Powering growth
through innovation
Helping people realise the life they imagine through learning
Annual report and accounts 2025
Pearson continues to
evolve with purpose,
continuing to innovate
and leverage AI to create
sustainable value for learners,
partners and shareholders.”
The Strategic report, up to and including page 69,
was approved for issue by the Board on 12 March 2026 and
signed on its behalf by:
Sally Johnson
Chief Financial Officer
Use this QR code to visit our
Pearson plc website where you
can find the online version of
this report.
Strategic report
At a glance 2
2025 highlights 3
Business unit overviews 4
AI is accelerating demand for trusted
skills assessment and verification
6
Using AI to improve efficiency,
performance and learning outcomes
7
Chair’s note 8
Chief Executive’s review 10
Strategic framework 12
Our business model and value drivers 13
Engaging with our stakeholders 17
Key performance indicators for 2025 23
Financial review 25
Sustainability 32
Risk management 55
Governance report
Corporate governance 70
Directors’ Remuneration Report 117
Additional disclosures 153
Financial statements
Statement of Directors’
responsibilities
157
Independent auditor’s report to the
members of Pearson plc
158
Consolidated financial statements 168
Company financial statements 225
Other information
Five-year summary 234
Financial key performance indicators 235
Additional information for US listing
purposes
241
Shareholder information 262
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 1
Pearson
at a glance
Our purpose
Helping people realise
the life they imagine
through learning
We are the world’s
lifelong learning
company
What we do
Create and curate content
• Produce assessments
• Develop learning courseware
• Design courses
• Write curriculum standards
Distribute content digitally
and physically
• Deliver assessments
• Distribute lessons
• Enable learning experiences
• Facilitate teaching
Build and verify skills
• Score assessments
• Measure skills
• Credential skills
• Evaluate talent
1
2
3
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 2
2025 highlights: Powering growth through innovation
Sales
£3,577m
Underlying growth
4%
Adjusted operating profit
£614m
Free cash flow conversion*
125%
Underlying growth
6%
Free cash flow
year-on-year increase
8%
* Free cash flow conversion calculated as free cash flow divided by adjusted earnings.
Inclusive of the recovery of £0.1bn of taxes in relation to the State Aid matter.
Pearson continued to deliver strong strategic and
operational progress – advancing our purpose to help
people realise the life they imagine through learning.
Improved Group adjusted operating
profit margin to 17.2%
Read more on page 126
Strong cash performance
with free cash flow of £527m. Completed a £350m share buyback
Read more on page 29
Continued enterprise momentum
through strategic partnerships
to help employees and organisations prepare for the future of work
Read more on page 7
Continued to lead with the application of
innovative technologies, deepening and
scaling AI across our offering
driving measurable improvements in learner outcomes and saving
educators meaningful time, whilst embedding AI as a foundational
capability within Pearson
Read more on page 7
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 3
Business unit overviews
Assessment & Qualifications
Assessment & Qualifications (A&Q) delivers world-class
testing, certification and qualification solutions through four
sub-business units, all of which contributed to growth in 2025:
Pearson Professional Assessments (formerly known as Pearson
VUE), Clinical Assessment, US Student Assessment and UK &
International Qualifications. Together, these businesses
provide trusted knowledge and skills measurements for
learners, professionals, enterprises and institutions globally.
In 2025,Pearson Professional Assessmentscontinued to lead
the global market in large-scale testing services, supporting
workforce certification and reskilling across professional and
government sectors. Despite headwinds in PDRI driven by US
federal government hiring and spend reductions, the business
grew, securing new contracts and expanding enterprise
partnerships. We also integrated AI to drive efficiencies in
assessment generation, and strengthened our global
delivery infrastructure.
Clinical Assessmentdelivered strong growth due to the
continued traction of our products in the market and digital
product growth. This was further supported by the first
state-wide adoption of our digital platform in Tennessee and
our expanded pharmaceutical business. Key innovations
included the launch ofRevibe, a wearable device designed to
support individuals experiencing challenges with focus and
attention, the pilot of an AI-powered psychological report
writing assistant and the release ofD-KEFS Advanced, a fully
digital neuropsychology assessment.
