1. Pearson Citigroup Smith Barney Pearson  Citigroup Smith Barney 4th Annual European Media Conference 18 September 2003

2. School 27% Higher Education 18% Professional 19% FT Group 17% Penguin 19%

3. Financial priorities  Deliver steady earnings growth  Improve cash generation  Improve return on invested capital

4. Outlook 2003  Steady growth at Penguin, Higher Ed, IDC  Strong competitive performance in flat US School market  Professional affected by TSA; underlying business growing  Advertising and technology markets still tough; further cost actions

5. Looking ahead...  Steady growth in Penguin, Higher Ed, IDC  Slow adoption year in ’04; strong rebound in ’05/ ’06  School operations benefit from No Child Left Behind  Business newspapers highly geared to ad recovery

6. Our agenda  Attractive markets  Leading positions  Efficiency gains

7.  IDC counters ad cycle in business information  0-3% growth in consumer publishing –Faster growth in niche categories  5-7% growth in K-16 publishing –Faster growth in testing, software, ELT Attractive markets

8. FY ’03 FY ’04 TRAINING$384m$390m DATA ANALYSIS $384m$385m READING FIRST $994m$1,005m TEACHER PROFESSIONAL DEVELOPMENT $2,930m$2,850m US School: No Child Left Behind

10. Attractive markets  Rising demand for English as a 2 nd language  Surge in Federal government testing and training  Trend to customisation  Growth in children’s publishing

11. Higher Education: growth in custom Sales $m

14. Our agenda  Attractive markets  Leading positions  Efficiency gains

15. Leading positions #1 in K-16 education publishing #1 or #2 in English language markets worldwide #1 in education testing & software #1 in international education The leading international and national business newspapers

16. US School: #1 in new adoptions subject opportunity (est) market share (est) secondary social studies $200m23% secondary literature $110m 40% + elementary social studies $100m58% elementary reading $80m 30% + total competed for $585m35% total – all adoptions $690m30%

17. % change in Higher Ed gross sales vs. prior year US College: still beating the market SOURCE: MANAGEMENT PRACTICE DATA +8.6% +0.3%

19. UK Europe Asia USA The FT’s international expansion Circulation ’000s 332 353 414 467 478 459 302

24. Our agenda  Attractive markets  Leading positions  Efficiency gains

25.  Managing costs aggressively  Driving down working capital  Integrating Pearson Education and Penguin Efficiency gains

26. The world’s largest book company Source: annual reports, analyst reports Note: 2001 median GBP / USD exchange rate = 1.45 Estimated 2001 book revenues ($m) Harcourt / Reed News Corp (Harper Collins) Holtzbrinck Scholastic Bertelsmann McGraw Hill Pearson Houghton Mifflin

27.  Attractive markets  Leading positions  Efficiency gains... to deliver steady annual progress in earnings, cash and returns