Good morning, everyone, and welcome to Pearson's 2025 Full Year Results. Today's session will include a presentation followed by a Q&A. Now, I'll hand over to Omar.

Thank you, Alex. I've been looking forward to seeing you all. Welcome, and thank you for joining. We appreciate your presence. Let me start by highlighting three key points from today's presentation. First, we are very optimistic about Pearson's future, driven by significant trends that are generating strong demand for our offerings and our unique characteristics and competitive strengths. Second, 2025 was another successful year for our financial performance and strategic advancements. Third, we will continue to make strides on our strategy in 2026, with a financial outlook that is even better than 2025. I will discuss our business progress before handing over to Sally for an overview of our 2025 financial results and 2026 expectations. After that, we'll have a Q&A session with Aarti, Tom, Sharon, Vishaal, Anthony, alongside Sally and me. For those present in person, we have product demonstrations focusing on our latest releases available after the main presentation. Now, let me explain why I am confident about Pearson's future and our position for success. Two main factors build this confidence. First, significant trends are set to drive consistent demand for our services. We've discussed before the ongoing demographic changes and advancements in AI. These trends are already increasing demand for skills development and skills validation. Our confidence comes from the valuable revenue commitments we have from nine leading technology and service companies for these services. These trends are poised to reshape industries, job roles, and educational systems. Companies will need to rapidly upskill their workforces, and institutions must offer alternative pathways for vocational and technical education. As the world's lifelong learning company, Pearson is ideally positioned to capitalize on this surge in human skill development in the coming years. Second, we will succeed thanks to Pearson's unique attributes and lasting competitive advantages. To elaborate, over 80% of Pearson's profit is generated from assessments and virtual schools. These areas rely on human-led services where complex interconnected physical and digital processes facilitate large-scale operations in highly regulated markets. Our services must reach a high standard required by accreditation authorities and regulators, underscoring the importance of strong operational delivery. Together, our services serve as verification infrastructure for companies, industry associations, and government entities. Examples include physical security, secure supply chains for assessment materials, and statistical proof for maintaining standards alongside capacity management for millions of tests across our 20,000 secure facilities. Even in today's AI-driven environment, some customers are still unprepared for digital solutions at scale, meaning that print-based products will continue to be vital for the foreseeable future. This indicates that about 90% of Pearson's profits come from complex, interconnected hybrid physical and digital services alongside print, all demanding uncompromising quality and trust. The remaining 10% mainly comes from digital courseware. In higher education, we are deeply integrated into critical workflows that decision-makers use to perform their roles. These customer relationships have developed over years on a foundation of quality, which results in high switching costs. We are excited to see the advancements made by AI labs and are actively incorporating these enhancements into our offerings. However, our products go beyond mere learning content; they are designed to manage courses comprehensively and are closely integrated with learning management and student information systems at universities, as well as with individual professors' curriculum and assessments. These attributes are distinctive and are supported by robust competitive advantages. Our unique position within the learning ecosystem provides us with extensive proprietary data that enhances learning experiences and outcomes. We gather data from billions of student interactions and submissions and countless instances of feedback on our platforms annually, enabling us to create more effective products. Pearson holds leading positions across nearly all our businesses, offering economies of scale and strong operating leverage, and delivers a breadth of offerings that is unmatched globally. This diversity strengthens the business model, while our long-standing trust underpins these strengths, developed through a history of operational excellence in our large-scale services and our expertise in teaching methodologies and measuring education outcomes. Trust is essential, especially in an era driven by AI, as proximity to teachers and learners necessitates higher levels of trust. In summary, the demographic shifts and advancements in AI will continue to drive demand for skills and validation, positioning Pearson as the ideal company to benefit from these changes. Our unique attributes of trust, quality, operational strength, and a wide array of services deeply embedded in learning ecosystems, combined with our proactive investment in AI innovation, ensure strong, sustainable cash flows and profitability. Our deep-rooted competitive advantages provide us with a unique platform for future growth. We established three priorities in 2025, and I am pleased to report that we achieved all of them, thanks to our people's focus on our customers and execution. First, we again met our financial performance expectations, with a 4% revenue increase, a 6% rise in profit, and strong free cash flow, highlighting the appeal of Pearson's business model. Second, we continued to integrate AI-based innovation throughout our products and services, resulting in more engaging and personalized learning experiences, and we are seeing tangible improvements in learner engagement and outcomes. Third, we are making significant strides in our enterprise segment. Our new go-to-market strategy is producing results, evident in our growing revenue backlog, which now amounts to hundreds of millions of dollars in incremental sales anticipated by 2030. This indicates that our enterprise segment is on track to ensure meaningful shareholder value and support accelerated growth in the medium term. You'll recall our strategy framework shared in 2024, which continues to guide our actions. Our motivation stems from our commitment to help individuals achieve their aspirations through learning. At the end of our presentation, we will showcase a video