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Professional publishers A selective approach

Professional publishers A selective approach. Sami Kassab Andrea Beneventi Adrien de Saint Hilaire Direct Tel.: +44 (0) 20 7039 9448 Mobile Tel + 44 779 55 28 365 Sami.kassab@exanebnpparibas.com. October 2009. Sami Kassab Charles Bedouelle

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Professional publishers A selective approach

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  1. Professional publishersA selective approach Sami Kassab Andrea Beneventi Adrien de Saint Hilaire Direct Tel.: +44 (0) 20 7039 9448Mobile Tel + 44 779 55 28 365Sami.kassab@exanebnpparibas.com October 2009

  2. Sami Kassab Charles Bedouelle Team Head Ad agencies, conglomerates, broadcasting +44 207 039 9448 +33 207 039 9482 sami.kassab@exanebnpparibas.com charles.bedouelle@exanebnpparibas.com Andrea Beneventi Adrien de Saint Hilaire Publishing Publishing +44 207 039 9509 +44 207 039 9499 andrea.beneventi@exanebnpparibas.com adrien.de_saint_hilaire@exanebnpparibas.com Media team

  3. What has changed in our sub-sector view following H109 results? Change in segment outlook post H109 results

  4. Industry analysis Late cyclical pressure on scientific information Go long Tax, short US Legal Cost efficiency programs to accelerate

  5. Late-cyclical pressure on scientific, technical and medical (STM) Chg. in US research libraries materials spending • Consensus expects ongoing growth in US research libraries materials budgets • We disagree • Library content spending has declined in the past • -10% in the Great Depression and WWII • Consensus expects growth in 2009 and 2010 • Large universities have seen several years of decline in recent past • Library budgets under strong pressure due to: • decline in state budgets and • universities endowments • Total endowments to US universities down 25-30% in FY2009 Source: Gerould, ARL, Exane BNP Paribas estimates Years with decline in library materials budgets Source: nabuco.org, Exane BNP Paribas estimates

  6. More negative view on academic library market in 2010 • We have conducted a proprietary survey with the support of Yale University to find that • Over 80% of academic libraries expect decline in content spending in next 18 months • Yale and Harvard at -10% and -15% in FY10 • Books and databases appear more at risk compared to journals • Our contacts with ARL and ICOLC (library associations) show academic library budgets under unprecedented pressure • ‘it may not be uncommon for consortia budgets to decline by double digits year over year’ • ‘cuts will be prolonged’ • ‘Most member libraries are preparing cancellations of ongoing commitments for 2010’ • We exepect US library materials spending to fall by 4% in the US and 2% globally. • Consensus expectations of 3% revenue growth for Elsevier, Wiley, Informa is too high, in our view Expected decline in library materials budget for FY10 among 50 US libraries Main area of expected cuts Source: Exane BNP Paribas estimates

  7. Reed & Informa are most exposed to libraries Reed Elsevier’s STM revenues are likely to decline in FY10. Consensus expects growth Informa has been less agressive on pushing for multi-year contracts and is more expensive Exane is below consenus expectations for 2010 underlying revenue growth Short term catalysts: bad news from renewal cycle from August to October 2009 Long term: growth of Open Access is still an issue Source: Exane BNP Paribas estimates Cutting our forecasts for STM information publishers for 2010 Publisher’s exposure to STM, 2009e Number of Open Access Mandates worldwide STM revenue growth forecasts for FY2010 Source: Exane BNP Paribas estimates

  8. What publisher is most at risk? Average STM subscription length • Average of contract length varies across publishers • Informa’s average subscription length of less than 2 years • Reed Elsevier above 3 years with less renewals in 2010 than in 2009 than in 2008 • Size of product portfolio as a driver of market shares • We expect publishers with large product mix to take market shares away from smaller publishers • Increased bundling • Elsevier aggressively bundling primary and secondary content? • Price per citation and price per article analysis shows wide discrepancy between publishers • Within commercial publishers, Elsevier offers an attractive price per citation mix • Informa’s mix is least attractive STM journal prices per citation and article (USD) Source: journalprices.com, Exane estimates

  9. Deteriorating revenue trends in exhibitions and B2B magazines When do you believe that the global exhibition industry’s economic recovery will begin? • Exhibitions are sensitive to economic conditions • Deteriorating trends since beginning of the year 2009 • Our tracking of 60 exhibitions shows general decline in exhibitors, visitors and net square space • Recent survey of 180 trade show organisers suggest over 50% expect industry recovery by 2010 • Tentative signs of improvement in H209 • Deteriorating trends in B2B Magazines in the US, UK and Continental Europe • Revenue growth unlikely to return in 2010 Exhibitor’s percentage change at Reed Exhibitions in 2009 vs. 2008 Source: UFI, Exane BNP Paribas estimates

