28% in 2000; in 2008 advertising accounted for 25% of FT Group revenues (and 18% in the first half of 2009), down from 52% in 2000. On a continuing business basis, FT Group sales have increased from £504m in 2004 to £796m in 2008, and profits from £65m to £195m.

Looking ahead, we believe that the FT Group's premium and global positions, combined with our digital and subscription businesses, put us in a good position to weather tough economic conditions and to build growing financial information businesses.

FT Publishing

  • FT Publishing revenues declined by 13%, mainly reflecting tough market conditions for financial and corporate advertising, as expected. The impact of advertising revenue declines was mitigated by substantial growth in content revenues, the resilience of our subscription businesses and early actions to manage our cost base tightly.
  • We continued to see good demand for high-quality analysis of global business, finance, politics and economics resulting in:
    • an 18% increase in paying online subscribers to more than 117,000. While Financial Times worldwide circulation was 6% lower at 421,429 (for the January-June 2009 ABC period), retail and subscription circulation were broadly level;
    • UK print readership up 15% to 417,000 (according to the National Readership Survey);
    • Registered users on up 211% to 1.4m; unique users up almost 60% to 9.8m (six-month average Jan-June 2009).
  • We continued to invest in international expansion and fast-growing digital markets and sectors with the launch of China Confidential, a digital publication providing exclusive intelligence, news and analysis for investors in China; the Alphaville Long Room, an online comment and analysis site built around discussion threads or 'tables'; a new mobile, offering a new touch screen interface, faster access to content, improved search and data customisation tools; and a recently launched iPhone application.
  • Mergermarket was resilient despite challenging market conditions for some of its customers, particularly in the merger arbitrage markets serviced by dealReporter. We added new functions and data sets to mitigate some of the impact. We did benefit from the breadth of our portfolio with strong demand for Debtwire, resulting from dislocation in the debt capital markets, and sustained interest in Mergermarket, Wealthmonitor and Pharmawire.
  • The Economist, in which Pearson owns a 50% stake, increased weekly circulation by 6.4% to 1.39m (for the July-December 2008 ABC period). Operating profit at The Economist Group increased 26% to £56m, and sales increase 17% to £313m for the year ended 31 March 2009.
  • FTSE, our 50% owned joint-venture with the London Stock Exchange, increased revenues 13% and made a strong improvement in profits as Assets Under Management (AUM) in Exchange Traded Funds (ETF) which track FTSE indices grew almost 50% to $32 billion.

Interactive Data

  • Interactive Data revenues were up 9% and operating profit up 7% driven by its Institutional Services segment despite difficult market conditions in the financial services industry.
  • Pricing and Reference Data continued to generate good growth in North America and Europe. Growth was primarily organic and also benefited from bolt-on acquisitions, most recently NDF, a leading provider of financial pricing and services in Japan, and Kler's Financial Data Service, a leading provider of reference data to the Italian financial industry.
  • Real-Time Services faced challenging market conditions as solid demand for web-based Managed Solutions was more than offset by higher cancellations of real-time market data services.
  • Interactive Data continued to invest in expanding the breadth and depth of the data covered and products offered. Pricing and Reference Data added new information resources, transparency tools, and broader coverage of hard-to-value instruments. It also introduced new services such as the Business Entity Service and Options Volatility Service aimed at helping firms address risk management and compliance challenges. At Real-Time services, new product launches included PlusBookTM, a new consolidated order book service for the European financial industry, and enhancements to the PrimePortal product, which are used to create customized Web solutions for wealth management and infomedia applications. eSignal introduced new services and enhanced existing offerings such as its Market-Q browser-based workstation, which has been well received in the institutional wealth management market.
  • Interactive Data maintained its organic profit growth guidance of mid-single digits percent growth for the full year. Interactive Data took significant cost actions, enabling it to offset a one-off accounting adjustment in the second quarter and lower organic revenue growth guidance due to tough market conditions in the financial services industry. Interactive Data now expects full-year non-GAAP organic revenue growth at the lower end of the low-single digits percent range.
  • Interactive Data's second quarter earnings announcement and full outlook for 2009 is available at:



£ millions Half year 2009 Half year 2008 CER growth Underlying growth Full year 2008
Sales 452 408 (8)% (6)% 903
Adjusted operating profit 21 26 (23)% (23)% 93


Penguin is one of the most famous brands in book publishing, known around the world for the quality of its publishing and its consistent record of innovation.

