Final Results - Part 2

Pearson PLC
5 March 2001

PART 2



Consolidated Profit and Loss Account
for the year ended 31 December 2000

                             ----------2000--------  ---------1999--------
                                                              Rest-  
                                                               ated
                             Results                 Results         
                                from                    from         
all figures in £               oper-  Other            oper-  Other  
millions                Note  ations  items    Total  ations  items    Total
____________________________________________________________________________
Sales (including share                                               
of joint ventures)            3,537      -    3,537   3,332      -    3,332
Less: share of joint                                                 
ventures                        (17)     -      (17)      -      -        -
____________________________________________________________________________
Continuing operations         3,520      -    3,520   3,332      -    3,332
Acquisitions                    354      -      354       -      -        -
____________________________________________________________________________
Total sales               2a  3,874      -    3,874   3,332      -    3,332
Cost of sales                (1,633)    (8)  (1,641) (1,414)   (10)  (1,424)
____________________________________________________________________________
Gross profit                  2,241     (8)   2,233   1,918    (10)   1,908
                                                                     
Net operating expenses       (1,791)  (220)  (2,011) (1,441)  (220)  (1,661)
____________________________________________________________________________
Operating profit                                                     
analysed between:
Continuing operations                                                
- Group                         446   (143)     303     477   (230)     247
Acquisitions - Group              4    (85)     (81)      -      -        -
____________________________________________________________________________
____________________________________________________________________________
Total operating profit                                               
- Group                         450   (228)     222     477   (230)     247
____________________________________________________________________________
Share of operating                                                   
loss of joint
ventures:
Continuing operations           (21)     -      (21)      -      -        -
____________________________________________________________________________
Total share of                                                       
operating loss of                                                    
joint ventures            2c    (21)     -      (21)      -      -        -
____________________________________________________________________________
Share of operating                                                   
profit of associates:
Continuing operations            25     (1)      24      24     (1)      23
Acquisitions                     28    (50)     (22)      -      -        -
____________________________________________________________________________
                                 53    (51)       2      24     (1)      23
Discontinued                                                         
operations                        8      -        8      48      -       48
____________________________________________________________________________
Total share of                                                       
operating profit of                                                  
associates                2c     61    (51)      10      72     (1)      71
____________________________________________________________________________
                                                                     
                                                                     
____________________________________________________________________________
Total operating profit                                               
analysed between:
Operating profit                                                     
before internet                                                      
enterprises               2b    686   (262)     424     588   (231)     357
Internet enterprises      2b   (196)   (17)    (213)    (39)     -      (39)
____________________________________________________________________________
____________________________________________________________________________
Total operating profit    2b    490   (279)     211     549   (231)     318
____________________________________________________________________________
                                                                     
Continuing operations:                                               
(Loss)/profit on sale                                                
of fixed assets and                                                  
investments               3       -     (4)      (4)      -    349      349
Profit/(loss) on sale                                                
of businesses and                                                    
associates                4       -     30       30       -    (44)     (44)
Discontinued                                                         
operations :
Profit on sale of                                                    
businesses and                                                       
associates                4       -    231      231       -      -        -
____________________________________________________________________________
                                  -    257      257       -    305      305
Continuing operations:                                               
(Loss)/profit on sale                                                
of businesses and                                                    
associates by an                                                     
associate                         -     (3)      (3)      -      1        1
____________________________________________________________________________
Profit before interest                                               
and taxation                    490    (25)     465     549     75      624
                                                                     
Net finance costs                                                    
Net interest payable -                                               
Group                          (154)     -     (154)   (145)     -     (145)
Net interest payable -                                               
associates                       (3)     -       (3)     (2)     -       (2)
Other net finance                                                    
costs                             -    (24)     (24)      -      -        -
____________________________________________________________________________
Total net finance                                                    
costs                          (157)   (24)    (181)   (147)     -     (147)
____________________________________________________________________________
Profit before taxation          333    (49)     284     402     75      477
Taxation                  6     (87)   (19)    (106)   (100)   (77)    (177)
____________________________________________________________________________
Profit after taxation           246    (68)     178     302     (2)     300
Equity minority                                                      
interests                       (14)    15        1      (6)     -       (6)
____________________________________________________________________________
Profit for the                                                       
financial year                  232    (53)     179     296     (2)     294
Dividends on equity                                                  
shares                    7                    (164)                   (138)
____________________________________________________________________________
Profit retained                                  15                     156
____________________________________________________________________________
Adjusted earnings per                                                
equity share before                                                  
internet enterprises      5                    54.6p                   47.6p
Adjusted earnings per                                                
equity share after                                                   
internet enterprises      5                    31.9p                   43.3p
Earnings per equity                                                  
share                     5                    24.6p                   43.0p
Diluted earnings per                                                 
equity share              5                    24.0p                   42.4p
Dividends per equity                                                 
share                     7                    21.4p                   20.1p
____________________________________________________________________________

1999 has been restated to reflect the adoption of FRS16 'Current Tax'.
Earnings per equity share and dividends per equity share in 1999 have been
restated to reflect the rights issue of equity shares during 2000.
There is no difference between the profit on ordinary activities before
taxation and the retained profit for the year stated above and their
historical cost equivalents.

