Pearson Trading Update: Strong end to the year; on track for record profits

Pearson is today providing its regular January trading update.

Pearson continued to perform strongly through the fourth quarter of 2006. We remain on track to produce record profits in 2006, and we expect to report adjusted earnings per share towards the top end of current market expectations*. We also expect good cash generation and a further significant improvement in our return on invested capital.

All our businesses traded well in the fourth quarter. Pearson Education sustained its good revenue momentum and achieved further margin improvement, ahead of expectations, as we benefited from our investments in educational testing and technology. The Financial Times added circulation and advertising and Penguin had a good year-end publishing and selling season.

The average £:$ exchange rate for the full-year was £1:$1.84 and we expect our tax rate to be below 32% (compared with our previous guidance of 32-34%).

Pearson will announce its preliminary results for 2006 on 26 February, 2007. We expect to complete the sale of our Government Solutions business to Veritas Capital in the first quarter of this year.

Marjorie Scardino, chief executive, said: "A strong all-round performance in our key fourth quarter selling season capped another very good year. All around Pearson, our investments in content and technology are paying off. Those advantages have produced Pearson's highest ever profits in 2006, and will bolster our future growth."

* 2006 adjusted earnings per share including Government Solutions. Analysts' estimates range from 36.1p-40p (sources: Reuters and Bloomberg).

For more information:

Luke Swanson/ Simon Mays-Smith/ Deborah Lincoln + 44 (0) 207 010 2310