Trading Statement

Pearson PLC
10 November 2004


10 November 2004
                                 Trading update

Pearson is today providing investors and analysts with a trading update. All
growth rates are for the first nine months of the year and are stated on an
underlying basis, excluding the impact of currency movements and portfolio
changes.

Pearson's sales are up 2%, operating profit is up 7% and free cash flow is well
ahead of 2003. At this stage we remain on track to achieve underlying progress
on earnings, cash and returns in 2004.

Our education businesses are performing well and we are making good profit
progress across the FT Group. This is helping us to mitigate the impact on
earnings of the weak dollar, the long-expected slow year for US School adoptions
and a difficult period for Penguin.

Looking ahead to 2005 and beyond, we remain confident of a significant
acceleration in earnings, cash and returns. With leading market positions and
lower costs, we are in good shape to take advantage of a strong rebound in the
US School publishing industry, improving US state budgets and federal education
funding, the rapid expansion of our testing businesses and further profit
improvement at our business newspapers.

Sales at Pearson Education are up 1% for the first nine months of the year.

Sales at our School business are 1% lower. Good growth in open territories, in
supplementary publishing and outside the US is offsetting the weak adoption
calendar. We expect revenues at our total School business to be broadly level
for the year as a whole. In the US we have led in share of new adoption
business, winning approximately 28% of the total new adoptions (and
approximately 31% of those we competed in) in a new adoption market that is some
30% lower than in 2003. We are also performing well in the open territories and
in supplementary publishing, where growth is picking up with the continuing
recovery in state budgets. Outside the US, we are gaining share in key markets
including Canada, Hong Kong and the UK.

In Higher Education, our sales are up 3%. We are once again growing ahead of the
industry, with strong performances in online learning and custom publishing. We
expect our US Higher Education business to grow ahead of its market this year
and in the 4-6% range, as planned.

Sales are up 3% at our Professional education business, and we continue to
expect sales and profit to be ahead for the full year. Government Solutions and
Professional Testing are growing strongly with the start-up of new contracts
with customers such as the US Department of Health and Human Services and the
UK's Driving Standards Agency. Our technology publishing business continues to
face weak conditions in the IT industry but is gaining share and benefiting from
its lower cost base. We continue to expect that we will receive the full $151m
payment for work completed in 2002 on behalf of the US Transportation and
Security Administration.

Penguin generates a large proportion of its sales and profits in the fourth
quarter. In the first nine months, underlying sales are up 1% although, as
previously stated, headline sales and profits will be affected by the weak US
dollar. As a result of disruption to UK distribution and a slowdown in the US
consumer publishing industry in recent months, Penguin's full-year profits are
likely to be around the low end of current market expectations.

In the US, the AAP has reported that net sales for the industry were level with
last year in the first half, but down 3% for the first nine months. We expect
the US book retail market - which slowed down in the run-up to the US elections
- to pick up for the holiday season. In the UK, despite distribution
difficulties, our total volumes shipped to bookstores are up 4% compared with
the same period last year and we have maintained our market share. However, we
have seen a change in the mix towards lower margin frontlist titles, and have
incurred additional costs from delivering direct from printers to bookstores and
running two UK warehouses. For the important fourth quarter we have a strong
schedule of frontlist titles, including new books from Nora Roberts, Clive
Cussler, Jamie Oliver and Sue Townsend.

At the FT Group, sales are up 6% and we expect a significant profit improvement
for the full year. The Financial Times is on track to reduce losses by
approximately £20 million this year, and we expect it to return to breakeven in
the fourth quarter. Though advertising trends remain erratic from week to week
and across industry sectors, advertising revenues are ahead of last year at all
our business newspapers. At the Financial Times, advertising revenues are 2%
higher and forward bookings are slightly ahead. Recruitment and luxury goods
advertising revenues are growing at more than 20%, but technology and
business-to-business advertising remain weak. Geographically, we are seeing good
growth in Europe and Asia, largely offset by a weaker US corporate advertising
market. IDC's total revenues as reported are up 12% and net income up 10%,
helped by acquisitions and organic revenue growth, which accelerated to 5% in
the third quarter. Recoletos will announce its third quarter results tomorrow.

Exchange rates Pearson makes approximately two-thirds of its sales in the US and
a five cent change in the average exchange rate for the full year (which in 2003
was £1:$1.63) will have an impact of approximately 1p on adjusted earnings per
share. For the first nine months of 2004 our average exchange rate was £1:
$1.82.

Ends

For more information:

UK: Luke Swanson/ Charlotte Elston + 44 (0) 20 7010 2310

US: Jeff Taylor + 1 212 641 2409

Pearson will be holding two conference calls today with Marjorie Scardino, chief
executive, and Rona Fairhead, chief financial officer, for analysts and
investors.

Europe

The call will take place at 0830 GMT. To participate in the conference call,
please dial + 44 (0)1296 317 500, password: Pearson. To register, please dial in
five minutes before the conference call starts.

US

This call will take place at 1000 EST (1500 GMT). To participate from the US,
please call toll free [phone], passcode: 55934626. Participants from
outside the US should call [phone], passcode: 55934626. To register,
please dial in five minutes before the conference call starts.

Both calls will be audiocast live on www.pearson.com. They will also be
available on demand at www.pearson.com afterwards.


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