US Student Assessmentadvanced its role as a strategic
assessment partner to states and districts, delivering
comprehensive assessment systems spanning formative,
interim and summative programmes. Although we lost the
contract with New Jersey, we subsequently renewed and
extended several key contracts, including Maryland and others
at a late stage of contract completion. We also launched an
integrated partnership with McGraw Hill to embed
assessments into core K12 curricula.
UK & International Qualificationsdelivered strong growth,
benefiting from volume and international expansion. We
commenced the deliveryof the new UK Government Test
Operations Services contract and we expanded our digital
offerings, including increased adoption of onscreen assessment
and ActiveHub, our flagship teaching and learning platform.
Across A&Q, priorities for 2026 include continued expansion
into adjacent market opportunities, such as moving up the value
chain into high-stakes test prep and formative assessments,
as well as renewing key contracts and securing new wins.
We are also expanding internationally, enhancing operational
excellence and accelerating innovation, particularly through AI.
Virtual Learning
Virtual Learning (VL) delivers high-quality online learning
solutions for K12 students through two main offerings: Partner
Schools and District Partnerships.
Partner Schools provides state-wide, turnkey virtual school
solutions for public K12 students in the US, integrating
courseware, platform technology, instructional services and a
range of support services to deliver flexible, high-quality online
learning. District Partnerships offers customisable virtual
education solutions for K12 districts.
2025 sales by business unit
Built on deep expertise, global reach
and strong customer relationships,
assessments sit at the heart of our
strategy – enabling learners to prove
their skills in a world where trusted
credentials are increasingly
important.”
Art Valentine
President – Assessment & Qualifications
£3,577m
Total sales
4% underlying
growth
Assessment &
Qualifications
£1,604m
(4% underlying growth)
Virtual Learning
£511m
(8% underlying growth)
Higher Education
£775m
(2% underlying growth)
English Language
Learning
£405m
(1% underlying growth)
Enterprise Learning &
Skills
£282m
(6% underlying growth)
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 4
In 2025, we made targeted marketing investments to capture
demand and completed the launch of a new enrolment portal
across the Partner Schools network, helping to remove friction
in the enrolment process. We continued to expand our career
programmes with new offerings, now available across our
Partner Schools network to support students in their transition
to the workforce. We opened two new schools, taking our total
to 41 across 31 states. We also deepened the integration of AI
into our study tools, contributing to higher course scores and
end-of-semester pass rates.
Our 2026 priorities focus on continuing to capture growing
demand for US virtual schooling, further strengthening of our
marketing and enrolment capabilities, targeted school
expansion and the ongoing application of AI to personalise
teaching and learning.
Higher Education
Higher Education (HE) provides leading learning experiences
across the Post-Secondary and Early Careers markets, with
additional reach into K12 education through Honours, AP®,
Dual Enrolment, and Career and Technical Education (CTE).
In 2025, we provided AI-powered learning experiences that
delivered measurable improvements in learning outcomes.
Adoption continued to grow across our key platforms, all of
which now integrate advanced learning capabilities to support
more personalised, adaptive and engaging experiences. The
new ‘Go Deeper’ functionality in our AI study tools encourages
critical thinking by prompting learners with challenging
follow-up questions. We continued to see strong traction in
our Inclusive Access offerings. We also expanded the
successful monetisation of Study Prep (formerly ‘Channels’)
through new AI-driven diagnostics and coaching features,
helping students build confidence ahead of assessments, and
extended reach into international markets.
In Early Careers, we established a direct sales force to
accelerate our College and Career Readiness strategy.
Our acquisition of eDynamic Learning (eDL), North America’s
largest provider of digital CTE, was a significant milestone –
strengthening our portfolio and enhancing our ability to
support learners as they transition from education into
the workforce.
Looking ahead to 2026, our focus remains on product and
platform innovation, expanding reach and impact in the sector
through strong educator partnerships, and building on our
Early Careers offerings. We will continue to enhance access
and integration across our Inclusive Access offerings in the US,
while focusing internationally on emerging markets, digital
expansion and content localisation.
English Language Learning
English Language Learning (ELL) is a global destination for
learners seeking to develop and validate their English
proficiency. By combining deep pedagogical expertise with
advanced technology, ELL delivers scalable learning and
assessment solutions that enable individuals, teachers,
enterprises and governments to achieve academic and
professional goals. It does this through three main offerings:
institutional courseware, including Wizard by Pearson; English
proficiency assessments, such as the Pearson Test of English
(PTE) for migration and Versant by Pearson for enterprises; as
well as our online offering, Mondly by Pearson.
