The Thomson Transformation: Remaking a Global 500 Company: The Thomson Transformation: Remaking a Global 500 Company David Turner Senior Vice President, Finance The Thomson Corporation February 28 2006


Slide2: Learning $2.3 Billion Snapshop - The Thomson Corporation 8,200 Employees 22 Countries 17,250 Employees 22 Countries 4,300 Employees 19 Countries 9,800 Employees 40 Countries Financial $1.9 Billion Legal & Regulatory $3.5 Billion Scientific & Healthcare $1.0 Billion Operate in 4 Key Markets Serve an Estimated $80+ Billion Global Market and Growing $8.7 Billion Revenue in 2005 $22 Billion Market Capitalization


Agenda: Agenda “Confronting Reality” - catalyst for change Transforming an industry leader Maintaining the edge


Confronting Reality – Aviation: Confronting Reality – Aviation Eclipse


Confronting Reality – Telephone: Confronting Reality – Telephone


Confronting Reality - Thomson: Confronting Reality - Thomson The Time: 1997 The Parent Company: $8.8 billion Canada-based holding company 3 major holdings in late ’90s Newspapers Leisure Travel Professional Publishing


Thomson Newspapers: Thomson Newspapers Revenues of $1 billion Primarily regional newspapers Fastest growing chain in North America 2nd most profitable Revenues primarily from advertising Category killers and the Internet emerging as threats


Thomson Travel: Thomson Travel Approx. 1/3 of parent company revenues Holiday packages, airline, travel shops Market leader in the UK Low margin, high volume business People-intense Price inelastic


Thomson Professional Publishing: Thomson Professional Publishing Approx. 1/2 of parent company revenues Mixed bag of print publications, with some electronic add-ons Wide range of products Textbooks Industrial publications Journals for legal, healthcare and education professionals Market trends Knowledge worker economy Shift from print to electronic


1997 Portfolio: 1997 Portfolio Revenues $8.8B EBITDA $1.6B Margin 18.5% Thomson Newspapers 10% Thomson Travel Group 33% Legal & Regulatory 23% Learning 13% Financial 13% Scientific & Healthcare 8%


Agenda: Agenda “Confronting Reality” - catalyst for change Transforming an industry leader Maintaining the edge


Where Was the Value in 1997?: Where Was the Value in 1997? Content was King Content


Where’s the Value Today?: Where’s the Value Today? Content Platform Components of a Workflow Solution Workflow Solutions & Analytics From informing decisions to enabling actions


Thomson Vision: Thomson Vision Workflow Solutions + + Information Publishing Industry Information Services Industry


Slide15: Thomson’s Response Divested $8B in non-strategic operations Sold Thomson Travel and Thomson Newspapers Spent $12B in acquisitions to build scale in information publishing Accelerated shift from print to electronic to solutions


Priorities During Transformation: Priorities During Transformation Redefine business models Align to create four strategic market groups Integrate acquisitions Build infrastructure (back-office) Reframe markets Manage talent


Organizational Alignment:Operating Mechanism for Change: Organizational Alignment: Operating Mechanism for Change


Front-End Customer Strategy: Front-End Customer Strategy


Looking back -: Looking back - Talent management Identifying skillset required Education and re-training across the organization Common systems / platforms Identifying change fatigue Correcting your mistakes


Transformation of Portfolio: Transformation of Portfolio 1997 2005 Legal & Regulatory 40% Learning 26% Financial 22% Revenues $8.7B EBITDA $2.4B Margin 27.5% Revenues $8.8B EBITDA $1.6B Margin 18.5% Thomson Newspapers 10% Scientific & Healthcare 12% Thomson Travel Group 33% Legal & Regulatory 23% Learning 13% Financial 13% Scientific & Healthcare 8%


Agenda: Agenda “Confronting Reality” - catalyst for change Transforming an industry leader Maintaining the edge


Competitive Landscape: Competitive Landscape Content Platform Workflow Solutions & Analytics


Maintaining the edge: Maintaining the edge Avoid complacency Anticipate market dynamics Customer-driven innovation


Innovate Across the Business: Innovate Across the Business Finance Process Offering Delivery Business Model Networking Enabling Process Core Process Product Performance Product System Service Channel Brand Customer Experience Source: DOBLIN Inc.


Most Companies Invest in Product Innovation: Most Companies Invest in Product Innovation Finance Process Offering Delivery Business Model Networking Core Process Product Performance Product System Service Channel Brand Customer Experience Source: DOBLIN Inc. Enabling Process


Shift in Source of Value Creation: Shift in Source of Value Creation Finance Process Offering Delivery Business Model Networking Enabling Process Core Process Product Performance Product System Service Channel Brand Customer Experience Source: DOBLIN Inc.


Key Success Factors Going Forward: Key Success Factors Going Forward Reframing markets, front-end customer strategy, innovation, and the ability to re-invent business models must be core competencies.


The Thomson Transformation: Remaking a Global 500 Company: The Thomson Transformation: Remaking a Global 500 Company David Turner Senior Vice President, Finance The Thomson Corporation February 28 2006