: the results :

In 2000, sales grew from £3,332m to £3,874m and operating profit, before goodwill, internet enterprises and integration costs, increased from £588m to £686m.

Pre-tax profit, before goodwill, exceptional and non-operating items, fell from £402m to £333m, as we stepped up investment in our internet enterprises. The net costs of developing our internet enterprises increased from £39m in 1999 to £196m, as we accelerated their path to profitability. The net costs of developing these internet enterprises is expected to fall significantly in 2001.

The results also reflect a number of major strategic moves made during the year. We completed the disposal of our stake in the Lazard banking houses for £436m. We merged Pearson TV with CLT-Ufa and took a 22% stake in the RTL Group, which is Europe’s largest television company and was valued at year-end at around £8bn. We made the £1.7bn acquisition, financed by a rights issue, of NCS, one of the leading commercial testing and educational services companies in the US. We acquired, for £318m, Dorling Kindersley, the worldwide illustrated reference publisher. We also made a number of smaller acquisitions and strategic investments. The net effect of these portfolio changes, which will allow us to accelerate revenue and earnings growth in 2001 and beyond, was to reduce operating profit by some £10m and pre-tax profit by around £20m in 2000.

Continuing operations before internet enterprises, goodwill and intergration costs.