Underlying sales growth

Pearson's underlying sales grew 6% in 2002. We calculate underlying sales growth by excluding the effect of acquisitions or disposals on the one hand and currency movements on the other. As our business portfolio is now more stable, the 'underlying' impact in 2002 is primarily currency movements.

We believe that we now have a mix of companies that can deliver long-term through-the-cycle growth. However, in 2001, our book publishing businesses were unable to protect us from the downturn in our more cyclical newspaper publishing operations. In 2002 we delivered a return to growth even though sales in our newspaper and technology businesses continued to decline.

In 2003, with the outlook for our advertising-related and technology publishing businesses still difficult, we expect only modest sales growth. Looking further ahead, we expect sales growth to pick up again.