Trading Statement

Pearson PLC
22 October 2007


22 October 2007


PEARSON NINE-MONTH TRADING UPDATE:


UNDERLYING SALES UP 6% AND OPERATING PROFITS UP 20%
FULL-YEAR GUIDANCE RAISED IN EDUCATION


Pearson, the international education and information company, is today providing
an update on trading in the first nine months of 2007.

Pearson traded strongly through the third quarter, building on a good first
half. For the first nine months, underlying sales are 6% higher and operating
profits 20% higher than in the same period last year. Headline sales are up 4%
and operating profits up 17%. (Headline results include the impact of
acquisitions and currency movements).

The fourth quarter is an important selling season in higher education and
consumer publishing, but at this stage all our businesses are trading in line
with, or ahead of, our previous guidance. For the full year, we remain on course
to achieve strong underlying growth on our key financial measures: earnings,
cash generation and return on invested capital.

Marjorie Scardino, chief executive, said: "We still have a lot of trading ahead
of us, but every part of the company is doing well. We're benefiting from rapid
take-up of our learning technologies; sustained increases in our audience and
advertising at the FT; and bestselling publishing combined with operating
efficiency at Penguin. This increases our confidence that 2007 will be another
year of record profits for Pearson."

Highlights for the first nine months of 2007


• Pearson Education underlying sales up 7% with good growth in all parts:


Our School business, with sales up 7%, continues to benefit from sustained
investment in content and technology and breadth in publishing, testing and
services. We have once again gained share in US School publishing and testing
and achieved good growth outside the US. Following a strong summer, we now
expect full-year sales growth around the top end of the 4-6% range and further
margin improvement, even after reorganisation costs.


Our Higher Education business has also performed strongly through the start of
the academic year. Sales are up 5%, with rapid growth in subjects where we offer
our online teaching and assessment programmes (established services such as
MyMathLab, MyEconLab and Mastering Physics as well as new programmes in Spanish,
nursing and information technology). More than 1.3 million US College students
registered for our online learning programmes in the August and September
back-to-school period, a 44% increase on the same period last year. We now
expect our worldwide Higher Education business to achieve full year sales growth
around the top end of the 3-5% range with stable margins.


Our Professional education business continues to show strong growth. Sales are
up 12% in the first nine months, and we now expect full-year sales growth of
8-10% (against our previous guidance of 5-7%) with further margin improvement.
We continue to have strong demand for our professional certifications including
the Graduate Management Admissions Test, the NCLEX Nurses examination and the
DSA/DVTA driving theory test, as well as growth in our range of state tests. Our
technology publishing imprints are also growing again, and we have continuing
momentum from our business imprints, including Wharton School Publishing and FT
Press.


• In FT Publishing, sales are up 8% overall, with increasing content
revenues as both the Financial Times and FT.com have continued to build
their audiences through the recent volatility in global financial markets.
Our advertising revenues have remained resilient through this volatility
with FT Publishing advertising revenues up 9% in the first nine months (up
from 7% growth in the first six months of the year). We continue to expect
FT Publishing to achieve double digit margins in 2007. As previously
announced, IDC will be reporting Q3 results on 25th October.


• Penguin sales are up 2% with a strong publishing performance from both
new and established authors including Alan Greenspan (The Age of
Turbulence), Khaled Hosseini (A Thousand Splendid Suns), Jamie Oliver (Jamie
at Home) and Elizabeth Gilbert (Eat, Pray, Love). For the full year we
continue to expect Penguin to improve margins further, as our publishing
investment and efficiency programmes bear fruit.


Acquisitions and disposals


We completed the acquisition of eCollege on 31 July 2007 and of Harcourt's
education businesses in the UK and South Africa during the third quarter. We
expect to complete the acquisition of Harcourt's US educational assessment
business around the end of this year, subject to regulatory approval. We intend
to hold an investor seminar on eCollege and Harcourt Assessment & International
early in 2008, following completion of the Harcourt transaction. We remain in
exclusive negotiations with LVMH over its proposed acquisition of Groupe Les
Echos.


Note: All growth rates are stated on an underlying basis from continuing
operations, excluding the impact of currency movements and portfolio changes,
unless otherwise stated.


Pearson generates around two-thirds of its sales in the US and each five cent
change in the average £:$ exchange rate for the full year (which in 2006 was £1:
$1.84) would have a translation impact of approximately 1p on adjusted earnings
per share. The average rate during the first nine months of 2007 was £1:1.99
(compared to £1:$1.82 in the first nine months of 2006) and the closing rate at
the end of September was £1:$2.01).


For more information:

Luke Swanson/ Simon Mays-Smith/ Charles Goldsmith + 44 (0) 207 010 2310




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