Pearson 2010 results


Included in this release:


Pearson 2010 Preliminary results (unaudited)

Record results
Adjusted EPS up 19% to 77.5p and operating cash flow up 16% to £1.06bn (headline growth rates).

Faster top-line growth
Revenues up 8% at CER with growth in all businesses: Education up 9%, Penguin up 2% and FT Group up 12%.

Rapid growth in developing markets and digital businesses
Developing markets revenues up 29% in headline terms to $834m ($648m in 2009), now approximately 10% of Pearson’s total sales.

Digital revenues up 24% in headline terms to £1.6bn (£1.3bn in 2009), now 29% of Pearson’s sales. Substantial growth in all parts of Pearson including:

  • Students served by our digital learning programmes up 33% to more than 55m.
  • Penguin eBook revenues up 182%; 6% of total Penguin revenues.
  • FT digital paid circulation up over 50% to 207,000; approximately a third of total global paid circulation.

Double digit profit growth in all businesses
Adjusted operating profit up 15% to £857m with growth of 13% in Education (to £691m), 10% at Penguin (to £106m) and 54% at the FT Group (to £60m).

Further efficiency gains
Operating margins reach 15.1% (up 1.3% points); average working capital: sales ratio improved to 20.1% (25.1% in 2009); return on invested capital up to 10.3% (8.9% in 2009).

Sustained investment
£535m invested in new companies in emerging markets including Wall Street Institute and SEB and, more recently, TutorVista and CTI. Organic investment in new products and technologies of £529m, an all-time high, with a further increase planned for 2011.

9% dividend growth
Dividend raised 9% to 38.7p and now covered 2.0x, representing Pearson’s 19th consecutive dividend increase and fastest rate of growth in a decade.

Healthy outlook
Pearson expects to achieve continued sales, margin and adjusted EPS growth in 2011. This guidance is struck at current exchange rates (£1:$1.61) and is in spite of tough trading conditions in some of our markets and rapid industry change.

Marjorie Scardino, chief executive, said: “These numbers add up to another excellent year for Pearson. More important than that, they indicate the changing shape and nature of our company: more digital, more efficient, more exposed to fast-growing economies, more focussed on all kinds of learning. Our markets will be tough again this year, but we have a proven formula built on investment, innovation and efficiency which we are using to accelerate change in our company and in our markets.”



£ millions 2010 2009 Headline growth CER growth Underlying growth
Business performance
Sales 5,663 5,140 10% 8% 5%
Adjusted operating profit 857 710 21% 15% 14%
Adjusted earnings per share 77.5p 65.4p 19%    
Operating cash flow 1,057 913 16%    
Free cash flow 904 723 25%    
Free cash flow per share 112.8p 90.5p 25%    
Return on invested capital 10.3% 8.9% 1.4% pts    
Net Debt 430 1,092 61%    
Statutory results
Sales 5,663 5,140 10%    
Operating profit 743 619 20%    
Profit before tax 670 523 28%    
Basic earnings per share 161.9p 53.2p 204%    
Cash generated from operations 1,169 1,012 16%    
Dividend per share 38.7p 35.5p 9%    



£ millions 2010 2009 Headline growth CER growth Underlying growth
North American Education 2,640 2,470 7% 5% 4%
International Education 1,234 1,035 19% 16% 6%
Professional 333 275 21% 20% 6%
FT Group 403 358 13% 12% 9%
Penguin 1,053 1,002 5% 2% 6%
Total continuing 5,663 5,140 10% 8% 5%
Discontinued (Interactive Data) 296 484 (39%) (39%) --
Total 5,959 5,624 6% 4% 5%
Adjusted operating profit
North American Education 469 403 16% 14% 12%
International Education 171 141 21% 10% 8%
Professional 51 43 19% 16% 5%
FT Group 60 39 54% 54% 49%
Penguin 106 84 26% 10% 26%
Total continuing 857 710 21% 15% 14%
Discontinued (Interactive Data) 81 148 (45%) (46%) --
Total 938 858 9% 5% 14%

