Chief executive's review The Pearson goals

Chief executive's review
The Pearson goals
Underlying sales growth
Trading margin
Adjusted earnings per share
Cash conversion
Free cash flow
Return on invested capital

Adjusted earnings per share

We report our adjusted earnings after normal business restructuring costs, which we treat as operating expenses, but before specific non-recurring costs, primarily the integration costs relating to significant acquisitions and before certain non-cash items - principally goodwill amortisation. Non-recurring costs were integration charges of 10m in 2002 (against 74m in 2001) and a 37m charge for the cancellation of certain swap contracts following the RTL disposal. The total goodwill charge was 340m down from 436m in 2001 with an average remaining life of goodwill of 15 years.

Our adjusted earnings per share fell back in 2001, driven by the sharp cyclical downturn in business advertising. In 2002, despite the continued advertising downturn and a weaker dollar exchange rate, we delivered earnings growth of 42%.

In 2003, we expect to continue to grow earnings in double-digits at constant exchange rates, as we benefit from a further steep decline in internet losses and some modest improvements from our business integrations.

Looking further out, we should benefit from our leading positions in growth markets and our ability to harness the benefits of sharing our assets and our processes. Our aim will be to deliver strong annual earnings improvement at constant exchange rates.


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