highlighting the real-world impact of learning, underscoring Pearson's significant role globally. Next, our core focus remains clear: we are the global leader in assessments and validation. We are advancing our strategy to enhance performance in our core businesses while also investing in the high-growth segments of early careers and enterprise skilling. Lastly, our approach involves capital allocation that prioritizes innovation aimed at improving learning outcomes and fostering a high-performance culture throughout the organization. I want to share some insights into our 2025 progress, starting with performance in our core businesses. Our focus on execution gives us confidence that each business unit is on a clear path to improved growth, enhanced by strengthening our sales capabilities and developing competitive product roadmaps. First, growth in assessments and qualifications improved in 2025 due to our team's dedication to meeting customer needs. Clinical Assessment and our Qualifications business performed well, benefiting from digital growth and international expansion. Pearson Professional Assessments achieved scope extensions and new contracts with companies like Google and ACCA, which we will announce in the coming year, contributing to faster future growth. U.S. Student Assessment made headway, unlocking adjacent market potential through collaboration with McGraw Hill, and we expect this momentum to continue in 2026 with sustained growth in enterprise, international markets, and fresh product innovations. Second, English Language Learning is performing strongly, with key wins in institutional markets, particularly in Latin America, and an increase in market share in PTE, maintaining our revenue levels even as global market volumes declined by about 15%. We aim to leverage this momentum in upskilling enterprise talent with English skills and achieve further market share increases in 2026. In higher education, we experienced quicker growth in 2025, despite the K-12 transition and challenging conditions in international markets. We progressed our early career strategy by operationalizing our direct K-12 sales team to seize the rapidly expanding career readiness market. Our core U.S. Higher Education business remained strong, particularly in inclusive access. We also recognize the potential for improvement, especially in channel execution to enhance inclusive access growth, alongside accelerating platform convergence and simplification in 2026. Regarding Enterprise Learning and skills, Vishaal and the team are laying a solid foundation for growth by building up our global enterprise sales team and securing long-term strategic relationships with major companies, which I'll elaborate on shortly. Lastly, Virtual Learning had a remarkable year, benefiting from execution improvements we spoke about last year, including a new enrollment portal and targeted marketing investments to meet high demand. We have enhanced our early careers offerings through new industry partnerships, now integrated throughout our school network, and we are optimistic about this business's potential in 2026 and beyond. Our leadership position and share gain in this market coupled with opportunities to expand our school network yield further specific improvements through execution synergies that will benefit Pearson as a whole. We are bolstering synergies across business units, backed by AI-enabled cost optimization opportunities and continuous process enhancements to support faster product innovation. These synergies are providing additional capacity for investment, promoting future growth. In 2025, we achieved about a 200 basis point margin through cost savings, which we are reinvesting. Expect us to keep optimizing our business to facilitate ongoing investment and margin growth within our profit and loss framework. Now, let me update you on our progress regarding key synergy areas. First, we've streamlined our supplier base and strengthened relationships with a select group of key partners to drive customer impact, efficiency, and business growth. Our latest partnership with Salesforce exemplifies these benefits: deepening our sales intelligence capabilities at an optimized cost while supporting Salesforce's reskilling objectives through our enterprise products. Second, we are enhancing our operational systems, utilizing new AI technologies to deliver improved customer service, faster market access, and enhanced data capabilities for decision-making. Teams leveraging our AI content development tools have seen content editing time reduced by at least 40%, translation costs cut by nearly one-third, and content alignment expenses diminished by 25%. Our AI customer service agents managed over 130,000 interactions, achieving approximately a 40% reduction in volume in areas where our agents have been deployed. We aim to unlock further value as we transition from pilot programs to larger internal application and develop new workflows utilizing agentic technologies. Through our newly formed revenue operations function, we now have a standardized sales pipeline across Pearson, alongside a simplified sales incentive framework that boosts forecast visibility and sales discipline. Now, turning to branding, if you explored all Pearson assets online, you would have encountered what I'd call brand confusion. We are working towards creating a more unified Pearson presence, resulting in a simpler and more intuitive product portfolio that enhances selling and purchasing ease, ideally improving the signal-to-noise ratio. You may have noticed this in the new Pearson branding we launched last year and through our product portfolio, such as Pearson Learn and Pearson Career Ready. In conclusion, we are progressing towards implementing a modern software development approach, maximizing the value of our substantial investment in product and technology, totaling around GBP 1 billion last year, which facilitates future innovation while enhancing our competitive strengths. Our initiatives are expediting innovation across the company, leveraging shared capabilities to integrate top-tier AI-enabled tools and functionalities throughout our business units, strengthening their market positions. As our AI tool usage increases among end users, we continue to see clear advantages, benefiting educators by giving them more time for teaching and improving learning outcomes for students. Let’s now showcase the full range of our AI offerings in higher education and how they contribute to enhancing student outcomes. What this highlights is not just the pace at which we're innovating, but how deeply integrated AI has become in our capabilities to enhance