  10. Growing pressure in US legal information market • US Law firms KPI kept deteriorating in Q209 • Hildebrandt PMI score at 44 • Legal jobs in the US down 2.5% in July, -2% ytd • US legal information budget under pressure • 70% of law librarians have experienced budget cuts • Cuts in duplicated materials likely • Overhead expenses (incl. Legal information budgets) down 5% in Q209 • Traditional marketing expenditures under pressure • Reed Elsevier’s Martindale Hubbell revenues down 29% but Thomson Reuters Findlaw.com revenues are up • LexisNexis suffers from business news segment. Thomson Reuters exited the segment last year Cuts in US Corporate and Academic law library budgets Change in US law firms KPI Source: Hildebrandt, LLB, Exane

  11. Westlaw vs. LexisNexis • Westlaw vs. LexisNexis • Stanford Law School survey suggests preference for Westlaw • West is more exposed than LexisNexis to counter-cyclical trends in law schools • Intention to cancel duplicate subscriptions has increased • American Lawyer survey of September 2009 suggests 31% (vs. 15% in 2008) intended to cancel duplicate subscriptions • Increasing investments to compress margins at LexisNexis and Westlaw • Westlaw to roll out a new front-end interface • Forces LexisNexis to increase investments as well (dedicated sales force at MH, front interface) Nb of law firm responses to ‘if you had to choose one legal research platform…’ Source: Stanford Law School 2008, Exane BNP Paribas estimates Are cancellations of duplicate subscriptions likely? Source: LLB April 2009, American Lawyer Sepy. 09, Exane estimates

  12. Wolters Kluwer to strike back on US tax & accounting • Wolters Kluwer is the most exposed player on the regulatory information • Tax, accounting, compliance activity is likely to increase in the US and Europe • Thomson Reuters has outpaced Wolters Kluwer over the past years but... • Due to higher investments in a better online product • ...Wolters Kluwer has launched a new tax research platform, Intelliconnect • Potential market shares gains not factored in Tax & accounting contributions to group revenues, 2009e Tax & accounting underlying revenue growth Source: Exane BNP Paribas estimates

  13. Education: solid fundamentals in Higher Ed. – strong pressure in US School Applications growth in sample of US universities to 2009-10 academic year • University textbooks: one of the best media segments • Enrolment growth sustained by rise in applications to universities and to the GMAT • Price increase in college textbooks still ongoing • School textbooks: state budgets under pressure • Brighter picture for 2010 • Rebound in new textbook adoptions • Texas rather than California is the key state in 2009 • ARRA funds available • Pent-up demand from postponements States textbook budgets are under pressure Source: Universities, Exane BNP Paribas estimates

  14. Market data terminals under pressure IDC affected by acceleration of decline in hedge fund creations Resilience of terminal business (Reuters 3000 Xtra at Thomson Reuters in Q4 08) We expect through of the cancellation cycle to be reached in H1 09 Potential for growth in 2009 Regulatory and technological changes Acceleration of buy vs. build for banking IT systems in large financial firms Picking up of the mortgage activity Roll out of a new Thomson Reuters terminal in H2 09 Financial Information: speck of gold amid the ashes Number of layoffs in banking and broking Yoy variation of mortgage applications in the US Source: Mortgage bankers association, Bloomberg, Exane BNP Paribas estimates

  15. Major cost savings opportunities ahead for the industry Breakdown of offshorable editorial costs • Off-shoring: a major trend for professional publishers • 50% of the editorial work of professional publishers offers potential for offshoring • Indexing, typesetting, abstracting, hyper text linking, file conversions are « offshorable » process • Related on-shored costs accounts for c. 5% of professional publishers’ divisional revenues • Cost savings of 50 to 70% on onshore costs Number of employees offshore Source: Exane BNP Paribas estimates

  16. Major cost savings opportunities ahead for the industry Monthly storage cost of one gigabyte • We expect further IT rationalisation • as back office integration of IT and publishing systems has often been poor • LexisNexis could save up to GBP15m (40bps) of adjusted operating margins if it were to move storage to a cloud architecture • Benefits from the consolidation of dispersed data centres • Limited execution risk • current management have been able to over-deliver on prior cost-savings plan Number of current data centres and consolidation plans Source: UC Berkeley, Exane BNP Paribas estimates

