: Financial Times Group :

: profile :

With the rise of private investment, the increase in cross-border mergers, acquisitions and alliances, and the globalisation of business and investment, there is ever more demand for reliable business information and insight. While the US newspaper industry is expected to grow at 6% from 2000 to 2004, the online financial news sector is expected to grow at 15% per year (sources: Veronis Suhler/Simba). In Europe, JP Morgan predicts that the number of people using online investment services will grow from four million in 2000 to 18 million in 2003, an annual growth rate of 65%.

In 1997, convinced that the Financial Times was a very special international brand with unique and valuable content, we began to invest heavily in its growth. We have expanded internationally, launching a new edition for the US and extending our network of print sites around the world. Building on our network of national business newspapers, we have broken into new markets, with the launch of Vedomosti in Russia and FT Deutschland in Germany. And, with FT.com at the heart of our network of international business, investment and personal finance websites, we are expanding both our audience and our range of products and services.

This investment is paying off handsomely, with our business newspapers reaching record circulation and advertising growth and with our internet enterprises gaining huge popularity and moving towards profitability in their own right. The FT Group will grow by continuing to do what we do best: providing authoritative news and analysis in a global context. We will continue to work hard both to beat the competition to major international business stories, and to ensure our journalism meets the very high standards that our readers expect. We will continue to provide the means by which many advertisers can communicate with a highly attractive and ‘hard-to-reach’ audience of international business people. And we will deliver the new premium products and services that will enable our customers to manage their businesses, careers and investments more effectively.

The Financial Times Group, one of the world’s leading business information companies, aims to provide a broad range of business information, analysis and services to a growing audience of internationally minded business people. The Financial Times newspaper is printed in 18 cities around the world and has one of the world’s fastest growing international readerships. FT.com, the news-paper’s internet partner, combines agenda-setting editorial with relevant financial data and discussion groups, as well as a broad range of business tools including the largest search function on the internet.

European business newspapers & online services: Our pan-European network of national business news-papers and online services includes France’s leading business newspaper and website, Les Echos and lesechos.fr, and Spain’s leading business newspaper and website, Expansión and Expansiondirecto.com. In February 2000 we launched in partnership with Gruner + Jahr a new German language newspaper, FT Deutschland, with a fully inte-grated online business news and data service.

Securities and specialist financial information: Through a controlling interest in Data Broadcasting Corporation, we are one of the world’s leading sources of securities pricing and specialist financial information to global institutional, professional and individual investors. Our products include eSignal, an online real-time quotation service for brokers and active traders.

Business information: FT Business produces specialist information on the retail, personal and institutional finance industries. It publishes the UK’s premier personal finance magazine, Investors Chronicle, and The Banker, Money Management and Finan-cial Adviser for professional advisers.

Private investor information: FTMarketWatch, a joint venture with CBSMarketWatch, provides free, fast, incisive, real-time financial and market news to Europe’s rapidly growing community of private investors. The FT Group owns a 34% interest in CBS-MarketWatch, whose web properties (BigCharts.com and CBSMarketWatch.com) are the internet’s most popular destinations for financial market news.

Joint ventures and associates: We also have a number of other associates and joint ventures, including:

• A 50% interest in The Economist Group, which publishes the world’s leading weekly business and current affairs journal;
• FTSE International, a joint venture with the London Stock Exchange;
• Vedomosti, Russia’s leading business newspaper and a partnership venture with Dow Jones and Independent Media;
• A 50% interest in BDFM, publishers of South Africa’s leading financial newspaper and magazine.

: performance :

The Financial Times Group had an outstanding year, with underlying revenue growing by 22% and underlying profit increasing by 40%. While circulation and advertising revenues hit record levels, we continued to invest in international expansion and new print and online products and services. Our internet enterprises also grew rapidly during the year, increasing revenues from £7m in 1999 to £42m in 2000. They are on track to break even by the end of 2002, two years ahead of our original expectations.

The Financial Times newspaper increased profits by 45% to £81m. Average daily sales in December increased to 485,000, up 10% year on year. Worldwide advertising revenues increased by 34%, with vigorous growth sustained throughout the year. The newspaper continued its successful expansion into North America, with circulation up 26% to 129,000. In the first two months of 2001, circulation and advertising revenues continued to increase.

FT.com continued to grow rapidly and by January 2001 had 1.7 million unique monthly users (up 55% on January 2000) and 39 million monthly page views (up 57%). The Financial Times newspaper and FT.com now have integrated editorial, advertising sales and support teams and a number of blue-chip international companies and financial institutions have run integrated advertising campaigns across the FT newspaper and FT.com. FT.com is also generating revenues by syndicating its content to an increasing number of customers and developing a range of premium services.

FTMarketWatch was launched successfully in June. It performed in line with our expectations, generating strong advertising and content licensing revenues. The business expanded further with the launch of a German language site in November, targeting Europe’s largest community of private investors.

Les Echos increased its circulation by 5% to a record 154,000, and increased advertising revenues by 37%. Its online service, lesechos.fr, built on its position as France’s leading newspaper website and grew advertising revenues by 180%. Lesechos.fr also established content partnership deals with a number of websites and launched a new personal finance portal, mesfinances.fr.

Expansión grew its circulation to a new high of 63,000 and increased advertising revenues by 41%. Expansiondirecto.com more than doubled traffic and increased its advertising and e-commerce revenues.

FT Interactive Data, benefiting from the successful acquisition of Muller Data and subsequent merger with Data Broadcasting Corporation, enjoyed strong revenue and profit growth. FT Interactive Data streamlined its activities to focus on the institutional and retail businesses and, in the process, delivered earnings growth ahead of our expectations at the time of the merger.

FT Business had a strong year, with many of its leading financial titles delivering record revenues. Investors Chronicle grew its average sales by more than 20% to 75,000 copies and launched a new online service.

Joint ventures and associates

The Economist Group, in which Pearson has a 50% interest, had another excellent year and continued to invest in its two global brands, The Economist and CFO, both in print and online. Circulation at The Economist newspaper continued to grow with its worldwide circulation now averaging 762,000 copies, 5% higher than last year. The newspaper also benefited from strong advertising revenues. The CFO business also performed well and the international rollout of the CFO brand continues.

Profits from The Economist Group were more than offset by our share of the start-up costs of FT Deutschland, our joint venture with Gruner + Jahr. It reached a circulation of 66,000 just nine months after its launch and is running ahead of its advertising targets.

Business Day and Financial Mail, the South African titles in which we also own a 50% interest, maintained market share in a difficult economic environment. Average circulation at Business Day for the six months to the end of December was stable at approximately 44,000.