outcomes. Now, let’s look at our progress on our two medium-term growth vectors, starting with enterprise skilling. When I talk to CEOs, the message is clear: AI is reducing the half-life of skills, and there is no successful AI transformation without a genuine investment in human learning. This has led to a greater urgency around reskilling, bridging productivity gaps, and getting ready for the AI-driven reshaping of jobs. The scale of this shift is moving companies away from traditional learning and development methods with isolated tools that have minimal or no return on investment, and toward partners who can help create learning experiences and connect skills, data, and talent intelligence within a unified system. Pearson’s strengths align well with this opportunity, and we're making solid progress in unlocking it. Our new go-to-market strategy has resulted in nine significant partnerships. What links these companies is their relevance in the future of technology; they have large workforces with extensive reskilling needs and share our belief in the importance of skills in the age of AI. They chose Pearson because we are the leading lifelong learning company. I want to outline the scope of these long-term partnerships and explain why these deals are important. First, they secure our partners as Pearson customers. We've already created substantial sales opportunities, like integrating our learning products to facilitate Amazon's workforce development, providing English Language Assessments for TCS, delivering certifications at scale for Google via Pearson Professional Assessments, collaborating with Credly as a key credentialing partner for Microsoft's new skilling platform, and offering sales skilling through tailored assessments and content for IBM and Cognizant. Each partner also has clear commitments to expand our collaborations. Additionally, Pearson benefits as a customer of their engineering expertise and services by utilizing AI tools for content generation and leveraging Azure and Bedrock capabilities in our AI-enhanced products. Lastly, we are involved in joint innovation and go-to-market efforts that open new opportunities through complementary solutions and access to various industries or regions. For instance, we are partnering with HCLTech on a skilling initiative for a major U.S. retailer and embedding our enterprise product suite, assessments, and learning content within the Deloitte Academy, which is Deloitte's all-encompassing skills transformation offering to their clients worldwide. Microsoft has been a vital strategic partner from the beginning, and we've achieved considerable progress together towards 2025. We are thrilled by the innovation we are developing alongside them. We now provide personalized adaptive learning experiences seamlessly integrated into the flow of work. Let me now introduce our communications approach. Please roll the video. We're just at the start of what we can do with our partners as we combine Pearson's proprietary content, data, and assessment capabilities with their scale, enterprise selling and reach. Our enterprise business will contribute meaningful shareholder value over the medium term, and we're pleased by the progress so far. I know I have a finance audience in the room. So from a financial perspective, the contracts we signed in 2025 lock in revenues of hundreds of millions of dollars with existing customers, and they add incremental cumulative revenue commitments to Pearson of hundreds of millions of dollars through to 2030, with value being realized in AMQ, ELL, and ELS. Now let's turn to our second growth vector, early careers. In an AI-driven economy, concerns are particularly acute around entry-level roles. That makes job-ready and vocationally aligned skills more important than ever. We estimate the early careers market is about a $6 billion opportunity in the U.S. alone. It is fragmented with no clear winner and has been underserved historically, presenting a clear adjacent opportunity for Pearson given our strengths. We had an early presence through our career offerings within virtual schools and relevant IP in higher education and career-ready certifications in Certiport. We're augmenting these areas with significant investment. For example, we improved our channel access through a direct Salesforce to deepen and expand our relationships with U.S. school administrators. And we expanded our capabilities through the acquisition of eDynamic Learning, North America's largest provider of digital career and technical education. So by optimizing our model across these areas, we're driving new growth here and are energized by the progress in unlocking this attractive adjacent market. I now want to shift gears a little and come back briefly to the topic of power metrics. These are a small number of metrics of leading indicators that we want to report to you on a go-forward basis. We chose these metrics because they signal clearly the future health of the business, and we want also Pearson's people to be laser-focused on these as part of their incentives as well. First, our renewals metric. The renewal rate was strong at 96%, reflecting the competitive strength of our businesses. While Pearson Professional Assessment continued to drive near-perfect retention, the metric was impacted by New Jersey and U.S. student assessment, although we were successful in another 38 competitive renewals in that business. And our renewals metric will be supported by our second growth metric, which shows the average annual new contract value signed across our core large-scale assessment businesses. In 2025, our metric was GBP 33 million, benefiting from large wins such as Google with Pearson Professional Assessment and our formative assessments contract with McGraw Hill. And given contracts in this space are long-term in nature, you should think of this metric as cumulative over a 3- to 5-year period. Lastly, we extended our major customer metric to 49 in 2025, reflecting both new customer wins and expansion within existing relationships, demonstrating our momentum in enterprise. As you can see, we have now made a lot of progress in our business while delivering on our commitments, which will contribute to an even stronger 2026. Our unique business model, continued progress against our strategy, plus our strong focus on execution means that we're guiding to a further improved financial profile in 2026. This builds on our track record of financial progression and meeting market expectations each year since COVID. I'd like to now hand over to the wonderful Sally to break down in more detail our financial performance for '25 and the financial outlook for '26.

