Final Results - Part 1

Pearson PLC
5 March 2001

PART 1

PEARSON PLC PRELIMINARY RESULTS (audited)
Year ended 31 December 2000
                                
            RECORD PERFORMANCE AND ACCELERATED GROWTH

                                         Year to      Year to      %
                                          31 Dec       31 Dec Change
                                            2000         1999
                                                                    
Sales                                    £3,874m      £3,332m    16%
Operating profit (pre Internet             £686m        £588m    17%
enterprises)*
Investment in Internet enterprises       £(196)m       £(39)m       
Pre-tax profit (post Internet              £333m        £402m  (17)%
enterprises)*
Adjusted earnings per share - pre          54.6p        47.6p    15%
Internet enterprises**
Adjusted earnings per share - post         31.9p        43.3p  (26)%
Internet enterprises**
Dividend per share**                       21.4p        20.1p     6%
                                                                    

     * Before goodwill, integration costs and non-operating items
                     ** 1999 restated to reflect the rights issue

Record Performance

      Sales up 16%; operating profit up 17% to £686 million.

      Underlying sales up 9.2%; trading margin up from 15.2% to
     16.5%; cash conversion rate of 85%.

      Record profits across all business operations: FT Group up
     41%, Pearson Education up 25%, Penguin Group up 22%.

Accelerated Growth

      The acquisitions of NCS and Dorling Kindersley expected to
     contribute strongly to earnings growth in 2001 and future years.

      £196 million net costs of Internet enterprises in education
     and the FT Group; faster path to profitability for these
     businesses.  FT Internet enterprises on track to break even by
     end of 2002; Learning Network to break even by end of 2003.

      Good start to 2001 across all business operations puts
     Pearson in good shape to deliver another year of strong revenue
     and earnings growth.

Marjorie Scardino, Pearson's chief executive, said:

'This is another great set of results. For the fourth straight
year, we increased our organic revenue growth, improved our
margins and turned in a good cash performance. All the time, we
are making the moves that enable Pearson to grow more quickly and
more profitably.'

2000 overview

In 2000, operating profit pre Internet enterprises increased by
17% to £686 million and we generated a related operating cash
flow of £580 million. Underlying sales growth, which represents
year-on-year increase in sales excluding portfolio changes and
exchange rate movements, was 9.2%. The trading margin, excluding
profits from associates and passive investments and before net
investment in developing our Internet enterprises, was 16.5%. The
net cost of developing these enterprises was £196 million, with
investment peaking in the second half of 2000. We expect the net
cost of developing these enterprises will decline significantly
in 2001.

The financial results also reflect a number of major strategic
moves made during the course of the year. We completed the
disposal of our stake in the Lazard investment houses for £436
million. We merged Pearson TV with CLT-Ufa and took a 22% stake
in the RTL Group, which is Europe's largest television company.
We made the £1.7 billion acquisition, financed by a rights issue,
of NCS, one of the leading commercial testing and educational
services companies in the US. We acquired, for £318 million,
Dorling Kindersley, the worldwide illustrated reference
publisher. We also made a number of smaller acquisitions and
strategic investments. The net effect of these portfolio changes,
which are expected to enable the company to accelerate revenue
and earnings growth in 2001 and future years, was to reduce
operating profit by some £10 million and pre-tax profit by around
£20 million in 2000.

Outlook for 2001

All our business operations have made a good start to the year.
Across the company we are in good shape to deliver another year
of strong revenue and earnings growth.

For further information

John Fallon/ Luke Swanson     Pearson plc         + 44 (0) 20 7411 2310


Operating Performance

Pearson Education

£ millions                   Year to Year to 31         %
                                  31   Dec 1999    Change
                            Dec 2000
                                                         
Sales
US School                        722        586       23%
US Higher Education &            779        666       17%
Professional
International                    540        446       21%
Discontinued                       3          8          
                                                         
Pearson Education             2,044*      1,706       20%
FT Knowledge                      43         19          
                                                         
                               2,087      1,725       21%
Internet enterprises               3          -          
                                                         
Operating profit/(loss)                                  
Pearson Education               337*        265       27%
FT Knowledge                    (17)        (8)          
                                                         
                                 320        257       25%
Internet enterprises            (83)        (3)          
                                                         
                                                                 
   *Includes the NCS acquisition, completed on 11 September 2000.
   NCS sales for the period ended 31 December 2000 were £146m and
                                     operating profits were £15m.