Throughout this announcement:

  1. Growth rates are stated on a constant exchange rate (CER) basis unless otherwise stated. Where quoted, underlying growth rates exclude both currency movements and portfolio changes.
  2. Interactive Data is treated as a discontinued business. Sales, operating profit and growth rates are stated on a continuing business basis, excluding Interactive Data from both 2009 and 2010. Until its sale on 29 July 2010, Interactive Data contributed revenues of £296m (full year 2009: £484m) and adjusted operating profit of £81m (2009: £148m).
  3. The ‘business performance’ measures are non-GAAP measures and reconciliations to the equivalent statutory heading under IFRS are included in notes to the attached condensed consolidated financial statements 2, 3, 4, 5, 7 and 16.


Over the past five years Pearson has produced average annual earnings and cash flow growth of 16%. We sustained our growth even in the face of very tough economic and market conditions in recent years. We are planning for some of our markets to remain weak in 2011, particularly those that depend on government spending and traditional print publishing business models. In addition, we face tough comparatives (especially in the first half of the year) after our particularly strong competitive and financial performance in 2010.

Even so, we have built a series of competitive advantages which should help us deliver another good year in 2011. These advantages include our sustained investment, digital leadership, educational effectiveness, positions in fast-growing economies and operating efficiency. At this early stage, Pearson expects to achieve continued sales, margin and adjusted EPS growth in 2011. This guidance is struck at current exchange rates (£1:$1.61) and includes further integration costs on acquisitions made in 2010 (which are always expensed).

In Education, we expect to achieve continued growth in 2011. In North America, we see growth in higher education (despite slower enrolment rates) and assessment more than offsetting a slower year for the school publishing industry (the result of the lower new adoption opportunity and pressure on state budgets). Our International Education business will benefit from its rapidly-growing position in services, technology and developing economies, enabling it to grow again despite the weak public spending environment in some markets. 

At the FT Group, we are rapidly shifting our business model towards digital and subscription revenues. Advertising revenues remain unpredictable, but we see healthy demand for the FT’s premium content, especially in digital formats, and a recovery in business conditions for Mergermarket.

Penguin will face another year of fast-changing industry conditions, driven by the rapid growth of both digital sales channels and digital books, and by the resulting pressures on physical bookstores. After particularly strong competitive performance and financial results in 2010, we expect Penguin to perform in line with the overall consumer publishing industry this year, while we continue to adapt the business to these industry changes.

Interest and tax. In 2011, our lower net debt level and pension finance charge will result in a lower interest charge to adjusted earnings than in 2010. We expect our P&L tax charge against adjusted earnings to be in the 24-26% range and our cash tax rate to be in the 15-20% range.

Exchange rates. Pearson generates approximately 60% of its sales in the US. A five cent move in the average £:$ exchange rate for the full year (which in 2010 was £1:$1.54) has an impact of approximately 1.3p on adjusted earnings per share.

For more information

Luke Swanson / Simon Mays-Smith / Charles Goldsmith + 44 (0) 20 7010 2310

Pearson’s results presentation for investors and analysts will be audiocast live today from 0900 (GMT) and available for replay from 1200 (GMT) via High resolution photographs for the media are available from our website



Pearson’s goal is to help people make progress in their lives through learning. We aim to be the world’s leading learning company, serving the citizens of a brain-based economy wherever and whenever they are learning. In financial terms, we measure our progress against three key measures: earnings, cash and return on invested capital.