  17. Who will benefit more from cost saving? Cumulative cost efficiency benefits • Wolters Kluwer and Thomson Reuters are to post the strongest operating margin improvements over 2009-11 • Benefits from cost efficiency programmes with control on top-line pressure • Informa to suffer the most among peer group • Lack of a wide-reaching cost efficiency plan • Top-line pressure on its cyclical PI and Events business with slowdown on Academic and Scientific revenue growth Change in group operating margins 2008-2011e (bps) Source: Exane BNP Paribas estimates

  18. Investment cases

  19. United Business Media Hidden Jewels Outperform, TP GBp650 Sami Kassab Andrea Beneventi Direct Tel.: +44 (0) 20 7039 9448 Direct Tel: +44 (0) 20 7039 9509 Mobile Tel + 44 779 55 28 365 andrea.beneventi@exanebnpparibas.com Sami.kassab@exanebnpparibas.com

  20. Investment case: Hidden JewelsOutperform UBM’s change of status is overlooked: asset mix shifting from structurally declining media into structurally strong events, press releases and databases (80% of total revenues) Cyclical exposure (80% of the mix) is not fully priced in as consensus seem to overestimate the late cyclicality of the business UBM is now trading on historic and relative lows on 8.3x EBITA09e, 14% below professional publishers despite a 12% FCF yield, 8% EPS CAGR between 2009e and 2012e and 6% dividend yield 1 2 3 • UBM’s cyclical upside and improved asset mix still forgotten by the market

  21. Asset mix has improved into growing events, press releases and databases UBM revenue mix over time (% of total) • In the last few years, UBM has aggressively sold out from structurally weak areas of: • Newspapers (The Express, sold in 2000) • Free-to-air TV (Channel Five, sold in 2005) • B2B magazines (from 46% of total revenues in 2005 to 20% in 2009) • … and reallocated capital into the structurally growing businesses of: • Events c. 35% of group revenues, 50% of EBIT • Professional databases (medical, trade, semicon) • Online verticals • With only 1.2x net debt/EBITDA, UBM should be able to capitalise on a revival of M&A activity • China Optoelectronic Expo (Aug-09) • Iasist clinical monitoring, Spain, EUR6m (Jul-09) • Management has a good track record on acquisitions and is incentivised on relative share price performance Revenues by region, 2009e Sources: UBM, Exane BNP Paribas estimates

  22. Cyclical improvement in Events and Databases not yet priced in When do you believe that the global exhibition industry’s economic recovery will begin? • We believe consensus overestimates the late cyclicality of several key revenue streams • Consensus expects flat to declining Events revenues in FY10. We disagree due to: • Geographic mix of Events revenues • Tracking of Asian events show strong performance in H209 • Recently published survey by trade body suggests industry participants expect recovery in 2010 • Stronger exposure to cyclical improvement in Data & Services business in FY10 (online advertising, customised research work) Geographical split of UBM Events’ revenues ’09e Sources: UFI, Exane BNP Paribas estimates

  23. Press releases: gaining market share, better product mix, geared to the US recovery Est. chg. in press releases volumes 2009 • UBM’s is regaining market share • UBM volumes trends suggest PR Newswire is gaining market share on BusinessWire • Exit of smaller players with poorer competitive positioning (M2 Presswire) likely to benefit UBM • Improving the revenue mix • Proprietary tracking shows multimedia releases volumes (video, photo) doubled vs.2008 • Cyclical upside: historically high correlation with US GDP. We forecast a return to 2% growth in 2010 versus -10% in 2009 • Thomson Reuters buys Hugin on a 45% premium on our PR Newswire valuation, underlying the attractiveness of the news wiring business US GDP vs. PR Newswire growth Sources: UBM, Factiva, IMF,Exane BNP Paribas estimates

  24. Valuation versus history: 25% below the index despite structural improvement, cyclical exposure • The stock trades at a discount to the market in terms of Forward PE despite the improvement in the asset mix… • Which suggests an improved growth profile from an average 1% organic revenue growth over last 10 years to a 2-3% expected for 2010-11 • …and despite the cyclical upside. • Our valuation implies a P/E 2011 of 10.5x at target. UBM 12m forward consensus P/E relative to FTSE 250 FactSet, Exane BNP Paribas estimates

