1. Pearson  interim results

2. Financial highlights £m 2002 half year 2001 half year change sales1,8131,876 - 3% operating profit 7660 + 27% pre-tax profit 26(28) adjusted earnings per share 0.5p(1.5)p dividend per share 9.1p8.7p + 5% CONTINUING OPERATIONS AFTER INTERNET ENTERPRISES; BEFORE INTEGRATION COSTS, GOODWILL AND NON-OPERATING ITEMS 2001 RESTATED FOR FRS19

3. Headlines  Earnings rebound on track  Competitive performances strong  Cash and returns a major focus

4. Pearson financial performance Pearson  financial performance

5. Financial priorities for 2002  Protect margins  Maintain balance sheet strength  Increase cash flow

6. Sales £m H1 2002 H1 2001 total growth underlying growth education1,0491,045 0% 0%0% ft group 370429 - 14% - 12% penguin394402 - 2% - 2% - 1% total sales 1,8131,876 - 3%

7. Operating profits £m H1 2002 H1 2001 total growth underlying growth education0(27)-- ft group 3850 - 24% - 26% penguin3837 + 3% + 3% + 1% continuing operations 7660 + 27% + 10% televisionsold33- operating profits 7693 - 18% + 10% BEFORE GOODWILL, INTEGRATION COSTS AND NON-OPERATING ITEMS

8. Operating profits £m H1 2002 H1 2001 variance headline growth education pearson education 2228 - 21% ftk(9)(12) + 25% internet(13)(43) + 30 + 70% total education 0(27) ft group news2556 - 31 - 55% idc3732 + 16% internet(24)(38) + 14 + 37% total ft group 3850 - 24% total penguin group 3837- + 3% total operating profit 7660 + 27%

9. Internet enterprises – losses 37 55 81 112 85 32 7 FT Group Education

10. Deferred taxation P&L impact 2002e2001 tax rate pre frs19 26%31% tax rate post frs19 34%34% ON ADJUSTED EARNINGS POST INTERNET ENTERPRISES

11. Adjusted earnings per share H1 2002 H1 2001 operating profit 7693 finance cost (50)(88) taxation(9)(2) profit (loss) after tax 173 minorities(13)(15) adjusted profit (loss) 4(12) adjusted earnings per share 0.5p(1.5)p dividend per share 9.1p8.7p 2001 RESTATED FOR FRS19

12. P&L £m H1 2002 H1 2001 operating profit (including TV for ’01) 7693 goodwill(182)(184) integration costs (5)(28) total operating (loss) / profit (111)(119) non-operating items 10(22) finance costs (87)(88) taxation(6)124 minorities(13)(13) (loss)/profit(207)(118)

13. Balance sheet £m H1 2002 H1 2001 intangible assets 3,9394,568 tangible assets 528557 operating working capital 1,1291,213 other net assets / (liabilities) (47)900 net trading assets 5,5497,238 shareholders’ funds 3,5094,299 deferred tax / provisions / minorities 8367 net debt 1,9572,872 capital employed 5,5497,238 2001 RESTATED FOR FRS19

14. Balance sheet – key ratios £m H1 2002 H1 2001 debt / equity 60%71% net debt / ebitda (rolling 12 months) * 3.94.1 interest cover (rolling 12 months) 3.42.9 * AFTER INTERNET ENTERPRISES

15. Cash flow £m H1 2002 H1 2001 operating profit 7660 working capital (269)(312) net tangible fixed assets (73)(98) depreciation6364 other movements (26)48 operating cash flow * (229)(238) tax paid (19)(28) finance charges (56)(79) free cash flow (304)(345) * CONTINUING OPERATIONS BEFORE INTEGRATION COSTS

16. Average annual working capital Pre-publication/ authors’ advances Inventory Receivables/payables Education Penguin FT by value 2002 by business 2002 100% £1.1bn

17. Average annual working capital Pre-publication/ authors’ advances Inventory Receivables/Payables £1,115m £1,098m 20012002 +£48m £(61)m £(4)m £(17)m

18. Progress on 2002 financial priorities  Protect margins –Lower cost base in all businesses offsets advertising downturn at profit line  Maintain balance sheet strength –Improvements on all key ratios  Increase cash flow –Good cash generation and reduced working capital

19. Pearson  First half performance  Management agenda  Full-year outlook

20. Business priorities for 2002  Secure earnings rebound  Drive performance in future years  Benefit from more cohesive company

21. 19%

22. Operating profits £m 2002 half year 2001 half year ft newspaper 732 les echos 615 recoletos1413 interactive data 3732 joint ventures and associates (3)(6) ft business 12 6288 internet enterprises (24)(38) total3850 h1 performance  management agenda  fy outlook

23. FT Newspaper Long term trends 878889909192939495969798990001 H1 02 worldwide circulation, 000s 1987 = 100 advertising revenues (at constant prices) advertising volumes 100 - - 0 - 100 - 200 - 300 - 400 - 500 0 -

24. FT display advertising volumes 2001 by category International business titles volumes, 4 months to April 2002 h1 performance  management agenda  fy outlook Technology- 40% Corporate finance- 37% Business to business- 35% Technology 29% Corporate finance 28% 15% 12% 16% B2B Personal finance Other SOURCE: CMR