Our strategy for achieving these goals has four major elements, which are common (though applied somewhat differently) to all our businesses:

  • Long-term organic investment in content: Over the past five years, we have invested £4bn in our business including: education programmes; authors for Penguin; FT Publishing’s journalism. In 2010, that content investment reached an all-time high of approximately £900m. We believe that this consistent investment is critical to the quality and effectiveness of our products and that it has helped us gain share in many of our markets.
  • Digital products and services businesses: Our strategy is to add services to our content, usually enabled by technology, to make the content more useful, more personal and more valuable. These digital products and services businesses give us access to new, bigger and faster-growing markets. In 2010, our digital revenues were £1.6bn or 29% of Pearson’s total sales. Our worldwide educational testing businesses have increased their revenues almost 70% over the past five years to $1.7bn.
  • International expansion: We are already present in more than 70 countries and we are investing to become a much larger global company, with particular emphasis on fast-growing markets in China, India, Africa and Latin America. Over the past five years, our international education business has grown headline sales at an average annual rate of 18% through strong organic growth and acquisitions, generating more than £1.2bn of revenues in 2010.
  • Efficiency: Our investments in content, services and new geographic markets are fuelled by steady efficiency gains. Since 2006, our operating profit margins have increased from 12.7% to 15.1% and our ratio of average working capital to sales has improved from 26.3% to 20.1%.

We made good organic progress on our strategic priorities in 2010. In addition, we made a series of significant portfolio changes, selling our stake in Interactive Data for $2bn and beginning the process of reinvesting the proceeds in a series of acquisitions that extend both the geographic reach and the product breadth of our education company.

This strategy has helped us make significant progress on our financial goals:

  • Earnings: over the past five years, we have grown adjusted EPS at an average annual rate of 16% in headline terms. 
  • Cash: our operating cash flow has increased at an average annual rate of 16% over the past five years and we have converted, on average, more than 100% of our profits into cash.
  • ROIC: our ROIC has increased from 8.1% in 2006 to 10.3% in 2010, above our cost of capital.
  2006 2007 2008 2009 2010 Average annual growth (headline)
Adjusted earning per share 43.1p 46.7p 57.7p 65.4p 77.5p 16%
Operating cash flow £575m £684m £796m £913m £1,057m 16%
Return on invested capital 8.1% 8.9% 9.2% 8.9% 10.3% --



In 2010, Pearson’s sales increased by 10% in headline terms to £5.7bn and adjusted operating profit by 21% to £857m.

The headline growth rates include a benefit from currency movements and acquisitions. Currency movements added £128m to sales and £39m to operating profit. This was the result of the strengthening of the US dollar and other currencies against sterling: we generated approximately 60% of our sales and profits in US dollars and the average exchange rate strengthened from £1:$1.57 in 2009 to £1:$1.54 in 2010. At constant exchange rates (ie stripping out the benefit of those currency movements), our sales and operating profit grew 8% and 15% respectively.

Acquisitions, primarily in our education company, contributed £120m to sales and £5m to operating profits. This includes integration costs and investments related to our newly-acquired companies, which we expense.

Our underlying revenue and operating profit (ie stripping out the benefit of both portfolio changes and currency movements) grew 5% and 14% respectively.

The disposal of Interactive Data was completed on 29July 2010. Interactive Data therefore contributed seven months of profit in 2010, compared to a full twelve months in 2009. Pearson’s total operating profit increased 9% in headline terms to £938m, reflecting this part-year contribution from Interactive Data in 2010.

Our tax rate in 2010 was 25.2%, a little lower than in 2009.

We increased adjusted earnings per share by 19% in headline terms to 77.5p.

Cash generation. We increased operating cash flow by £144m to £1,057m (headline growth of 16%) and free cash flow by £181m to £904m, or 112.8p per share (headline growth of 25%). We converted 113% of operating profit into cash, with our average working capital: sales ratio improving by a further five percentage points to 20.1% as we benefited from the rapid growth in our digital businesses and continued efficiency improvements.

Return on invested capital. We improved our return on average invested capital by 1.4 percentage points to 10.3%, benefiting from strong profit growth and tight control of working capital as well as the part-year contribution from Interactive Data.

Statutory results. Our statutory results show an increase of £124m in operating profit to £743m (£619m in 2009). Basic earnings per share were 161.9p in 2010, up from 53.2p in 2009, helped by the profit on disposal of Interactive Data.