Thanks, Omar, and good morning, everybody. 2025 delivered another year of good financial performance. Sales grew 4% with a 6% increase in underlying profit and margin expansion from 16.9% to 17.2% despite currency headwinds. Adjusted EPS increased 4% to 64.5p, reflecting that solid trading performance and a reduced share count from the share buyback, partially offset by higher interest costs. It's worth noting that EPS grew 9% at constant FX rates. Cash performance continues to be strong with free cash flow conversion of 125%, including the state aid recovery, 98% without. This strong performance, combined with our balance sheet strength, supports a 5% increase in the dividend. We also recently commenced a further GBP 350 million share buyback, demonstrating proactive capital allocation to drive incremental shareholder value. Before we get into the detail, we've updated the slide we shared last year, demonstrating historical financial progression for 2025 data. We have a track record of consistent progress with underlying sales, profit, free cash and return on capital growth. This demonstrates the momentum in the business and underpins our confidence in both our 2026 outlook, which I'll come to in a minute, and our medium-term guidance. But first, a recap on our 2025 sales performance with group underlying growth of 4%. By business unit, Assessments and Qualifications delivered a solid performance with growth accelerating in H2, particularly in Q4 and all sub-business units contributing to that growth of 4%. Virtual Learning delivered a strong performance, particularly in H2 when sales were up 18%. Fall enrollments were up 13%, supported by enhancements to our enrollment platform, improved retention, the rollout of our career academies, targeted marketing and strong underlying market growth. Higher Ed growth improved as expected versus 2024. Our core U.S. Higher Ed business delivered a solid performance with anticipated offsets from K-12 and international, both of which are expected to improve in 2026. English Language Learning continued to grow, driven by institutional, while PTE was flat year-on-year, outperforming a challenging market. And Enterprise Learning and Skills grew 6% with another solid performance from Vocational Qualifications and momentum in Enterprise Solutions, who grew 20% in Q4. Group adjusted operating profit grew 6% on an underlying basis to GBP 614 million. This was driven by operating leverage from sales growth and continued cost savings, partially offset by investment and inflation. FX also impacted the headline movement. Adjusted operating profit margin increased to 17.2%. Again, by business unit, Assessments & Qualifications margins remained at 23% with margin benefits from sales growth offset by investment, inflation and currency movements. Virtual Learning margins increased to 16%, driven by operating leverage on strong sales growth. Higher Ed margins remained flat as sales growth was offset by investment, inflation and currency movements. English Language Learning margins also remained flat with cost savings offset by inflation and currency movements. And Enterprise Learning and Skills margins increased to 10%, driven by margin on sales growth. Statutory profit declined 6%, predominantly due to a noncash one-off impairment relating to our Higher Ed platforms, partially offset by vacant property provision reversals following sublets in 80 Strand and Hoboken. As Omar mentioned, in 2026, we plan to accelerate the conversions of our Higher Ed platforms to streamline and modernize our courseware offering and reduce support costs. A consequence of this is an impairment of GBP 87 million in some of our assets, which is one-off and noncash in nature. This write-off now generates a mechanical circa GBP 15 million per annum profit improvement in Higher Ed on average over the next six years. Free cash flow increased by 8% with a conversion of 125% due to the recovery of state aid taxes. Conversion, excluding that state aid recovery was still a strong 98%. Operating cash conversion was 93% with an increase in working capital in the year given high Q4 sales growth and slightly increased investment. Our balance sheet remains strong with a leverage at a comfortable 1.3x at the end of the year, below our medium-term cap of 2x EBITDA, maintaining optionality to make value-enhancing investments and/or shareholder returns. Net debt at the end of the year was GBP 1.1 billion, a GBP 0.2 billion year-on-year increase with free cash flow more than offset by the share buyback and acquisition of eDynamic Learning and dividends. Return on capital increased 80 basis points to 11.3%, more than 250 basis points ahead of post-tax WACC. Turning to guidance for 2026 and beyond. As we've previously guided, in the medium term, you can expect mid-single-digit CAGR underlying sales growth, sustained margin improvement, equaling an average of 40 basis points per annum and strong free cash conversion in the region of 90% to 100% on average across the period. As you've heard from Omar, we have strong confidence in our ability to deliver in 2026. And therefore, we're laying out specific guidance. At a group level, you can expect mid-single-digit sales growth and adjusted operating profit in the range of GBP 640 million to GBP 685 million at FX rates as at the end of 2025. The mechanical improvement driven by that 2025 impairment I discussed earlier is included in this range, and free cash conversion will be 90% to 100%. The effective tax rate will be circa 25% and interest will be circa GBP 80 million following the commencement of our further GBP 350 million share buyback. Included within this guidance is new investment to support our strategy and drive growth, including higher-than-average transformation costs, which are weighted to H1. This investment is more than offset by the margin on sales growth and operational improvements, which drive the group's margin expansion and our GBP 0.01 equaling GBP 5 million FX profit guide still stands. On a business unit basis, A&Q will grow low to mid-single digit, driven by new contracts, products, and pricing. Virtual Learning will grow even more strongly than in 2025, given a full year of enrollment growth. Higher Education will grow more than 2025, supported by continued product and platform innovation, pricing, and inclusive access in U.S. core as well as improvement in the K-12 channel. English growth will be higher than in 2025 with PTE returning to growth, market share gains, and pricing. And Enterprise Learning and Skills growth will be driven by a solid performance in BQ and strategic account growth in Enterprise Solutions. In terms of phasing growth is again H2 weighted, but not as markedly as in 2025. At a business unit level, A&Q will decline in Q1 given the loss of the New Jersey contract and PDRI headwinds but will then turn to growth in subsequent quarters, supported by new business and recently awarded contracts. Virtual Learning will see strong growth, particularly in H1. English growth will again be Q4 weighted given the seasonality of the business and HE and ELS growth is expected to be relatively steady. Our disciplined capital allocation policy remains the same with a focus on maintaining a strong balance sheet, investing both organically and inorganically, paying a progressive and sustainable dividend, and then returning surplus cash to shareholders. The slide you see now illustrates how consistently we've applied this policy over the past six years. We continue to invest behind the business with meaningful organic cash investment during the year alongside inorganic investment through the $225 million acquisition of eDynamic Learning. Since 2020, we have returned GBP 1.4 billion to shareholders through share buybacks with a further GBP 350 million program commenced in January, underpinned by another year of strong cash performance in 2025 and our confidence in 2026 and beyond. Going forward, we will continue to apply this disciplined approach. And through our strong cash generation, we'll continue to invest behind opportunities to drive further growth and create long-term value for all our stakeholders. And with that, I'll hand back to Omar.

