Pearson is an international media company with market-leading businesses in education, business information and consumer publishing.

Record results. Pearson reports its highest ever operating profits (adjusted operating profit up 15% to £592m), earnings (adjusted eps up 18% to 40.2p) and cash (free cash flow up £2m to £433m). 
Sustained growth and market share gains. School sales up 6% and Higher Education sales up 4%, benefiting from leading position in content, assessment and technology; FT advertising revenues up 9%; Penguin sales up 3% despite tough consumer publishing market. 
Stronger margins and double-digit profit growth in all businesses. Pearson margin up a percentage point to 13.4%. Education margin up to 14.1% and profits up 12%; FT Group margin up to 17.3% and profits up 18%; Penguin margin up to 7.8% and profits up 22%. 
Higher returns. Return on invested capital up to 8.0% (from 6.7% in 2005), above Pearson's weighted average cost of capital; dividend increased by 8.5% to 29.3p, the largest increase for a decade.
Marjorie Scardino, chief executive, said: "This is another strong set of results. We have built market-leading businesses and invested consistently in their content, technology and international expansion. That strategy is paying off with sustained growth in sales, margins, earnings and returns, and we expect 2007 to be another good year."
Summary £ millions 2006 2005 Headline
growth Underlying
growth 
Business performance 
Sales  4,423 4,096 8% 4% 
Adjusted operating profit 592 506 17% 15% 
Adjusted profit before tax 502 422 19% -- 
Adjusted earnings per share 40.2p 34.1p 18% -- 
Operating cash flow 575 570 1% -- 
Free cash flow 433 431 -- -- 
Return on invested capital 8.0% 6.7% 1.3 ppts 0.6 ppts 
Net debt 1,059 996 (6%) -- 
Statutory results 
Sales 4,137 3,808 9% 
Operating profit 540 516 5% -- 
Profit before tax 466 446 4% -- 
Basic earnings per share 55.9p 78.2p (29%) -- 
Basic earnings per share - continuing 54.1p 38.9p 39% -- 
Cash generated from operations 621 653 (5%) --
Dividend per share 29.3p 27.0p 8.5% -- 
Throughout this statement, we refer to business performance measures for total operations (including Government Solutions) and growth rates on an underlying basis (ie excluding currency movements and portfolio changes) unless otherwise stated. The 'business performance' measures are non-GAAP measures and reconciliations to the equivalent statutory heading under IFRS are included in notes to the accounts 2, 5, 7,12,14 and 15. Profit measures within business performance are presented on an adjusted basis to exclude: i) other net gains and losses arising in connection with the sale of subsidiaries, investments and associates; ii) amortisation and adjustment of acquired intangible assets; and iii) short-term fluctuations in the market value of financial instruments (under IAS39) and other currency movements (under IAS21).
2006 OVERVIEW
Pearson's three key financial measures are adjusted earnings per share, free cash flow and return on invested capital. In 2006, adjusted EPS and free cash flow reached record levels, and our return on invested capital increased from 6.7% in 2005 to 8.0%, above our weighted average cost of capital of 7.7%
Pearson's sales increased by 4% to £4.4bn and adjusted operating profit was up 15% to a record £592m. All parts of Pearson contributed, with good sales growth, further margin improvement and double-digit profit increases in each business. Adjusted earnings per share were 40.2p, up 18%.
Operating cash flow increased by £5m to £575m and free cash flow by £2m to £433m. Cash conversion was strong at 97% of operating profit (even after an exceptional 113% cash conversion rate in 2005). The ratio of average working capital to sales at Pearson Education and Penguin improved by 1.1% points to 26.3%.
Statutory results show an increase in operating profit to £540m (£516m in 2005). Basic earnings per share were 55.9p (compared with 78.2p in 2005, which included the £302m profit on the sale of Recoletos). Net debt rose by £63m to £1,059m (from £996m in 2005).
During the year, we completed a series of bolt

Pearson 2006 Interim results 31 July 2006
Good start to the year. Sales up 8%; adjusted operating profit up 57% to £73m. 
Sustained organic growth and market share gains. Pearson Education sales up 11% with leading position in US School new adoption market and 4% growth in US Higher Education; FT Group sales up 6% with FT advertising revenues up 11%; Penguin sales up 2%. 
Strong profit growth in all businesses. Pearson Education, traditionally loss-making in the first half, breaks even (loss of £21m in 2005). FT Group profits up 23% to £55m and Penguin profits up 38% to £18m. 
Full-year outlook maintained. Pearson's profits are always heavily weighted to the second half of the year. With this first-half performance, we continue to expect strong earnings growth and cash generation and a further significant rise in our return on invested capital in 2006.
Marjorie Scardino, chief executive, said: "These results provide further evidence of the quality and potential of our business. All parts of Pearson are making strong progress, and our steady investment in new content and services is paying off with sustained organic growth, market share gains and margin improvement. We remain confident that 2006 will be another good year for Pearson both in competitive and financial terms."
Summary £ millions Half year
2006 Half year 2005 Headline growth Underlying growth Full year2005 
Business performance 
Sales 1,878 1,613 16% 8% 4,096 
Adjusted operating profit 73 33 -- 57% 506 
Adjusted profit/ (loss) before tax 31 (6) -- -- 422 
Adjusted earnings/ (loss) 9 (14) -- -- 272 
Adjusted earnings/ (loss) per share 1.1p (1.8)p -- -- 34.1p 
Operating cash flow (183) (196) 7% -- 570 
Free cash flow (250) (265) 6% -- 431 
Net debt 1,611 1,298 (24)% -- 996 
Statutory results 
Operating profit 65 73 (11)% -- 536 
Profit before tax 25 48 (48)% -- 466 
Basic earnings 7 337 -- -- 624 
Basic earnings per share 0.9p 42.3p -- -- 78.2p 
Dividend per share 10.5p 10.0p 5% -- 27.0p 
Note: Statutory operating profit for 2005 included a £40m profit on the sale of our investment in CBSMarketWatch. Statutory basic earnings for 2005 included CBSMarketWatch and a £302m profit on the sale of Recoletos.