Balance sheet. We significantly reduced our net debt by £662m to £430m (£1,092m in 2009). We benefited from the proceeds from the sale of Interactive Data and strong cash generation, partly offset by acquisition investment of £535m and sustained investment in our businesses. Since 2000, Pearson’s net debt/ EBITDA ratio has fallen from 3.9x to 0.4x and our interest cover has increased from 3.1x to 11.0x.

Dividend. The board is proposing a dividend increase of 9% to 38.7p, subject to shareholder approval. 2010 will be Pearson’s 19th straight year of increasing our dividend above the rate of inflation and our fastest rate of growth in a decade. Over the past ten years we have increased our dividend at a compound annual rate of 6%, returning more than £2.3bn to shareholders. We have a progressive dividend policy: we intend to sustain our dividend cover at around 2.0x over the long term, increasing our dividend more in line with earnings growth.



£ millions 2010 2009 Headline growth CER growth Underlying growth
Sales 2,640 2,470 7% 5% 4%
Adjusted operating profit 469 403 16% 14% 12%


North American Education is Pearson’s largest business, with 2010 sales of £2.6bn and operating profit of £469m. Building on our roots as a leading publisher of educational materials and provider of assessment services, we have made significant investments and changes to transform Pearson into a world-leading provider of learning technologies for students and enterprise technologies for educational institutions. These technology services - including eCollege, PowerSchool, the MyLabs and Edustructures - are the backbone of our strategy to help educators raise student performance and institutions to become more effective.

Key highlights in 2010 include:

Higher Education

  • The US higher education publishing market grew 7.3% in 2010, according to the Association of American Publishers, with the industry seeing healthy enrolment growth and good demand for instructional materials. Pearson gained share, benefiting from its lead in technology and customisation, and has now grown faster than the US higher education industry for 12 consecutive years.
  • Pearson’s pioneering ‘MyLab’ digital learning, homework and assessment programmes grew strongly with student registrations up 32% to more than 7.3 million. Evaluation studies show that the use of MyLab programmes can significantly improve student test scores and institutional efficiency (
  • We launched LearningStudio, a broad suite of learning management technologies including eCollege and Fronter. We increased fully-online student enrolments by 54% to 8.3m. Renewal rates remain high at approximately 90% by value.

Assessment and Information

  • Revenues at our Assessment and Information division were broadly level with 2009. State funding pressures made market conditions tough for our state assessment and teacher testing businesses; these were offset by good growth in diagnostic and clinical assessments. Assessment and Information achieved good profit growth, benefiting from a shift to premium products and further efficiencies generated from the integration of the Harcourt Assessment business.
  • We renewed two important contracts, extending our long-standing relationships with the College Board to administer the SATs and with the Texas Education Agency to administer state-wide student assessments.
  • We continue to achieve strong growth in secure online testing, delivering 13.3 million online tests in 2010, up 41% over 2009.
  • Our market-leading student information systems businesses in the US continued to achieve rapid organic growth further boosted by the acquisition of Administrative Assistants Limited in 2010. We now support almost 16 million students, an increase of 49% over 2009.
  • We achieved strong growth with AIMSWEB, our progress monitoring service which enables early intervention and remediation for struggling students. AIMSWEB now supports almost four million students, an increase of more than 20% on 2009.