Consolidated Balance Sheet
as at 31 December 2000

____________________________________________________________________________
all figures in £ millions                          Note     2000      1999
____________________________________________________________________________
Fixed assets                                                       
Intangible assets                                          4,522     2,457
Tangible assets                                              524       405
Investments: joint ventures                                        
                                                         __________________
  Share of gross assets                                       13         -
  Share of gross liabilities                                  (1)        -
                                                         __________________
                                                              12         -
Investments: associates                                    1,024       234
Investments: other                                           155        99
____________________________________________________________________________
                                                           6,237     3,195
____________________________________________________________________________
Current assets                                                     
Stocks                                                       828       691
Debtors                                                    1,217     1,132
Investments                                                   12         4
Cash at bank and in hand                                     516       328
____________________________________________________________________________
                                                           2,573     2,155
____________________________________________________________________________
                                                                   
Creditors - amounts falling due within one year                    
Short term borrowing                                        (112)      (47)
Other creditors                                           (1,484)   (1,441)
____________________________________________________________________________
                                                          (1,596)   (1,488)
____________________________________________________________________________
                                                                   
Net current assets                                           977       667
____________________________________________________________________________
Total assets less current liabilities                      7,214     3,862
Creditors - amounts falling due after more than                    
one year
Medium and long term borrowing                            (2,705)   (2,276)
Other creditors                                              (34)      (32)
____________________________________________________________________________
                                                          (2,739)   (2,308)
Provisions for liabilities and charges                             
Deferred taxation                                             (9)      (21)
Other provisions for liabilities and charges                (257)     (206)
____________________________________________________________________________
Net assets                                                 4,209     1,327
____________________________________________________________________________
                                                                   
Capital and reserves                                               
Called up share capital                            9         199       153
Share premium account                              9       2,440       517
Profit and loss account                            9       1,405       651
____________________________________________________________________________
Equity shareholders' funds                                 4,044     1,321
Equity minority interests                                    165         6
____________________________________________________________________________
                                                           4,209     1,327
____________________________________________________________________________


Consolidated Statement of Cash Flows
for the year ended 31 December 2000

_____________________________________________________________________________
all figures in £ millions                             Note     2000     1999
_____________________________________________________________________________
Net cash inflow from operating activities               10      361      433
                                                     
_____________________________________________________________________________
Dividends from joint ventures and associates                     49       44
_____________________________________________________________________________
Interest received                                                16       41
Interest paid                                                  (179)    (182)
Debt issue costs                                                 (4)      (5)
Dividends paid to minority interests                              -       (1)
_____________________________________________________________________________
Returns on investments and servicing of finance                (167)    (147)
_____________________________________________________________________________
Taxation                                                        (90)    (156)
_____________________________________________________________________________
Purchase of tangible fixed assets                              (139)    (102)
Sale of tangible fixed assets                                    22       36
Purchase of investments                                        (132)     (24)
Sale of investments                                               1      624
_____________________________________________________________________________
Capital expenditure and financial investment                   (248)     534
_____________________________________________________________________________
Purchase of subsidiary undertakings                          (2,276)    (249)
Net debt acquired with subsidiary undertakings                  (31)       -
Purchase of joint ventures and associates                      (108)     (54)
Sale of subsidiary undertakings                                 158       44
Net cash disposed with subsidiary undertakings                    -       (3)
Sale of associates                                              392       12
_____________________________________________________________________________
Acquisitions and disposals                                   (1,865)    (250)
_____________________________________________________________________________
Equity dividends paid                                          (143)    (132)
_____________________________________________________________________________
Net cash (outflow)/inflow before management of                        
liquid resources and financing                               (2,103)     326
_____________________________________________________________________________
Liquid resources acquired                                       (16)      (9)
Liquid resources disposed                                         -       10
Collateral deposit placed                                      (118)       -
_____________________________________________________________________________
Management of liquid resources                                 (134)       1
_____________________________________________________________________________
Issue of equity share capital                                 1,959       18
Capital element of finance lease rentals                        (10)     (11)
Loan facility advanced                                          473        -
Loan facility repaid                                           (735)  (1,112)
Bonds advanced                                                  411      608
Loan notes advanced                                             134        -
Net movement in other borrowings                                 63      202
_____________________________________________________________________________
Financing                                                     2,295     (295)
_____________________________________________________________________________
Increase in cash in the year                                     58       32
_____________________________________________________________________________

2000 results
The preliminary results for the year ended 31 December 2000 have been
extracted from audited accounts which have not yet been delivered to the
Registrar of Companies. The 1999 accounts carry an unqualified audit report
and have been so delivered.  The 2000 Annual Report will be posted to
shareholders on Tuesday 27 March 2001.

Dividend
The directors recommend a final dividend of 13.2p per share, payable on Friday
1 June 2001 to shareholders on the register at the close of business on Friday
16 March 2001.

Annual General Meeting
The AGM will be held at The Queen Elizabeth II Conference Centre, Broad
Sanctuary, Westminster, London SWIP 3EE, at 12 noon on Friday 27 April 2001.


Statement of Total Recognised Gains and Losses
for the year ended 31 December 2000

_________________________________________________________________________
all figures in £ millions                                   2000   1999
_________________________________________________________________________
Profit for the financial year                                179    294
Other net gains and losses recognised in reserves:                
Currency translation differences                              95     33
Taxation on currency translation differences - UK             (8)     3
_________________________________________________________________________
Total recognised gains relating to the year                  266    330
_________________________________________________________________________


Reconciliation of Movements in Equity Shareholders' Funds
for the year ended 31 December 2000

_________________________________________________________________________
all figures in £ millions                                   2000   1999
_________________________________________________________________________
Profit for the financial year                                179    294
Dividends on equity shares                                  (164)  (138)
_________________________________________________________________________
                                                              15    156
Currency translation differences (net of taxation)            87     36
Goodwill arising on prior year acquisitions                    1      -
Goodwill written back on business combinations               585      -
Goodwill written back                                         68     63
Shares issued                                              1,961     18
Replacement options granted on acquisition of subsidiary       6      -
_________________________________________________________________________
Net movement for the year                                  2,723    273
Equity shareholders' funds at beginning of the year        1,321  1,048
_________________________________________________________________________
Equity shareholders' funds at end of the year              4,044  1,321
_________________________________________________________________________

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