  25. Key catalysts ahead Negative catalysts Positive catalysts Short term Long term Bull-bear case analysis, fair value per share and upside Swine flu pandemic (10%of tradeshows cancelled in 2010) -5% press release volumes in 2010 15% op. margins on magazines by 2011 +5% press release volumes in 2010 Further -5% decline in advertising +5% Events revenues in 2010 Base case 474p 3% Upside 636p 39% Upside 650p 40% Upside 693p 50% upside 723p 56% upside 759p 64% upside 590p 29% Upside

  26. UNITED BUSINESS MEDIA (Outperform)Publishing | Media (Neutral) - United Kingdom

  27. Performance Improvement 18% Publishing 47% Events 35% INFORMA AT A GLANCE16 April – Now: Underperform11 September 2008 – 16 April 2009: NeutralJune 2007 – September 2008: Outperform Pro Forma revenue breakdown per division 2009e Pro Forma Adj. profit per division 2009e Breakdown of turnover by revenue stream Geographic Revenue Breakdown in 2008 Source: Company, Exane BNP Paribas

  28. Informa: Late cyclical pressure in STM Average STM subscription length • Recent share price rallye driven by relief on balance sheet pressure • But we now have a more cautious view on Scientific information • Library budgets pressure to put pressure on subscription renewals and one-off purchases from August 2009 • Informa less aggressive than peers in pushing multi-year contracts • Informa’s STM articles are more expensive than peers • Late-cyclicality of Events not fully priced in • Exhibitors’ space for H109 has been booked before the worsening of the downturn • Proprietary tracking suggests worsening trends in the Events business • Balance sheet shows dividend pressure • We are now assuming no final dividend for FY09 in order to avoid a covenant breach in FY10 vs. consensus of around 10-12p per share • Catalysts and risks • Informa currently trades on EV/EBIT09 of 8x, in line with peers despite higher cyclicality and balance sheet risk • Key negative catalysts: earnings downgrades on FY10 forecasts • Key risk: higher-than-expected cost savings to protect balance sheet STM journal prices per citation and article (USD) Source: journalprices.com, Exane estimates

  29. Most cyclical exposure within peers • Events business likely to suffer in 2009 • 45% of group revenues are late cyclical • Small conferences at risk • Growth in Dubai only likely to mitigate decline in European and financial events • Sponsorship revenues to large events under growing pressure • PI organic revenue decline likely to accelerate in FY09 • Management taking aggressive cost control measures • Capex cut by 50% • Reduction in variable costs • GBP35m cost savings plan (c.2.6% of revs.) Percentage of cyclically exposed revenues Events revenue breakdown Source: Company, Exane BNP Paribas

  30. INFORMA (Underperform)Publishing | Media (Neutral) - United Kingdom

  31. PEARSON AT A GLANCE28 July 2009 – Present: Outperform16 April 2009 – 27 July 2009: Neutral11 March 2008 – 16 April 2009: OutperformFeb. 2005 – 11 March 2008: Neutral Operating cost breakdown (as % of revs.) Geographic breakdown of revenues Source: Company, Exane BNP Paribas

  32. A solid asset mix within Media companies Publishers’s exposure by client type, 2008 • A solid asset mix • No major structural challenges • Little exposure to advertising revenues • Good pricing power • A solid balance sheet • With a favourable exposure to defensive client types • Strongest exposure to student market through textbooks • Non-discretionary spending • Little exposure to corporate budgets • Exposure to politically sensitive school funding segment Divisional breakdown of adj. op. profit 2008e Source: Exane BNP Paribas estimates

  33. Exane vs. consensus EPS10e Market share gains in US School Source: FactSet, Exane BNP Paribas estimates Source: Exane BNP Paribas estimates Further consensus upgrades likely • Despite strong share price reaction on Q209 results, we see further 25% upside • We are 9% ahead of consensus • We see improving operating trends in areas of weaknesses • Rebound in new US school textbook adoption market in 2010 confirmed by contact with Texas Education Agency • Impact of Obama stimulus plan revised upwards for 2010 • Penguin to benefit from restocking activity in H209-2010 • While areas of strength are powering ahead of expectations • Market share gains greater than anticipated • Higher Education too remain very strong in H209-2010 • International Education to remain strong as underpinned by discussion with privately-held competitors of Pearson