School Curriculum

  • The US School publishing market grew 3.2% in 2010, according to the Association of American Publishers. State budgets continue to be under pressure but the industry returned to growth, benefiting from the stronger new adoption opportunity (total opportunity of $800m in 2010 against $500m in 2009).
  • Pearson gained share with a strong performance from enVisionMATH, Pearson’s pioneering digital math curriculum. A two-year study in elementary schools concluded that: “students using enVisionMath demonstrated significantly greater improvement in math computation, math problem-solving and math communication compared to students using other math programs." In computation, they jumped the equivalent of five grade levels in two years. 
  • We acquired America’s Choice to boost Pearson’s services in school reform, a major focus of the US Department of Education. America’s Choice brings together instruction, assessment, leadership development, professional development, coaching and ongoing consulting services.
  • Successnet, our online learning platform for teachers and students which supports Pearson’s digital instruction, assessment and remediation programmes, grew strongly. It generated almost 6 million registrations in 2010, up 33% on 2009, with the number of assessments taken through the system increasing 53% to more than 8m.
  • We continue to develop digital programmes, platforms and mobile apps to boost achievement and to increase access and affordability. We successfully launched three major new school programmes:
    • digits (, our digital middle school maths programme, provides powerful services for teachers including embedded assessment, differentiation of students and automation of administrative tasks. In field tests and pilots, digits helped to make teachers more efficient, doubling the amount of time they had to devote to instruction.
    • Writing Coach (, a blended print and online programme that helps middle and high school students in writing and grammar with personalised assignments and grading. Studies of classes using the technology behind Writing Coach show significant gains in writing proficiency as measured by district and state assessments.
    • Online Learning Exchange, an open education resource that allows teachers to create personalised digital learning programmes using standards-based Pearson content as well as teacher-generated material.
  • Poptropica ( is one of the largest virtual worlds for young children in the US with average monthly unique visitors growing by 40% to 8.1 million from more than 100 countries and speaking more than 70 languages. Poptropica launched seven new islands and was the fifth most searched-for video game on in 2010.



£ millions 2010 2009 Headline growth CER growth Underlying growth
Sales 1,234 1,035 19% 16% 6%
Adjusted operating profit 171 141 21% 10% 8%


Our International Education company is active in more than 70 countries. It is a major focus of our strategy, and sales and profits have doubled since 2006. Our strategy is to combine educational content, assessment, technologies and related services to help educational institutions become more effective and their students more successful. We expect to benefit from a series of powerful long-term global trends: increasing public and private spending on education (despite current pressures on public spending in developed markets); growing participation rates in elementary, secondary and higher education; the demand for assessment to provide measures of achievement; the growing technology infrastructure in educational institutions; and the rise of English as a global language.

Our International Education business has significant exposure to a wide range of currencies including the US dollar and the Euro. In 2010, currency movements boosted revenues by £38m and adjusted operating profits by £15m compared to 2009.

Key highlights in 2010 include:


  • We acquired Wall Street Institute (WSI), which provides premium spoken English training for adults, for $101m in cash. WSI has about 340 franchised learning centres in 25 territories in Asia, Europe, the Middle East and Africa.
  • More than 660,000 students used our MyLab digital learning, homework and assessment programmes, an increase of more than 40%. They included 150,000 users of our online English-language products MyEnglishLabs and MyNorthStarLab, a 170% increase.
  • Our eCollege learning management system won new contracts in Malaysia and Colombia. Our Fronter learning management system continued to grow strongly with unique registrations rising more than 20% to 1.1 million students in more than 8,700 schools, colleges and universities around the world.
  • Pearson Learning Solutions, which combines products and services from across Pearson to deliver a systematic approach to improving student performance, won new contracts in South Africa, Malta, Vietnam and the UK.


  • BTEC, our flagship vocational qualification, attracted more than 1.4 million student registrations, up 28% on 2009. Research suggests that a BTEC National qualification can increase an individual’s lifetime earnings by up to £92,000. Registrations for our NVQ work-based learning qualification grew 45% to more than 165,000, and we introduced the BTEC Apprenticeship to serve the work-based learning market.
  • We marked more than 5.4 million A/AS Level and GCSE and Diploma scripts in the 2009-2010 academic year, with 90% now marked onscreen. Pearson marked and delivered 3.4 million tests in six weeks for the National Curriculum Tests at Key Stage 2.
  • Pearson announced plans to create a vocational degree to boost student access to higher education in the UK and around the world. The first phase of degree programmes will be developed in business, engineering, IT and health and social care.
  • We established a new school improvement business in the UK, which will work with schools to help them train teachers, improve strategic planning and structure teaching methods.