Thank you, Sally. Let me conclude by outlining our priorities for 2026, which build on our focus from 2025. First, we will once again achieve our financial targets. Second, we aim to maintain our leadership in the application of innovative technologies, including AI, across our products and services. Third, we will work towards achieving our core business and enterprise power metrics. There are three key takeaways from today. First, we remain very optimistic about Pearson's future, driven by significant trends that create strong demand for what we offer, as well as by our unique characteristics and competitive strengths. Second, we successfully achieved our goals in 2025, which was another year of financial success and important strategic advancement due to our strong focus on execution. Finally, you can expect us to perform even better in 2026. I want to take a moment to congratulate Sally on her remarkable 26-year career at Pearson and her valuable contributions along the way. I am also looking forward to introducing Simon Robson, who was previously Group CFO at Sky, in the coming months. Now, let's view a video I mentioned earlier, featuring Savannah, a real graduate of Pearson Connections Academy, as she shares how learning has transformed her life, which highlights Pearson's unique role in the world. Please roll the video.

I've got three questions, please. I guess, firstly, please, could you provide a bit more detail on the moving parts of A&Q growth in 2026? If you didn't have the New Jersey contract loss and PDRI was, say, stable, then would it be fair to assume the division would grow more mid- to high single digits, around 6% rather than the 4% you've broadly guided to? Is that the right way to think about it? And you've also announced a number of contract wins over the last year with major tech companies in professional assessments. Does there still remain a strong pipeline for potential new contracts going forward? Secondly, on EOS, your guidance for 2026, I think, is somewhat vague in terms of you're clearly growing the number of large blue-chip logos you're working with in Enterprise Solutions. Should this not lead to improved revenue growth this year versus '25? Or are there some other dynamics offsetting this that we should be aware of? And thirdly, I guess, Omar, building on your comments about the significant opportunities from generative AI for Pearson, what are the primary risks that you identify? For example, do you see any risk from evolving student learning behaviors impacting demand for Pearson's courseware content in Higher Ed?

Great. Thank you. This is just a very light collection there, James. We appreciate that. We appreciate that very much. I'm sure the other analysts are like, "Damn, and I wanted that question." But anyway, it's good. So I think on the A&Q dynamics and what's going on under the hood. I mean maybe, Sally, like say a little bit about how you think about the numbers, and now particularly James is asking ex PDRI, ex New Jersey, and maybe add a little bit to what you're seeing, the overall landscape of how that business is performing.

Yes. So I'm going to start and then I'll pass over to Aarti. So low to mid for A&Q in 2026, and you've called out the right pieces. So yes, you can see the impact of New Jersey from a retention point of view. I've called that out because it impacts Q1, and I want you to be ahead of Q1. But then through the rest of the quarters of the year, we bought new contracts online. You heard of Omar calling out the number of them. So we've got a new contracts in Maryville. We've got a new contract in other states. We've got a new contract with Google in Pearson Professional Assessment. And we've got some new contracts that we can't talk to you about yet because we haven't got the contracts signed, but which we've been verbally awarded. Alongside new products that we're bringing online, pricing and all those sorts of things as well. So we've got really good confidence in the A&Q performance for the year. To your point, I haven't done the math on what you say, but quite clearly, without the PBRI piece with the federal funding and without that New Jersey piece, then yes, it would be better than low to mid.

Art, do you want to just comment a little bit on how you're thinking about the business shape overall?

Yes, absolutely. And good to see you, James. And as Sally said, those two factors are real, particularly in the early part of the year in the course of New Jersey. But contract performance in the two large contract services business, Professional Assessments and School continues to be very strong. We won a competitive bid for Maryland. We won a competitive bid for Wyoming. We renewed close to 40 other competitive bids. We'll see the impact in 2026 of the full year of running the Salesforce and ServiceNow certification programs within the Professional Assessment business. Omar announced the extension of ACCA. That chartered accountants in the U.K. for those not familiar, that starts to show up in '26. In our U.K. and international qualifications business, we're launching the Standards and Testing Agency primary school testing contract in '26. We came online with that in '25, but this is the first full year of implementation. We'll be delivering primary school examinations in 16,500 schools in the U.K. And our clinical assessment business continues to deliver strong digital innovation into the market. That business has performed well over the last few years. I encourage you to stay for the product demos afterwards, and you'll see some examples of more innovation that we're bringing to market that gives us confidence in strong performance in that business. So overall, we feel great about A&Q.

That's the summary. We feel great about A&Q. On the second question, Sally, I'm going to ask you to say like one word about why our growth guidance was slightly thin. And then I'm going to ask Vishaal if he's sitting on his haunches having signed nine deals and he's not building pipeline for the future. But over to you, Sally.