Pearson Education
Sales at Pearson Education increased to £2.044 billion. Stripping
out the benefits of the acquisition of National Computer Systems
(NCS), completed in September, sales increased by 11% and profits
by 22% as Pearson Education continued to develop new online and
print products and services. The acquisition of NCS, the leading
provider of assessment, testing and software services to US
schools, is transforming Pearson Education, enabling it to
capitalise on the worldwide movement towards accountability in
education and to personalise learning through the alignment of
testing and assessment with curriculum and content.

NCS Pearson has met our revenue and profit expectations,
benefiting from its leadership both in state testing and
delivering enterprise software solutions to schools. Its latest
product, NCS4School, will launch this summer. The integration of
NCS Pearson with Pearson Education and Learning Network is on
track to deliver $50 million of annual cost savings by the end of
2002.

Our US School business increased sales by 23%. Excluding revenues
from NCS, sales were up 10%. Building on a very strong
performance in 1999, we made significant market share gains in
some key adoptions, benefiting from a range of new print and
online programmes. In secondary science, Prentice Hall School
took a 40% share in the major state adoptions including
California and our new Scott Foresman reading programme grew
market share from less than 5% to approximately 25% nationwide.
We continued to build on the success of our best selling math
programmes and took the leading position in secondary social
studies.

The US Higher Education & Professional business increased sales
by 17%, gaining market share and growing margins. Excluding the
NCS business, sales were up 9%. The college business delivered
particularly strong growth in math, computer sciences, history
and developmental English and continued to invest in combined
text and online programmes, which helped to mitigate the impact
of lower growth rates in the consumer IT publishing market.

The International business increased sales to £540 million.
Excluding the NCS business, sales increased by 18%. Our major
international operations all reported double digit revenue
growth, with particularly strong progress in Latin America and
English Language Training.  We extended our lead in the
international education market through a series of acquisitions
in France, Brazil, Korea and Japan.

The integration of the Simon & Schuster and Addison Wesley
Longman businesses is now completed, and, in 2001, is expected to
deliver the projected $130 million in annual cost savings.

FT Knowledge made losses of £17m as it invested in developing its
global corporate learning and executive education businesses, a
market that continues to experience rapid international growth.
FT Knowledge acquired The Forum Corporation, one of America's top
corporate training companies; extended its financial training
company, New York Institute of Finance, to Europe and Asia;
launched FT Dynamo, a subscription portal focusing on world-class
management thinking; and continued to develop online courses for
the finance, investment and marketing professions.

Pearson launched its consumer education portal, Learning Network,
in September 2000. It is already established as the leading
consumer education source on the web, generating more than 130
million page views in February 2001, and provides learning
content and services for teachers, students and parents in the K-
12, professional development and lifelong learning and reference
markets. Learning Network will launch its Higher Education
offering later this year. We expect Learning Network to increase
revenues strongly this year as it moves towards breakeven by the
end of 2003. Pearson Broadband, a new initiative to create
interactive education television for K-12, Higher Education,
Professional and Lifelong Learning markets, will launch its first
products later this month.


Financial Times Group

£ millions                  Year to 31   Year to        %
                              Dec 2000    31 Dec   Change
                                            1999
                                                         
Sales                              802      680       18%
Internet enterprises                42        7          
                                                         
Operating profit /                                       
(loss)
FT Newspaper                        81       56       45%
FT Interactive Data                 59       31       90%
FT Business                         10        1          
FT Businesses sold                 (1)      (2)          
Les Echos                           29       18       61%
Recoletos                           38       34       12%
Associates and joint               (5)       12          
ventures
                                                         
                                   211      150       41%
Internet enterprises             (113)     (36)          
 
The Financial Times Group had an outstanding year. While
circulation and advertising revenues hit record levels, the Group
continued to invest in international expansion and new print and
online products and services. The FT Group's Internet enterprises
grew rapidly during the year, increasing revenues from £7 million
in 1999 to £42 million in 2000. They are on track to break even
by the end of 2002, two years ahead of our original expectations.