Continental Europe

  • In Italy, adoption of our Linx digital secondary science programme helped Pearson to grow strongly and become joint market leader for combined lower and upper secondary education. Linx is built around content from our North American science programmes customised for the Italian market. We began to develop a broader range and depth of digital products and services, including teacher training, to personalise learning and increase educational effectiveness.
  • In the Netherlands, we launched iPockets, the first fully digital Early English course for 4-8 year-olds in primary education. The course is 100% digital and subscription based and customised for the Dutch market.

Africa and the Middle East

  • In South Africa’s Western Cape province, we won a three-year contract to prepare, administer and report all Grade 9 student assessments. The tests focus on both individual student results and the systemic performance of schools and districts.
  • Pearson won new national contracts in Ethiopia, to supply 2.9m Biology and Physics learning materials for senior secondary grades 9 to 12. In Zimbabwe, we were awarded a contract by UNICEF to deliver 13.5 million textbooks to children in Grades 1-7 in mathematics, environmental science, English, Shona and Ndebele.
  • Pearson announced its intention to acquire a 75% stake in CTI Education Group of South Africa, one of South Africa’s leading private higher education institutions, for £31m in cash. CTI serves more than 9,000 students on 12 campuses.
  • We generated strong growth in the Gulf region in higher education with integrated technology products in Business & Economics and Science.


  • Student enrolments at our Wall Street English schools increased by 27%. We announced plans to open 50 new English-language centres in China, adding to the 66 centres and schools already operating under the Wall Street English and Longman English brands.
  • In January 2011, Pearson agreed to increase its shareholding in Indian education company TutorVista to a controlling 76% stake for a consideration of $127m. TutorVista supplies digital content and technology platforms, online tutoring and services to K-12 schools.

Latin America

  • Pearson agreed a strategic partnership with Sistema Educacional Brasileiro (SEB) in Brazil to provide services to its educational institutions and to acquire its school learning systems (‘sistema’) business for $517m. SEB serves more than 450,000 students across both private and public schools.
  • Our School curriculum business grew strongly, particularly in Mexico, Colombia, Chile and Peru, as we continued to build our locally developed materials as well as Spanish-language adaptations of US school programmes.
  • Strong growth of English Language Teaching materials across Latin America underpinned by performance in Brazil, Colombia, Argentina, Chile, Dominican Republic and Peru.



£ millions 2010 2009 Headline growth CER growth Underlying growth
Sales 333 275 21% 20% 6%
Adjusted operating profit 51 43 19% 16% 5%


Our Professional education business is focused on publishing, training, testing and certification for professionals. Over the past five years, we have increased operating profit from £17m in 2006 to £51m in 2010. We expect this business to benefit from rising demand for work-related skills and qualifications in both developed and developing markets, and from close connections with professional content and customers in other parts of Pearson.

Key highlights in 2010 include:

Professional testing

  • We continued to see good growth at Pearson VUE with test volumes up 3% on 2009 to approximately 8 million. Average revenues per test are increasing as we develop a broader range of services and enhance our systems and assessments to meet our customers’ current and future needs.
  • Pearson VUE renewed a number of major contracts including: the Driving Standards Agency (DSA) of Great Britain and the Driver & Vehicle Agency (DVA) of Northern Ireland; Cisco; and Colorado Department of Regulatory Agencies. On 11 January 2011, we announced a 12-year extension of our relationship with the Graduate Management Admission Council to administer the Graduate Management Admission Test.
  • We also won a number of new contracts to deliver computer-based tests in the US, UK and the Middle East, covering the real estate, accountancy, legal, healthcare, skills and finance sectors.

Professional publishing

  • Our Professional publishing business was level in 2010 with steady margins as strong growth in digital products and services offset continued challenging trading conditions in the retail market and international markets, as well as a planned reduction in the number of print titles published.
  • We launched online learning products with customisable content, assessment and personalised study paths and also delivered 450 hours of technical training through online subscriptions for the IT certification market.
  • We developed applications for social networks and mobile devices to extend the reach and accessibility of our content and videos available within our Safari Books Online platform.

