Annual Report and Accounts 2010

Financial highlights

In financial terms, Pearson’s goal is to achieve sustainable growth on three key
financial goals – earnings, cash and return on invested capital – and reliable
cash returns to our investors through healthy and growing dividends. Over the
past five years we have produced, on average, 16% growth in earnings and cash
flow. And we have sustained our growth even in the face of very tough
economic and market conditions in recent years.

Business performance and Statutory results

Business performance          
Sales 5,663 5,140 10% 8% 5%
Adjusted operating profit 857 710 21% 15% 14%
Adjusted profit before tax 853 761 12%    
Adjusted earnings per share 77.5p 65.4p 19%    
Operating cash flow 1,057 913 16%    
Total free cash flow 904 723 25%    
Total 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          
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%    

Throughout this document:

  • a) 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.
  • b) Interactive Data is treated as a discontinued business and sales and operating profit 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).
  • c) The ‘business performance’ measures are non-GAAP measures and reconciliations to the equivalent statutory heading under IFRS are included in notes 2, 8 and 31 to the annual report.

2010 Sales


2010 sales

2010 Adjusted operating profit


2010 Adjusted operation profit

Our record

Average annual growth in headline terms, 2006–2010

Adjusted earnings
per share


Operating cash flow




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