  34. Blue sky scenario vs. base case Pearson one-year forward PE Source: Exane BNP Paribas estimates Source: Exane BNP Paribas estimates Economic recovery not yet priced in • Unlike other media stocks, Pearson share price is not pricing in any economic recovery • Blue sky scenario suggests 13% upside to DCF • with a recovery in FT advertising revenues and book retail sales in 2010 and improvement in state budgets in 2011 • Stock continues to trade on historic lows in terms of forward PE despite: • Evidence of lower cyclicality than in 2000 • Evidence of innovation and competition leadership • Likely improvement in growth fundamentals

  35. Sustainable competitive advantage drives market share gains PSON market share in US Higher Ed. • Market share gains in Education • Pearson has been consistently gaining market shares in: • US higher education, • UK school and higher ed, • US testing • Global professional certification • And at the FT group and Penguin • FT and The Economist show growth in print circulation in 2008 • Increase in number of Penguin bestsellers • Three drivers of sustainable competitive advantage • Technology lead in Education • Strong balance sheet vs. over-leveraged competitors • Access to quality content Penetration rate of digital textbooks among publishers Source: Exane BNP Paribas estimates * Number digital textbooks published divided by total number of textbooks on US Higher Ed. Market

  36. Attractive exposure to counter cyclical trends in Higher Education • Higher Education shows historical counter-cyclical trends • c30% of group operating profit • University enrolment increase when the job market tightens • Growth in the number of applicants for freshman year • Own analysis of applications to 2009/10 academic year show strong growth • Applications for academic year starting September 2009 is up 8% in the UK, the biggest rise in 8 years • Pricing power remains • US PPI shows college textbook prices up 9% yoy in March. Stable trends • Expect consensus of +3% to revise up to our +5% in FY09 US real GDP vs. University enrolment growth Source: NCES, Exane BNP Paribas estimates

  37. Secular growth of emerging markets (12% of revs.) Rise in secondary and university education enrolment rates Rise in English language learning due to globalisation By 2018, there will be more English speakers in China than anywhere else in the world Pearson tapping into USD1.9bn Chinese market for English language service. Now #2. Move into the global English language certification (TOEFL) market Successful bid for UK SAT contract (c. GBP28m annual revenues) 2009 underlying revenue growth raised from 6% to 7% Good exposure to International Education assets University education enrolment rates 1991-Now Pearson International Education revenues Source: OECD, company, Exane BNP Paribas estimates

  38. US School to improve in 2010 Change in state textbook budgets • US School textbook account for an est. 14% of group EBIT (vs. 20% in 2002) • Most states show major budget gaps for FY09/10 • But Pearson is gaining market share in US school • A more positive view of 2010 driven by: • Rebound in new textbook adoptions from USD500 to USD900m • c.+13% impact offset by assumptions of 10% decline in open territories • Texas rather than California is the key adoption state in 2010 • ARRA funds available (positive impact on Pearson School software unit) • Pent-up demand from 2008-2009 postponements • Pearson New adoption participation rate to increase from 89% to 94% • We forecast Pearson North American School to grow 6% (vs. -4% in 2009e) Texas instructional materials & IS budget

  39. New adoption calendar 2009-2011e

  40. c.$98 billion Obama Stimulus Plan for US Education Indirect exposure for Pearson Direct exposure for Pearson $15.6 bn to increase grant threshold from by $500 from $4,850 to $5,350, sustaining enrollment growth $650 million to modernize classrooms, including computer, science labs and teacher technology training. $250 million to design and develop data systems to analyze individual student data and to provide teachers effective tools. $10 bn in Title I Fund, that can be partly used to purchase of textbooks $65bn stabilization fund to reduce local school districts spending cuts (incl. IDEA) $100 million to improve instruction in science, math and engineering. Pearson Exposure: Professional development Impact from the new US administration: more in 2010 than in 2009 Source: www.nacsl.org, www.ed.gov, Exane BNP Paribas estimates

  41. Penguin accounts for 13% of group EBIT Destocking activity has hurt the US market in H1 but Borders mentions restocking Penguin CEO talks about restocking Destocking started in Q408 US book retail market likely to be down 2-4% Structural decline of trade reference publishing (dictionnaries, travel guides) We estimate it accounts between 10 and 15% of Penguin revenues Long term favourable margin impact from the migration to ebooks Trade book publishing to benefit from restocking US Household spending on books 1930-2005 Kindle vs. print book publishing profitability Source: Exane BNP Paribas estimates

