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Sales: Total 3,729m $7,160m*


by Sector
School: (30%) 1,118m $2,147m
Penguin: (21%) 786m $1,509m
Higher Education: (19%) 731m $1,404m
FT Group: (16%) 587m $1,127m
Professional: (14%) 507m $973m

by Geography
North America: (67%) 2,505m $4,810m
United Kingdom: (15%) 545m $1,046m
Continental Europe: (8%) 300m $576m
Asia Pacific: (7%) 261m $501m
Rest of the World: (3%) 118m $227m

Adjusted operating profit: Total 433m $832m*

Adjusted operating profit

by Sector
Higher Education: (31%) 133m $255m
School: (27%) 117m $225m
FT Group: (20%) 86m $165m
Penguin: (12%) 54m $104m
Professional: (10%) 43m $83m

by Geography
North America: (86%) 393m $755m
Asia Pacific: (7%) 31m $60m
Continental Europe: (4%) 21m $40m
Rest of the World: (3%) 14m $27m

Note: United Kingdom operating loss excluded = (26)m $(50)m.

*Continuing businesses (excluding Recoletos).

Financial Highlights
change %
Sales(1) 3,729 7,160 3,879 7,448 3
Business performance
Adjusted operating profit(1,2) 433 832 462 887 7
Adjusted profit before tax(2) 386 741 410 787  
Adjusted earnings per share(2) 30.0p 57.6¢ 32.0p 61.4¢  
Free cash flow(1,2) 279 536 188 361  
Return on invested capital 6.2%   6.3%   0.3%pts(3)
Statutory results
Operating profit 231 444 226 434  
Profit before tax 171 328 152 292  
Basic earnings per share 11.1p 21.3¢ 6.9p 13.2¢  
Dividends per share 25.4p 48.8¢ 24.2p 46.5¢  
Net borrowings 1,206 2,316 1,361 2,613  

(1) Continuing businesses (excluding Recoletos: sales (2004: 190m; 2003: 169m), operating profit (2004: 22m; 2003: 28m)).
(2) Before goodwill (2004: (224)m; 2003: (264)m) and non-operating items (2004: 9m; 2003: 6m).
(3) At constant currency.

Throughout this report (unless otherwise stated):

1. Growth rates are on an underlying basis, excluding the impact of currency movements and portfolio changes. In 2004, currency movements reduced revenues on a continuing business basis by 302m and profits by 51m while portfolio changes increased revenues by 41m and reduced profits by 8m.

2. Adjusted figures are stated before goodwill, integration costs and non-operating items. Goodwill is amortised over no more than 20 years.

3. The 'business performance' measures, which Pearson uses alongside other measures to track performance, are non-GAAP measures for both US and UK reporting. Pearson uses these measures because we consider them to be most useful for tracking underlying business performance. Reconciliations of operating profit, adjusted earnings per share and operating free cash flow to the equivalent statutory heading under UK GAAP are included in notes 2, 9 and 27 of the governance and financial statements.

4. The value of the dollar has been translated at the year end rate; $1.92: 1 sterling.

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