Yes. So really confident in ELS growth. But I think we know right now, it's one of the smaller divisions. It's not going to be for long because I know how competitive, apart from anything else, Vishaal is. And that just means that a few million pounds can make a couple of percentage points difference. And therefore, it didn't really seem to make sense when we're looking at it quarter-by-quarter to be too specific. But the BQ part of the business, we'll see solid growth. And I talked about that Enterprise Solutions part of the business and that 20% growth in Q4, it's relatively small now. But if it keeps growing at that rate, it's not going to be relatively small for very long.

So Vishaal, you're not going to do any more selling and like are we done now with...

Yes. To elaborate on Sally's comments, we have two segments within ELS. The BQ segment is showing strong performance, particularly in the U.K. with our BTEC brand. We are securing numerous new contracts in the vocational sector, which is driving growth. Additionally, we are expanding into international markets such as Uzbekistan, Pakistan, and Jordan. An exciting aspect of this segment is our apprenticeship services. We recently announced a contract with the British Army, which we are currently executing, and we have collaborations with the NHS, with more developments coming up in the Middle East that we will announce soon. This part of the business is performing well. The other segment, which I find even more promising, is Enterprise Solutions, where we have established nine new partnerships. My team is focused on execution, working on various elements needed to drive revenue, including developing product co-innovation roadmaps and effective go-to-market strategies with our global partners, which are major technology players. There is a lot to concentrate on, and we are entering 2026 with significantly more momentum than we had at the beginning of 2025.

Thank you, Vishaal. James, I want to address the AI risk concern. This is a topic we could discuss extensively. The market considers the implications for digital products that are entirely online. If an AI tool is released for free, it raises questions about its impact on that market. This could indeed be troubling for some. However, Pearson is not affected in that way. The only part of Pearson that somewhat fits that description is Mondly, which we transitioned last year to focus solely on institutional and enterprise packages. This is where we are directing our investments and efforts. Interestingly, AI can lead to a different result for Pearson. As AI-generated content floods the Internet, we are seeing an influx of misinformation and deep fakes, which drives people towards reliable sources. There is a growing demand for trusted authorities, verified identities, and validated skills. As you know, it is challenging for graduates seeking jobs today; they often send countless resumes, but the resume screening is handled by bots. This process is not effective. Companies are increasingly asking for proof of validated skills, which is exactly what Pearson offers. Therefore, rather than a threat, AI presents significant advantages for us. Moreover, investors may not fully recognize this distinction, especially when Pearson is bundled with other media or EdTech companies, as we operate differently.

Three questions, please. First one is on the virtual learning margin. So it has improved significantly year-on-year. I understand it's coming mostly from operating leverage. Is there anything else that's driving the margin expansion? And is it reasonable to assume that it's going to continue expanding at the same pace? Second question is on pricing. So you said you're generating a lot of efficiencies, thanks to AI. I'm curious to hear how are your conversations with clients? Do they expect you to pass on some of these savings? Or is your pricing power very strong, which means that you don't have to give away any of these cost savings that you're realizing? And if you could comment on how is pricing evolving across your business, that would be really helpful. And then lastly, on the Higher Ed business, one of your peers, McGraw Hill is growing very fast. Why do you think they're growing so quickly? And do you think you can bridge the gap to their growth rate? And Sally, all the best for the next step in your career.

Thank you, Laura. Regarding the Virtual Schools margin, I'm going to ask Tom to share his thoughts on what has contributed to the success so far and how we plan to approach this moving forward.

Yes, sure. So I mean, I think from a virtual schools perspective, last year, we obviously saw great growth driven by helping people like Savannah, which was lovely to see in that video. I think fundamentally, the margin characteristics of that business are great. The one thing you have to bear in mind is when you grow as quickly as we did last year, you have some teacher vacancies because you're struggling to recruit teachers. It's obviously kind of hard to recruit teachers in Q4 of the year. So I think you should expect to see sort of continued margin expansion driven by the top-line leverage. But just recognize we may need to catch up and think a little bit differently about teacher hiring because fundamentally, I think we are seeing a very different opportunity in that space, which we're excited about. We just need to make sure we transform how we manage the business to support the ongoing demand.

And there was also that extra marketing spend that we put in to drive that growth as well. That's all covered in that margin movement too.

That was fully absorbed. Regarding pricing, the main point is no. Pearson is always investing in efficiency and productivity, and we will continue to do so. However, that doesn’t mean customers will demand discounts. This is due to the unique position Pearson holds as one of only a few companies capable of delivering high operational excellence in driving and assessing standards. This is the source of our gross margins. So, to summarize, we are not negotiating prices at this time. On the topic of Higher Ed and McGraw Hill, I appreciate you highlighting our potential. They are doing nothing we can't replicate, and under Tom and the team's leadership, we are in a much stronger position now than a few years ago. Our business is growing, and we aim to continue enhancing our performance, learning from McGraw Hill, which is a great company.

Two on enterprise and then one more. Just on your comments on the backlog in enterprise, could you just give us a sense of what it would have looked like 12 months ago, just to get a sense of how it's grown over the year in the context of the enterprise agreements you've signed? And then I guess, just on those partnerships, I'm just trying to get an understanding of pricing framework. Just in the context, I know there's a debate around AI displacement and unemployment levels. And I guess just in the context of potentially higher unemployment, how that would affect that business if pricing is based on headcount-led metrics? And then just on the medium-term plan and the average 40 basis point margin improvement per annum. Could you give us a sense of what's the contribution from, I guess, operating leverage and cost efficiencies just around your comments in terms of you've reinvested the cost efficiencies you've delivered over the last couple of years?