  42. FT Group improving the mix • FT publishing is diversifying away pressure points • Disposals of non global brands • Investment in ft.com drives a trebling of visitors while print circulation declined 10% • Exploiting pricing power and geographic opportunities to offset an expected 25% decline in FT advertising revenues in FY09 • IDC: cutting top line guidance • Independent asset valuation services have seen surge in demand • But pression on renewals and new sales activity led management to cut underlying revenue growth guidance for FY09 (profit guidance unchanged) Trends in the number of UMV at ft.com Change in global FT print circulation Source: ABC, Exane BNP Paribas estimates

  43. PEARSON (Outperform)Publishing | Media (Neutral) - United Kingdom

  44. Rest of World 8% Rest of Europe 12% The Netherlands 10% North America 56% UK 14% REED ELSEVIER AT A GLANCE11 September 2008 – Now: Underperform11 March 2008 –September 2008: NeutralOct. 2004 – March 2008 : Underperform Pro Forma revenue breakdown per division 2009e Pro Forma Adj. profit per division 2008e Operating cost as % of revs. Geographic revenue breakdown 2008 Source: Company, Exane BNP Paribas

  45. Dead money for a while • Bearish outlook from new CEO leads to capital increase • Surprise move given CDS of 35bps, but removes refinancing risks • LexisNexis top line and margin guidance has been revised down • Exhibition and RBI below expectations • Stock likely to remain dead money until • Communication of new investment budget (Autumn 2009) • Clarification of 2010 trends (subscription renewals trends in Q3 and Q409) • Positive catalyst from disposal of RBI US titles • We close shorts but prefer Pearson or Wolters Kluwer • Pearson is gaining market shares while LexisNexis is under pressure • Wolters Kluwer also benefits from cost efficiency gains, reaffirmed outlook and is less expensive

  46. LexisNexis: into a new investment phase? Peer Monitor Index vs. legal information organic revenue growth • A difficult market environment • Westlaw, reported below-expectation Q1 09 organic revenue growth (+2%), guided on further slowdown • Further deterioration of law firms environment in Q109 • LexisNexis faces increased competitive pressure • Thomson Reuters is gaining share on Lexis Nexis • Librarian preferences for Thomson West are at a record high • Structural pressure in directories and news aggregation business • Cost saving opportunities to be largely reinvested • We believe cost effeciency programme likely to be reinvested in the product mix • We have cut our op. margins by 70bps and stand below consensus Source: Hildebrandt, Exane BNP Paribas estimates Exane BNP Paribas vs. consensus legal margins expectations Source: Exane BNP Paribas estimates

  47. Nb. Of open access mandates Source: Roarmap, Exane BNP Paribas estimates Scientific publishing likely to decline due to late cyclical pressure 2010 price increases to journal subscriptions • 2010 top line at risk • 2009 to benefit from late cyclicality but 2010 revenues likely to decline due to library budget pressure • Small competitors have announced flat to declining prices for 2010 • Springer has announced 5% price increases for 2010 • Consensus still likely to come down (+3% vs. -1%) • Past 2010 pricing power unlikely to return • Price increases have driven 80% + of historic top line growth of STM publishing revenues • 2010 pricing pressure likely to persist due to long term nature of scientific journal subscriptions • Growth in open access mandates adds to long term pricing pressure. New bill introduced to US congress could accelerate the shift • Proprietary contacts with managers of scientific publishers suggests lower price increases than before.

  48. Number of classified ads on totaljobs.com Source: Exane BNP Paribas estimates RBI and Reed Exhibitions under cyclical pressure Y-o-y decline in nb. of exhibitors at Reed Exhibitions • Deterioration in Reed Exhibitions went through difficult months of May and June • Only broker on the street to have a monthly tracking of exhibitor and visitor numbers to Reed Exhibitions • Trends have deteriorated with a double digit decline in exhibitors in May & June • Consensus is too optimistic (-16% vs. -10% for FY09) • Ongoing weakness to persist at RBI • More negative view of RBI online (job classified advertising) • Cautious view from CEO • Additional disposal and closure of print titles likely • High operating leverage likely to put pressure on margins

  49. REED ELSEVIER PLC (Underperform)Publishing | Media (Neutral) - United Kingdom

  50. THOMSON REUTERS AT A GLANCE24 October 2008 – Now: Neutral11 September 2008 – 24 October 2008: Outperform11 March 2008 – September 2008: Underperform June 2007 – March 2008: Outperform Thomson-Reuters pro forma revenue breakdown 2009e Thomson-Reuters pro forma adj. EBIT breakdown 2009e Breakdown of 2008 revenues by currency Source: Company, Exane BNP Paribas

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