We set out a plan several years ago to grow Penguin's profits significantly and consistently. That plan had four major parts:

  1. Continued and disciplined investment in author and product development;
  2. Global coordination in Penguin's publishing organisation, benefiting from its worldwide scale and rapid rates of growth in literacy, education and demand for books in emerging markets;
  3. Innovating with digital technologies to provide new reading experiences, new ways to market and sell books, and more efficient means of production, storage and distribution of content; and
  4. Becoming a more efficient organisation, focusing on margin progression, working capital discipline and cash generation.

This strategy has produced good growth at Penguin over the past five years, with sales increasing at an average rate of 4% and profits at an average rate of 14%. It is also enabling Penguin to perform well this year, even in challenging market conditions, particularly in the reference category. In July, Penguin announced a series of organisational changes at Penguin UK and Dorling Kindersley designed to strengthen its publishing, reduce costs and accelerate the transition to digital production, sales channels and formats and to lower cost markets for design and production.

Penguin's first-half highlights include:

  • In the US, Penguin led the industry for #1 New York Times bestsellers in the first half. Penguin's 18 #1 bestsellers included titles from established authors such as Greg Mortenson with Three Cups of Tea, Charlaine Harris' Dead and Gone, Nora Roberts' Vision in White, Harlan Coben's Long Lost and Sarah Dessen's Along for the Ride.  We helped turn debut novelists Kathryn Stockett, with The Help, and Janice K. Lee, with The Piano Teacher, into national New York Times bestsellers.
  • In the UK, #1 bestsellers included Jamie Oliver's Ministry of Food, Antony Beevor's D-Day and Marian Keyes' This Charming Man. At the Nibbies, Penguin won the Marketing Campaign of the Year for Sebastian Faulks' Devil May Care (which won the Sainsbury's Popular Fiction Award at the Galaxy British Book Awards).
  • In Australia, Penguin was named Publisher of the Year for the second year running at the Australian Book Industry Awards (and won half of the awards for individual books). #1 best-sellers from Australian authors included Tom Winton (Breath) and Bryce Courtenay (Fishing for Stars) alongside international authors including Jamie Oliver (Ministry of Food).
  • In Canada, Penguin author Joseph Boyden won Fiction Book of the Year and Author of the Year at the Canadian Booksellers Association 2009 awards with Through Black Spruce.
  • In India, Penguin is the largest English language trade publisher, with bestselling authors in the first half of 2009 including Narayana Murthy, Dipankar Gupta and Nandan Nilekani. Penguin Books India launched e-commerce functionality on its website ( in partnership with Indiaplaza and won the Best Book award in two out of the three major categories (Jury) at the Vodafone Crossword national book awards with Amitav Ghosh's best-selling epic saga Sea of Poppies, which was named joint winner of the Best Book (Fiction) award, and Manohar Shyam Joshi's T'ta Professor (translated by Ira Pande) won the Best Book in Translation award.
  • In China, Penguin signed an agreement with Apabi to become the first International trade publisher to sell titles as eBooks in the market.
  • A strong second half publishing list is led by major new books in the US, including titles by Patricia Cornwell, Sue Grafton and Anthony Zuiker. The US also has new works by David Plouffe, Greg Mortenson and David Benedictus & Mark Burgess with Return to the Hundred Acre Wood, the first authorised sequel to A.A. Milne's Winnie the Pooh and The House at Pooh Corner. Penguin UK has works by Nick Hornby, Eoin Colfer, Marina Lewycka, Vladimir Nabokov, Jamie Oliver, Lauren Child and Charlie Higson.

Digital innovation

  • Significant expansion of eBook publishing and sales. In the US and UK, Penguin has almost 10,000 eBooks available to date and expects to have almost 14,000 by year end including eSpecials and Enriched eBook Classics.
  • In the US, Penguin launched an online network with three channels featuring nine series of book-related programming for adults, young adults and children. Titled "From the Publishers Office", the site aims to build on Penguin's 2.0 initiatives to engage new audiences and to enhance the dialogue between authors and readers.
  • In the UK, Penguin and Puffin launch We Make Stories, a unique set of digital tools for children to create, print and share a variety of innovative story forms including pop-up books, customised audio books, comics and interactive treasure maps. The site is designed to encourage literacy, creativity and storytelling skills and is Penguin's first move into providing services. We launched iPhone applications for the Top 10 DK Eyewitness travel guides retailing at £4.99.
  • Penguin China is the first major international publisher to sell English books directly under its own brand on Taobao (, the leading direct-to-consumer online auction site in China.


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