Yes. Looking back a year, in our enterprise business, particularly focusing on small enterprise solutions, we recognized that small numbers can indeed make a significant impact. This segment already had some partnerships, and other areas of Pearson, like Pearson View, had existing relationships with companies like Microsoft and AWS. Our goal was to ensure these customers remain long-term partners and to generate meaningful growth. These contracts help us secure hundreds of millions in future revenues from existing agreements and place us in a position where those companies are motivated to invest in us and innovate for the next generation of products. We’ve added hundreds of millions more through these arrangements and others, marking a significant shift from where we were a year ago. The benefits extend across ELS, ELL, and A&Q, because when we established the enterprise sales team, we realized Pearson had what the enterprise market required; it just wasn’t being marketed effectively. We have formed a unified sales team to capture this enterprise opportunity, and Vishaal's team is effectively leveraging all of Pearson's resources, which is reflected in our results. Regarding pricing and the potential impact of unemployment, I can't predict the future of employment or the effects of AI. I sense there is some hype coming from Silicon Valley about the capabilities of AI tools like Codex and Opus, particularly regarding software engineering, which has created a lot of concerns among software engineers. Historically, during such disruptions, there is a heightened need for new skills, which we're currently experiencing. Tech companies are seeking our help to train their workforce, particularly those involved in selling their AI products, and are asking us to educate their customers about using these new offerings effectively. To justify their significant investments, they need their users to be adept at utilizing these products, and that’s where we come in. This demand is driving our current efforts. Furthermore, Sally would point out that in previous economic downturns, Pearson has showcased a countercyclical element, assisting individuals during those challenging times.

On the specific financial question you're asking, though, from a pricing point of view, it's not based on headcount with these partnerships. It's on hard commits and dollars.

Yes. I mean, Sally you've got an excellent point. Sally. I mean so when I say the hundreds of millions, I mean, Sally and I talked about like how are we going to explain this to the market because it's a bit involved because it's across several years and it's across the different business units. But as Sally said, that is legally contracted revenue backlog. That's what that is. And then on the last point that you're asking about the medium-term 40 bps, how we're thinking about that vis-a-vis operating leverage. So Sally?

I think I've talked before about the kind of the three components: operating leverage on our mid-single-digit sales growth. And then we've talked about tens of millions of pounds of cost savings. Actually, last year, that was the 200 basis points that Omar referred to. So that gives you an idea of the scale that we're talking about. If you do the math on that, you get to a lot more than 40 basis points. And then we're reinvesting part of that back into the business in order to drive that future growth. So I think from a scale perspective, you can take the 200 basis points, you can apply the mid-single digits to the top line. And then the balancing figure to get that to 40 basis points is investment. And you'll see that, that's a significant number because we're driving for future growth. We're innovating with our partners to bring new products to the market, and it's really exciting.

So first of all, digging back into A&Q in Q1. So you saw 8% organic in Q4. I think if the whole of the New Jersey loss landed in Q1, that would be something like a 6-point drag. So that would still leave you in positive territory. PDRI was already declining in Q4. So were there one-off benefits helping you in Q4? Or is there something else worse in Q1 to get us down to negative? Also digging into Laura's question on Higher Ed a little bit more, Cengage was 10% up in U.S. Higher Ed and 25% McGraw Hill teens. Both of them say they won share of adoptions. They're also much bigger in Inclusive Access and growing faster in Inclusive Access. So this has been the case for a couple of years now. So what's going to make this turnaround and need to catch up when it isn't really happening so far? And a third question, can you talk about what kind of enrollment growth for fall 2026 you're baking into your thinking on higher education?

Yes. I mean, Nick, I love seeing you. I'm so happy you're here, and I'm excited about the day when you don't ask me tons of questions about Higher Ed. But anyway, we're going to absolutely answer those things. So on AMQ, was there anything funny going on in Q4, Sally, that gave us a one-off kicker in AMQ that we should be talking about?

No. I mean, of course, we're not a business where you can just go steady, steady, steady because it's not a volume play. We've got these large long-term contracts, and the revenue recognition is based on when you're delivering against those contracts. And if your exam falls in one quarter rather than another, it can mean that things move around. All that's going on in Q1 is the New Jersey contract, and then the comp from PDRI is a tricky comp. In Q2, the comp gets easier for PDRI and then we bring these new contracts online. And then we've got the new contracts that we had in Q4 also helping that growth. So just simple as that.

Thank you. I want to share my thoughts on the Cengage situation. Tom, you might want to add your insights on enrollment afterward. I'm straightforward about this: two key factors matter to me: having a great product and the ability to sell it. Historically, Pearson hasn't paid enough attention to these aspects in the Higher Ed sector. That’s why we are currently merging our platforms into a single modern tech stack, and Tony and his team are excelling at that. The product was previously lacking, but it's now rapidly improving, featuring rich functionality that professors appreciate. While some of our underlying technology was outdated, we're addressing that. On the sales side, Tom and his team have updated our approach, and I'm pleased with the performance there. However, we may have been slow to adopt inclusive access, and we ended the year with around 44% of revenues in that area, while the top competitors are around 60%. There's significant growth potential ahead, as we know our next steps. Tom, please provide your thoughts on that and also touch on enrollments.