Professional training

  • We acquired Melorio plc, one of the UK’s leading vocational training groups, for £98m, supporting our vocational education strategy by combining Melorio’s training delivery skills with our existing complementary strengths in educational publishing, technology and assessments. Melorio traded well in the second half of the year, securing a number of large key contracts for training delivery, and successfully graduating and placing the largest IT graduate cohort in the history of the business. Our investment in systems, streamlining the course offering and training centres and back office integration are all on track.



£ millions 2010 2009 Headline growth CER growth Underlying growth
Sales 403 358 13% 12% 9%
Adjusted operating profit 60 39 54% 54% 49%


The FT Group is a leading provider of essential information in attractive niches of the global business information market. These include insight, news and analysis and indices provided through a growing number of print, digital and mobile channels. In recent years, the FT Group has significantly shifted its business towards digital, subscription and content revenues and has continued to invest in talent and in services in faster-growing emerging markets. In 2010, digital and services accounted for 40% of FT Group revenues, up from 14% in 2006. Content revenues comprised 55% of total revenues, up from 33% in 2006, while advertising accounted for 45% of FT Group revenues, down from 67% in 2006.

Key highlights in 2010 include:

Financial Times

  • The FT produced strong and accelerating growth in its digital readership with digital subscriptions up over 50% to 207,000, more than 1,000 direct corporate customers and registered users up 79% to more than 3 million. It generated over 900,000 downloads of FT apps on mobile phones and tablet devices with new digital FT subscriptions through these channels growing rapidly.
  • FT’s combined paid print and digital circulation reached 597,000 in the fourth quarter of 2010.
  • After weak advertising markets in 2009, we saw good advertising growth in 2010 although the visibility for advertising revenues is poor.
  • We extended the breadth and depth of the FT’s premium subscription services through: the launch of FT Tilt, focused on emerging markets; the launch of MandateWire US, extending the reach of this successful European brand into new markets; and the acquisition of Medley Global Advisors, a premier provider of macro policy intelligence.

Mergermarket Group

  • The Mergermarket Group benefited from improving market conditions and its flexibility in adapting to new client investment strategies, which supported stronger renewal rates and new business revenues. An increase in global M&A activity benefited mergermarket and dealReporter; continued volatility in debt markets helped sustain the strong performance of DebtWire.
  • Strong growth in developing markets was supported by new product launches including our first local language version of mergermarket in China.
  • In March 2010, we acquired Xtract Research, which provides bond covenant data to help investors understand the impact of covenants on valuation.

Joint ventures

  • The Economist, in which Pearson owns a 50% stake, increased global weekly circulation by 3.7% to 1.47 million (for the July-December 2010 ABC period); total annual online visits increased to 118m, up 21% on 2009.
  • FTSE, our 50%-owned joint venture with the London Stock Exchange, increased revenues by 20% and acquired the remaining 50% of FXI, FTSE’s JV with Xinhua Finance in China.
  • Business Day and Financial Mail (BDFM), our 50% owned joint-venture in South Africa with Avusa, returned to profitability with revenue increasing by 5%. The business benefited from a recovery in advertising and the closure of non-profitable operations.



£ millions 2010 2009 Headline growth CER growth Underlying growth
Sales 1,053 1,002 5% 2% 6%
Adjusted operating profit 106 84 26% 10% 26%


Penguin is one of the most famous brands in book publishing, known around the world for the quality of its publishing and its consistent record of innovation. Over the past five years, Penguin’s profits have increased at an annual average rate of 8%.

In 2010 Penguin achieved record sales and profits in a challenging and rapidly-changing industry environment. Penguin’s profits were struck after making additional provisions for a number of credit exposures in the book retailing sector, including in relation to Borders in the US.

