Text Bank

Chairman's Statement

(Extract)

Dear fellow shareholders:

A year ago today, I wrote to you about my confidence that you would see a strong earnings recovery from Pearson in 2008, even in the uncertain times.

I am pleased to say that we have kept that promise -- in spite of the fact that the drought in business advertising has proved more severe and more enduring than any of us could have imagined. However, as a shareholder in Pearson myself, I am painfully aware that our share price has dropped dramatically over the past 24 months. It is little consolation that most of our media peers have experienced similar declines. As I write this, the newspapers are full of headlines about prolonged economic and political uncertainty, stock market falls and international terrorism. Why, therefore, am I still confident about Pearson's fixture?

1. We are now in three fundamentally strong long-term businesses.
2. The governance of Pearson is in good health.
3. Pearson's work is done by many, many bright, energetic and totally committed people.

We have set about 2009 with confidence and determination. We tried not to be distracted by irrational exuberance when the markets boomed, and we won't be deflected by irrational pessimism on the way down. We're keeping our eyes firmly fixed on the big picture -- which is that we have three world-class businesses, better managed than ever before, with leading positions in long-term attractive markets. That's a powerful combination that will ensure that Pearson will continue to make good progress this year and for many years to come.

Discussion:

1. Pearson makes profits mainly from education and consumer publishing. Do you agree with the chairman that those are strong long-term businesses? Why?
2. If you were looking for a company in which to make your first investment, would you put Pearson on your list? Why or why not?