1. Pearson 2001 results presentation Pearson  2001 results presentation Monday 4 March 2002

2. Financial highlights £m20012000 sales4,2253,689 + 15% operating profit 426414 + 3% pre-tax profit 294333 - 12% adjusted earnings per share 22.5p31.9p - 29% dividend per share 22.3p21.4p + 4% CONTINUING OPERATIONS BEFORE GOODWILL AND EXCEPTIONAL ITEMS

3.  Advertising was the main reason for profit downturn – Ad related profits down by £116m  Other businesses did well  Earnings will rebound in 2002 – whether the economy does or not Headlines

4. Pearson financial performance Pearson  financial performance

5.  Costs cut  Acquisitions integrated  Balance sheet strengthened  Working capital contained Actions to address economic downturn

6. Sales £m20012000 total growth underlying growth education2,5962,087 +24% +24% + 1% ft group 750802 - 6% - 7% penguin820755 +9% +9%+3% internet enterprises 5945 + 31% + 27% continuing operations 4,2253,689 + 15% 0%

7. Operating profits £m20012000 total growth underlying growth education351320 + 10% - 5% ft group 132211 - 37% - 31% penguin8079 + 1% + 6% internet enterprises (137)(196) + 30% + 33% continuing operations 426414 + 3% - 2% tv/lazard3776 - 51% 463490 - 6% BEFORE GOODWILL AND EXCEPTIONAL ITEMS

8. P&L £m20012000 operating profit 463490 goodwill(443)(239) integration costs (74)(40) total operating (loss) / profit (54)211 non-operating items (123)254 (loss) / profit before interest (177)465 finance costs (169)(181) amounts written off investments (92)-- (loss) / profit before tax (438)284

9. Dividend per share (p) 20012000 adjusted earnings 22.5p31.9p dividend22.3p21.4p earnings cover 1.0x1.5x cash cover 1.1x0.9x

10. Capital base £m pro forma inc RTL disposal 31 Dec 2001 31 Dec 2000 intangible assets 4,2614,2614,522 tangible assets 542542524 working capital 894894853 other net assets/(liabilities) (75)690877 net trading assets 5,6226,3876,776 shareholder’s funds 3,7423,5884,044 provisions / minorities 420420431 net debt 1,4612,3792,301 capital employed 5,6226,3876,776

11. Priorities for 2002  Protect margins  Maintain balance sheet strength  Improve cash flow

12. Pearson performance and priorities Pearson  performance and priorities

13. Leading in good markets Sharing assets, process and culture Driving performance

14. The leading source of international business news, analysis and data 19%

15.  Continue to develop Interactive Data  Build the FT’s reach and brand  Manage the cost base  Make online investments pay  Broaden into education and books f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a

16.  Continue to develop Interactive Data   Build the FT’s reach and brand   Manage the cost base   Make online investments pay   Broaden into education and books

17. P R O F I T (£M)  Benefit from acquisitions  Re-engineer processes  Move into real time f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  develop interactive data

18. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Continue to develop Interactive Data  Build the FT’s reach and brand   Manage the cost base   Make online investments pay   Broaden into education and books

19. SOURCE: ABC F T Y E A R E N D C I R C U L A T I O N (000’s) f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  build the ft’s reach and brand

20. SOURCE: ABC/ FT.COM F T. C O M Unique monthly users 2.7 m 0.2m JAN 99 JAN 00 JAN 02 JAN 01 f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  build the ft’s reach and brand

21. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Continue to develop Interactive Data   Build the FT’s reach and brand  Manage the cost base   Make online investments pay   Broaden into education and books

22. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  manage the cost base   Newspaper costs 15% lower   FT.com costs 35% lower   Not banking on recovery

23. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Continue to develop Interactive Data   Build the FT’s reach and brand   Manage the cost base  Make online investments pay   Broaden into education and books

24. L O S S (£M) f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  make online investment pay

25. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a subscriptions 10% services 15% syndication 25% advertising 50% services 15% advertising85% syndication 26% advertising 60% services 14% 20002001 2002E  make online investment pay

26. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Continue to develop Interactive Data   Build the FT’s reach and brand   Manage the cost base   Make online investments pay  Broaden into education and books

27. f i n a n c i a l t i m e s  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  broaden into education and books

28. Most potent brand in the business, best-in-class performance 19%

29. p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  Make Dorling Kindersley profitable  Sustain bestseller performance  Work capital harder  Deliver back-office savings

30. p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  Make Dorling Kindersley profitable   Sustain bestseller performance   Work capital harder   Deliver back-office savings

31. EXCLUDES DORLING KINDERSLEY p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a P E N G U I N M A R G I N S  make dk profitable

32.  Sales force doubled  Costs per page down 10%  Time to market down 15%  Stronger frontlist, fewer titles  Creative magic sparking Pearson Education p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  make dk profitable

33. p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Make Dorling Kindersley profitable  Sustain bestseller performance   Work capital harder   Deliver back-office savings

34. SOURCE: NEW YORK TIMES, BOOKTRACK (UK) p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a N U M B E R O F B E S T S E L L I N G T I T L E S  sustain bestseller performance

35. SOURCE: BOOK PUBLISHING REPORT / SIMBA H A R D C O V E R F I C T I O N 2 0 0 1 titlesweeks 1.random house 48229 2.penguin 40202 3.harper collins 1661 4.simon & schuster 1586 5.time warner 14119 P A P E R B A C K F I C T I O N 2 0 0 1 titlesweeks 1.penguin 46246 2.random house 44182 3.harper collins 2571 4.simon & schuster 22128 5.time warner 1661 p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  sustain bestseller performance

36. p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Make Dorling Kindersley profitable   Sustain bestseller performance  Work capital harder   Deliver back-office savings

37. p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a   Make Dorling Kindersley profitable   Sustain bestseller performance   Work capital harder  Deliver back-office savings

38.  Merge with Pearson Ed in Australia and Canada  Globalise sourcing, regionalise other functions  Continue driving savings with SAP p e n g u i n  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  deliver back-office savings

39. First in publishing, testing, technology and services in the US and around the world us school 23% us college 14% Int’national 14% us prof’l 11%

40.  Restore profitability in Latin America  Capitalise on demand to learn English  Grow in college and school publishing  Enlarge global testing business International p e a r s o n e d  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a

41.  Protect margins in technology publishing  Make corporate training profitable  Expand certification contracts  Exploit surge in federal testing and training US professional p e a r s o n e d  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a

42.  Keep growing market share  Use technology to increase adoptions and sell-through  Increase lead in custom publishing US college p e a r s o n e d  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a

43. US school p e a r s o n e d  m a r k e t o v e r v i e w  m a n a g e m e n t a g e n d a  Gain share profitably in publishing  Build on leadership in testing  Target early learning revenues  Make leadership in online learning pay

44.  Underlying revenues up 6%  17% growth in testing; software sales down 2%  Underlying operating profits up 47% – helped by integration savings  15%+ revenue growth in 2002 NCS

45. 2002 and beyond  Strong earnings recovery in 2002  Leading our markets in profitability and new business  Benefiting from more integrated company

46. Pearson 2001 results presentation Pearson  2001 results presentation