Our market share gains and improved profitability were the result of three factors in particular:

  1. An outstanding US publishing performance included a record number of bestsellers, an increase in market share and rapid expansion in emerging digital platforms and formats;
  2. Penguin in the UK celebrated the best year in its history, leading the bestseller lists and increasing its market share by two percentage points to 10%; and
  3. DK captured the benefits of its 2009 reorganisation, with sales of Lego Star Wars titles boosting revenue and the transfer of cost centres to India enhancing its margin.

Key highlights in 2010 include:


  • A strong and consistent publishing performance across imprints and territories produced market share gains in the US, UK and Australia, our three largest markets.
  • Strong growth in developing markets was boosted by the launch of new imprints and the increasing breadth and depth of our local publishing programmes in India, China and South Africa.
  • Continued investment in global publishing with the launch of Penguin’s Classics in Portuguese and Arabic, joining existing Mandarin and Korean editions; the launch in India of a new imprint in partnership with bestselling author and superstar Shobhaa De; and the continued international roll-out of our non-fiction imprint Allen Lane in Canada.


  • eBook revenues were up 182% on the previous year and now account for 6% of Penguin revenues worldwide.
  • We accelerated our investment in digital products and innovation with new app releases in the children’s market including Spot, Peppa Pig, The Little Engine That Could, Ladybird’s Babytouch and the Mad Libs app, which was named one of the best apps at the 2010 E-Book Summit. For adults, we launched the groundbreaking myFry app; published the amplified ebook of Ken Follett’s international bestselling novel The Pillars of the Earth, featuring video, art and music from the original TV series; and we introduced ten DK Eyewitness Top Ten Travel Guides apps with more to follow in 2011.
  • Penguin continued to invest to transform its internal publishing processes onto Pearson-wide digital platforms, enabling faster product development and more efficient creation and re-use of content.

Publishing performance

  • Penguin performed strongly in the US with a broad range of number one bestsellers from repeat authors such as Charlaine Harris, Nora Roberts, Tom Clancy, Ken Follett and Patricia Cornwell. The #1 bestselling The Help by Kathryn Stockett stayed on the New York Times bestseller list for the whole of 2010 and has sold more than three million copies to date. 
  • Our outstanding performance in the UK, resulting in our market share rising two percentage points to 10%, was led by Jamie Oliver’s 30 Minute Meals. It sold 1.2m copies to become the UK’s biggest selling non-fiction title in the last decade. Major bestsellers included Stephen Fry’s The Fry Chronicles (a bestseller in five formats - hardback, ebook, enhanced ebook, app and audio - a publishing first), Kathryn Stockett’s The Help, and The History of the World in 100 Objects (published in partnership with the BBC and the British Museum), as well as the Percy Jackson and Diary of a Wimpy Kid series. 
  • DK produced a very good year thanks in part to its top-performing franchise LEGO (Lego Star Wars Visual Dictionary was on the New York Times bestseller list for the whole of 2010 with 18 weeks at number one). Other bestselling titles included The Masterchef Cookbook, Complete Human Body and Natural History. DK continues to benefit from the organisational changes made in 2009 as well as the ongoing development of its publishing centre in India.
  • Penguin Children’s had an excellent year in the US, with Penguin Young Readers Group achieving a record 39 New York Times bestsellers, and in the UK, where we reclaimed our position as the number one children’s publisher with significant market share gains.
  • In 2011, we will publish books from some of our leading authors including, in the US, Patricia Cornwell, Sue Grafton, Charlaine Harris, Nora Roberts, Henry Kissinger, Betty White, Richelle Mead, John Grisham and Eric Carle; and, in the UK, Jamie Oliver, Stephen Fry, Rob Brydon, Jeff Kinney, Rick Riordan and David Almond.


Except for the historical information contained herein, the matters discussed in this press release include forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These risks and uncertainties include international, national and local conditions, as well as competition. They also include other risks detailed from time to time in the company’s publicly-filed documents, including the company’s Annual Report. The company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.