The Financial Times newspaper increased profits by 45% to £81
million. Average daily sales in December increased to 485,000, up
10% year on year. Worldwide advertising revenues increased by
34%, with vigorous growth sustained throughout the year. The
newspaper continued its successful expansion into North America,
with circulation up 26% to 129,000.  In the first two months of
2001, circulation and advertising revenues have continued to
increase.

FT.com continues to grow rapidly and by January 2001 had 1.7
million unique monthly users (up 55% on January 2000) and 39
million monthly page views (up 57%).  The Financial Times
newspaper and FT.com now have integrated editorial, advertising
sales and support teams and a number of blue-chip international
companies and financial institutions have run integrated
advertising campaigns across the FT and FT.com.

The FT Group and The Carphone Warehouse Group PLC are today
announcing the launch of a virtual mobile network offering high
quality phones, with business and financial news and analysis
from the FT with customer service and support from The Carphone
Warehouse. FT branded WAP handsets will be available in the
spring through FT.com, Carphone Warehouse stores, and
carphonewarehouse.com.

FTMarketWatch, our joint venture with MarketWatch, operator of
America's leading online personal finance site (and in which we
own a 34% stake), delivers incisive, real-time financial and
market news to Europe's rapidly growing community of private
investors and is generating strong advertising and content
licensing revenues. The business expanded further with the launch
of a German language site in November, targeting Europe's largest
community of private investors.

Les Echos increased its circulation by 5% to a record 154,000,
gaining market share, and increased advertising revenues by 37%.
Its online service lesechos.fr built on its position as France's
leading newspaper website and grew advertising revenues by 180%.
Lesechos.fr also established content partnership deals with a
number of websites and launched a new personal finance portal,
mesfinances.fr.

Expansion grew its circulation to a new high of 63,000 and
increased advertising revenues by 41%. Expansiondirecto.com more
than doubled traffic and increased its advertising and e-commerce
revenues.

Revenues and profits at FT Interactive Data were boosted by its
merger with Data Broadcasting Corporation (DBC) in February to
create a leading source of securities pricing, financial
information and analytic tools to global investors. Pearson is
now a 60% shareholder in DBC, which has a Nasdaq listing. The
businesses have been successfully integrated and revenues and
earnings were ahead of expectations at the time of the merger,
despite the sharp decline in the Nasdaq Index which affected
eSignal, DBC's service for active online traders. The new company
continued to build its institutional business, which provides
data and tools for leading financial institutions to value and
manage their portfolios.

FT Business had a strong year, with many of its leading financial
titles delivering record revenues. Investors Chronicle grew its
average sales by more than 20% to 75,000 copies and launched a
new online service.

Recoletos, our Spanish media group, increased profits 12% to £38
million. In addition to the strong performance of Expansion,
Marca, Spain's leading sports newspaper, reached a circulation of
403,000, increased advertising revenues by 16% and more than
quadrupled traffic to its website Marca Digital to 53 million
monthly page views. El Mundo, the Spanish daily newspaper in
which Recoletos owns a 30% stake, increased circulation to
292,000 and monthly page views to 43 million.

Recoletos extended its position as Spain's leading multimedia
business by winning licenses for digital free-to-air television
and radio channels, which are being rolled out in 2001. Outside
Spain, Recoletos built its presence in Latin America with the
acquisition of El Cronista, Argentina's most influential business
and financial newspaper. The IPO of Recoletos, completed in
October, has enhanced the company's ability to grow its business
online and in Spanish and Portuguese speaking markets around the
world.

Associates and joint ventures

The Economist Group, in which Pearson has a 50% stake, had
another excellent year and continues to invest in its two global
brands, The Economist and CFO, both in print and online.
Circulation at The Economist newspaper continued to grow and its
worldwide circulation now averages 762,000 copies, 5% higher than
last year.  The newspaper also benefited from strong advertising
revenues. The CFO business also performed well and the
international rollout of the CFO brand continues.

