IFRS Briefing

Pearson PLC 04 May 2005 4 May 2005 Pearson: IFRS briefing Pearson is today publishing its financial statements for 2003 and 2004 under International Financial Reporting Standards (IFRS). For 2004, the primary changes to our reported results under IFRS are: • Reported operating profit increases from £231m to £404m and reported eps from 11.1p to 32.9p; • Adjusted operating profit decreases from £455m to £421m and adjusted eps from 30.0p to 27.3p; • Net assets increase from £2,816m to £3,014m. IFRS has no effect on cash generation, and a negligible effect on our reported cash flows. Reported sales are lower because revenues earned by our discontinued business Recoletos (2004 sales: £190m) are not reported under IFRS. We have also deconsolidated a subsidiary, Maskew Miller Longman, which we report under IFRS as a joint venture (2004 sales: £33m). For 2005, we expect the IFRS effect to be broadly similar to 2004. Our expectation of strong growth with further underlying progress on earnings, cash and return on invested capital is therefore unchanged. We are holding a conference call and webcast at 14.00 BST (09.00 EST) today with Rona Fairhead, CFO; Robin Freestone, Deputy CFO; and Michael Day, Group Treasurer. You can join this by calling +44 (0) 1296 480 180, passcode: 607291# or at www.pearson.com/ifrs. Financial highlights £ millions 2004 2004 2003 2003 -------------------------- ------- ------- ------- ------- UK GAAP IFRS UK GAAP IFRS -------------------------- ------- ------- ------- ------- Sales 3,919 3,696 4,048 3,850 -------------------------- ------- ------- ------- ------- Statutory results -------------------------- ------- ------- ------- ------- Operating profit 231 404 226 406 -------------------------- ------- ------- ------- ------- Profit before tax 171 325 152 313 -------------------------- ------- ------- ------- ------- Basic earnings per share 11.1p 32.9p 6.9p 31.7p -------------------------- ------- ------- ------- ------- Business performance -------------------------- ------- ------- ------- ------- Adjusted operating profit 455 421 490 443 -------------------------- ------- ------- ------- ------- Adjusted profit before tax 386 345 410 353 -------------------------- ------- ------- ------- ------- Adjusted earnings 239 217 254 217 -------------------------- Adjusted earnings per share 30.0p 27.3p 32.0p 27.3p Free cash flow 288 282 192 190 Net borrowings 1,206 1,221 1,361 1,373 Return on invested capital 6.2% 6.1% 6.3% 6.0% -------------------------- ------- ------- ------- ------- Summary consolidated balance sheet £ millions 2004 2004 2003 2003 -------------------------- ------- ------- ------- ------- UK GAAP IFRS UK GAAP IFRS -------------------------- ------- ------- ------- ------- -------------------------- ------- ------- ------- ------- Goodwill and intangible assets 2,890 3,278 3,260 3,550 -------------------------- ------- ------- ------- ------- Other fixed assets 538 878 553 929 -------------------------- ------- ------- ------- ------- Current assets 2,558 2,064 2,523 2,257 -------------------------- ------- ------- ------- ------- Non-current assets held for sale - 358 - - -------------------------- ------- ------- ------- ------- Total assets 5,986 6,578 6,336 6,736 -------------------------- ------- ------- ------- ------- -------------------------- ------- ------- ------- ------- Equity and reserves 2,816 3,014 3,088 3,161 -------------------------- ------- ------- ------- ------- Current liabilities 1,275 1,080 1,704 1,593 -------------------------- ------- ------- ------- ------- Non-current liabilities 1,895 2,403 1,544 1,982 -------------------------- ------- ------- ------- ------- Non-current liabilities held for sale - 81 - - -------------------------- ------- ------- ------- ------- Total equity and liabilities 5,986 6,578 6,336 6,736 -------------------------- ------- ------- ------- ------- -------------------------- ------- ------- ------- ------- For more information: Luke Swanson / Robin Freestone / Charlotte Elston + 44 (0) 20 7010 2310 This information is provided by RNS The company news service from the London Stock Exchange

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Pearson (PSON)
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