25.  Manage the cost base  Build the FT’s reach and brand  Make online investments pay  Develop Interactive Data  Broaden into education and books h1 performance  management agenda  fy outlook

26. FT NEWSPAPER Index: H2 00 = 100 Manage the cost base h1 performance  management agenda  fy outlook circulation 469,000 circulation 486,000

27. SOURCE: ABC/ FT.COM FT.COM UNIQUE USERS 2.8m JAN 247,743 Build the FT’s reach and brand h1 performance  management agenda  fy outlook FT CIRCULATION six months to June (000’s)

28. h1 performance  management agenda  fy outlook Make online investments pay FT.com revenue sources subscriptions 5% content sales 45% advertising 50% content sales 15% advertising85% 2000 2002E

29. Develop Interactive Data  Subscription based ‘must-have’ premium services –fixed income as well as equities –95% renewal rates  Integration on plan  Set for double digit profit growth h1 performance  management agenda  fy outlook

30. Broaden into education and books  Linking up on campus  Creating new publishing franchises h1 performance  management agenda  fy outlook

31.  No sign of an advertising recovery  Benefits of a lower cost base  FT.com to meet breakeven target  Double digit growth at Interactive Data h1 performance  management agenda  fy outlook Outlook 2002

32. 19%

33. h1 performance  management agenda  fy outlook£m H1 2002 H1 2001 FY 2001 sales394402820 profit 383838383780 Operating results

34.  Work capital harder  Make Dorling Kindersley profitable  Sustain bestseller performance  Deliver back-office savings h1 performance  management agenda  fy outlook

35. Make DK profitable h1 performance  management agenda  fy outlook £m H1 2002 H1 2001 FY 2001 sales7166146 profit0(5)(7)

37. Deliver back office savings  Operating as one company in Australia and Canada  Combining back offices in US and UK h1 performance  management agenda  fy outlook

38. Outlook 2002  Revenue growth ahead of market  DK on track for 5% margin this year  Growth in double digits across Penguin h1 performance  management agenda  fy outlook

39. 14% 23% 11% 14% US School US College US Professional International

40. Sales£m 2002 half year 2001 half year underlying change us school 393430 - 8% us college 158139 + 15% us professional 232202 + 17% international242240 - 3% pearson education 1,0251,011 + 1% ft knowledge 2331 - 35% internet enterprises 13 - 52% 1,0491,0450% h1 performance  management agenda  fy outlook

41. International  Restore profitability in Latin America –$25m benefit in ’02  Capitalise on demand to learn English –good growth outside the US  Grow in College and School publishing –strong in Asia and Europe; very strong in Canada and Australia  Enlarge global testing business –UK, Canada and Australia the major priorities h1 performance  management agenda  fy outlook

42. US Professional  Protect margins in technology publishing –cost management sustains margins  Make corporate training profitable –losses falling in ’02  Expand certification contracts –sales up 20% at H1 –new testing centers open; more professions moving online  Exploit surge in federal testing and training –$150m in new contracts in ’02 –new opportunities in ’03 h1 performance  management agenda  fy outlook

43. US College  Keep growing market share –on track to outperform industry  Use technology to increase adoptions and sell-through –CourseCompass driving sales  Increase lead in custom publishing –20%+ growth is achievable h1 performance  management agenda  fy outlook

44. Our US School business  Basal & supplemental publishing  Testing & assessment  Software & online learning h1 performance  management agenda  fy outlook

45. Our US School business  Market growth through the cycle?  Market prospects for ’02 and ’03?  Our performance? h1 performance  management agenda  fy outlook

46. US School market 1981199119962001 Spending per student on instructional materials $34$49$51$69 $ per $1,000 of US School spending on instructional materials $7.4$8.7$9$11 sources: association of american publishers, us dept of education Standards movement drives school spending h1 performance  management agenda  fy outlook

47. US School market 2002 – 2003  The adoption cycle  Budgets under pressure  Education remains the #1 priority  Services that deliver results being protected: –curriculum –testing –assessment and learning tools h1 performance  management agenda  fy outlook

48. US School  Gain share profitably in publishing  Build on leadership in testing  Target early learning revenues  Make leadership in online learning pay h1 performance  management agenda  fy outlook

49. US School Gain share profitably in publishing – ’02  Match market growth in open territories  Stronger growth in supplemental publishing  35%+ share of adoption dollars competed for h1 performance  management agenda  fy outlook

50. SubjectOpportunity Market share secondary science $130m 35% + elementary reading $120m35% secondary literature $80m40% elementary / secondary math $40m25% secondary social studies $35m30% other$25m40% h1 performance  management agenda  fy outlook

51. US School Gain share profitably in publishing – ’03  More adoption opportunities  New federal funding  New markets h1 performance  management agenda  fy outlook

52. US School Extend leadership in testing  50% + share of $400m market  California contract renewed  Leadership in online testing extended  All set to meet doubling in demand over next five years h1 performance  management agenda  fy outlook

53. US School  Target Early Learning revenues –on track for double digit growth in ’02 –targeting new federal dollars in ’03  Make leadership in online learning pay –new products now launched –profitable in ’02; double-digit revenue growth in ’03 h1 performance  management agenda  fy outlook

55. Outlook 2002  3-5% underlying revenue growth  Margins maintained

56. Headlines  Earnings rebound on track  Competitive performances strong  Cash and returns a major focus