Profits from The Economist Group were more than offset by our
share of the start-up costs of FT Deutschland, our joint venture
with Gruner + Jahr.  It reached a circulation of 66,000 just nine
months after its launch and is running ahead of its advertising
targets.

Business Day & Financial Mail, the South African titles in which
we also own a 50% stake, maintained market share in a difficult
economic environment. Average circulation at Business Day for the
six months to the end of December was stable at approximately
44,000.


The Penguin Group

£ millions              Year to 31   Year to 31          %
                          Dec 2000     Dec 1999     Change
                                                          
Sales                          755          565        34%
                                                          
Operating profit                79           65        22%
                                                          

 Includes the Dorling Kindersley acquisition, completed on
                                               6 May 2000.
   For the period ended 31 December 2000, DK broke even on
                                           sales of £125m.

Penguin posted its best ever performance. Stripping out the
impact of Dorling Kindersley, the worldwide illustrated reference
publisher acquired in May, sales increased by 12% and profits by
a record 22%. Penguin also continued to improve operating
efficiencies and trading margin was 12.6%, up from 11.4% in 1999.

Penguin's success was built on continued increased investment and
development of new author talent and established best selling
authors such as Tom Clancy, Patricia Cornwell, Clive Cussler,
Spencer Johnson, Jamie Oliver, Nora Roberts and many others.

In the US, Penguin Putnam achieved record revenues and profits
and gained market share across all categories - adult hardcover,
mass market, trade paperback and children's books. It landed 106
titles on The New York Times bestseller lists, up 56% on 1999,
including 13 titles that reached the number one position. Its
adult hardcover and paperback titles spent a total of 600 weeks
on the New York Times bestseller lists, up 36% on 1999. In the
UK, Penguin had 39 titles in the Bookseller Booktrack top 15,
with best selling authors including Alex Garland, Jeremy Paxman,
Sue Townsend and Jamie Oliver, whose Return of the Naked Chef was
the number one book for 16 weeks.

Penguin titles are winning more awards than ever, including the
Whitbread Prize (Matthew Kneale's English Passengers), the
Whitbread first novel award (Zadie Smith's White Teeth) a
National Book Award for Nonfiction (Nathaniel Philbrick's In the
Heart of the Sea), the 2001 Caldecott Award (Judith St George and
David Small's So You Want To Be President?), the 2001 Newbery
Award (Richard Peck's A Year Down Yonder) and many others.

Penguin continued to invest in online and ebook enterprises,
focused on securing long-term growth opportunities and creating
more direct relationships with our readers. Penguin has developed
hundreds of author companion websites that provide readers with
access to authors and books; stages interactive Yahoo! webcasts
in the US with its best selling authors; has an alliance with
Lightning Source to be Penguin's ebook fulfilment service
partner; and, through a partnership with Gemstar, is marketing
ebooks by a number of best selling authors.

The integration of Dorling Kindersley is going well. We steered
the business to breakeven in 2000 and we expect significant
revenue and profit growth over the next few years. Dorling
Kindersley is also opening new revenue opportunities across
Pearson, creating new printed and online learning materials with
Pearson Education and developing services for the lifelong
learning market with Learning Network and Pearson Broadband.

Pearson Television/ RTL Group

£ millions            Year to 31          Year to 31
                        Dec 2000            Dec 1999
                                                    
Sales*                       185                 355
                                                    
Operating                     68                  68
profit**

     * Pearson TV sales until 25 July 2000, the completion of the
                                      merger to create RTL Group.
   ** Comprises £32 million contribution from Pearson TV until 25
                                                    July 2000 and
  Pearson's share of RTL Group's profits for the remainder of the
                                                            year.


Pearson TV's merger with CLT-Ufa to create RTL Group, Europe's
leading integrated broadcasting and production company, was
completed on 25 July 2000.  Pearson now holds a 22% stake in the
merged business, which is listed on the London Stock Exchange.
RTL Group will report its results for the 12 months ended 31
December 2000 on 21 March 2001.

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