Yes, I can respond to that. The issue of market share is something we anticipated. It’s straightforward. We focus on adoption market share rather than NPI for a couple of reasons. Firstly, NPI only represents half the market and overlooks significant elements like OER. Secondly, it doesn't reflect what professors are actually doing in terms of adoptions. Our focus is on adoption share. Last year, we saw growth, and this year, we’ve remained stable. We will keep you informed on when we see increases, decreases, or stability. Regarding Inclusive Access, as Omar mentioned, we see room for improvement. We're committed to enhancing our Inclusive Access strategy for 2026 and are eager to see its development in the fall. Additionally, we have been open about the challenges in some product areas. When I joined, there were 170 ways to integrate with an LMS, which complicated management for sales and customer support teams. We have streamlined that to under 10 and continue to focus on improvements that enhance the professor experience. The friction with aspects like inclusive access has received significant attention. In terms of enrollments, we expect overall stability, with an increase in the first half and a slight decline in the second half. So that's our perspective on the situation. I would also like to highlight that the AI showcased in earlier demos is currently in the hands of our sales team, helping to secure new business and capture market share. We're thrilled about our product offerings, and the work Tony and the team have done is remarkable in integrating advanced AI into our products, which is appealing to both faculty and students. Ultimately, what matters most is our close connection with faculty and how we are supporting students in learning, which is reflected in the positive statistics on active reading and learning.

What I'm connecting from what you're saying is that not long ago people thought EdTech would overpower companies like Pearson, and similarly, they believed OER would do the same. However, both have not reached that potential for reasons that aren't always clear. OER consists of high-quality, peer-reviewed content created by professors and made available for free, but it requires maintenance, alignment with curriculum and assessments, and integration with various LMS and SIS systems. This is often too much for the average professor to handle, so it doesn’t get done. In the current AI landscape, where a lot of unreliable information is being published, institutions tend to rely on trusted sources, which includes companies like Pearson. Therefore, I believe we are in a strong position. Does anyone else have anything to add?

We've got one question on the line. If there are no other questions.

First question is from Steve Liechti of Deutsche Numis.

I have a couple of questions. First, can you remind us about the size of the significant client pause that occurred in the first half of last year? Was that in the first quarter or the second quarter? How does that impact the numbers as they flow through the quarters? My second question is about Enterprise Learning. I know you've mentioned it is a small part of the overall mix. Can you provide a rough figure or remind us of what portion of the total ELS revenue of EUR 282 million is attributed to Enterprise Learning? This would help us understand its scale. Also, you mentioned a 20% growth in the fourth quarter of last year. How confident are you that you can achieve that same 20% growth for the current year? Do you believe that 20% growth is realistic for 2026?

Okay. Thank you very much, Steve. So on A&Q, I think people will remember, we had a bit of a snafu with a Middle Eastern customer around payment terms that ended up causing a pause and then a subsequent reengagement. So do you want to comment on the materiality of that in the quarter?

Yes. So that contract was still running for most of Q1. It was Q2 when it paused and it went back online in Q3.

Okay. So it won't have a relevant flow for Q1, Q2, is what you're?

It won't have a relevant flow for Q1 or Q2.

And then on ELS, do we segment out the ES component?

No, we don't, but it's kind of 10%, 20% would be the way to think about it.

There you go, Steve. You've got a clue there. Regarding the 20% growth rate, we've been cautious with our guidance. What we're indicating is that future revenues from ES and other components related to enterprise deals are expected to flow from previously committed contracts. The specific revenue recognized in any given quarter depends somewhat on the product flow that occurs. Therefore, we are not being overly explicit about that right now. I’m very proud of what Vishaal and the team have achieved because they built a team that didn't exist just over a year ago, engaged with these customers, and developed deep, multiyear, meaningful relationships that will benefit both them and us. However, we are not likely to discuss the specific quarter-to-quarter revenue growth at this time.

We have no further questions on the phone line. So I'd like to hand back to the room.

Yes, we have a question from Alex at AlphaValue. Can you provide more details on the product impairment? How many platforms were there before the convergence, and was this connected to past acquisitions?

Okay. Tony, over to you.

Yes. So it's specifically within the Higher Ed segment, and we had four courseware platforms, which we're converging down to one so that we have better efficiency. And you can see in the video, the AI study tools then work great across the one platform. And then we have a high degree of confidence that we then have the right setup moving forward from a product perspective as well as the way it's played out in the P&L.

Perfect. Thank you, Tony. And Alex, thanks for the question. Mr. Shore, does that cover us?

That covers us.

Okay. Well, ladies and gentlemen, thank you. Thank you for being with us and giving us your time. We appreciate it. We appreciate your interest in Pearson. Do not miss the chance to go across to the innovation studio and see some of these products and play with them and get a sense of what Pearson is building. I mean I love the chart that we showed about the rate of innovation increases we're releasing more and more products each year. You can expect that of this company going forward. Over to you. Thanks. See you soon.