In 2025, Institutional advanced its digital learning capabilities
through new AI-powered tools for students and teachers,
including Smart Lesson Generator for educators. Wizard by
Pearson continued to grow in Brazil, supported by increased
online business.
Our assessment portfolio, including PTE, Versant by Pearson
and a range of institutional assessments, continued to support
learners seeking to demonstrate English proficiency. We
launched the PTE Express Test, meeting growing demand for
trusted online testing among US-bound learners, and renewed
our agreement with Australia’s Department of Home Affairs.
Mondly by Pearson expanded its suite of engaging online
learning experiences with the launch of the Digital Language
Tutor, an AI-driven product designed to support enterprise
learners to improve their workplace English proficiency.
In 2025, in collaboration with our Enterprise Learning & Skills
business unit and co-developed with Microsoft, we launched
Communication Coach, which is designed to improve the
communication ability of both native English and non-native
English speakers and is aligned with Pearson’s Global Scale
of English, our proprietary rubric to benchmark English
language proficiency.
For 2026, we will continue leveraging AI and digital
technologies to enhance learning and assessment
offerings. Our priorities include continued strong operational
performance, refreshing our Institutional product suite,
developing next-generation solutions for institutional and
government partners, and supporting enterprise customers
with advanced upskilling capabilities.
Enterprise Learning & Skills
Enterprise Learning & Skills (ELS) provides career-focused
qualifications and enterprise talent solutions through Vocational
Qualifications (VQ) and Enterprise Solutions, which includes
skilling content, assessments and digital credentialing.
Vocational Qualifications continues to be the UK leader in
applied, career-focused credentials rooted in real-world work
scenarios, with an additional presence in 58 markets globally.
One in five working-age individuals in the UK holds a Pearson
BTEC qualification and our programmes are adopted by
ministries of education globally to support skills reform. In 2025,
VQ won contracts with the UK Ministry of Defence, the
Uzbekistan Ministry of Education and the Kingdom of Saudi
Arabia, reflecting the strength of our apprenticeship and
international BTEC expansion strategies.
Enterprise Solutions helps companies address evolving talent
needs in a rapidly changing economy, particularly as AI reshapes
workforce requirements. Through Credly, TalentLens, Faethm and
IT Pro, we support businesses in assessing skills gaps, planning
talent strategies, sourcing talent and delivering skills development
aligned to commercial objectives. In 2025, we launched a global
go-to-market approach, including a Global Enterprise Sales team,
supported by marketing and delivery. We secured strategic
partnerships with hyperscaler partners (Microsoft, AWS and
Google Cloud) and leading professional services enterprises
(including HCLTech, Cognizant and IBM).
In the US, General Educational Development (GED) remains a
critical pathway for individuals seeking to enter the workforce or
pursue higher education and continues to support career
advancement. As of 2025, more than 20 million learners have
earned the GED, which is recognised in over 90 countries.
Looking to 2026, we will continue to address the growing
market need for trusted talent solutions that enable
employees to work more effectively with AI. We will drive value
from our existing partners while expanding our partner
ecosystem, and will also broaden our validated skills data to
support workforce mobility at scale.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 5
AI is accelerating demand for trusted skills
assessment and verification
Confident in the future due to the mega trends of
demographics and AI which are driving upskilling
demand, as well as Pearson’s unique characteristics
and enduring competitive strengths.
Why AI strengthens Pearson’s position
Advances in AI are driving large-scale reconfiguration of industries, occupations and educational
approaches, providing secular tailwinds for learning, assessment and verification. Pearson, as the
world’s lifelong learning company, is perfectly positioned to benefit from this massive wave of
human skilling over the next several years.
Our unique characteristics of trust, infrastructure level quality, operational strength, and breadth
of services that are embedded in the learning ecosystems alongside our investments in AI driven
innovation delivers strong, durable cash flows and profitability. And our deep and enduring
competitive advantages provide a unique platform for future growth.
Trust
~90% Profit
Operationally complex physical and
digital workflows and print
~10% Profit
Digital courseware, embedded in critical workflows
Leadership positions
Long history of operational excellence
Deeply embedded
Proprietary data sets
Unique Characteristics & Enduring Strengths
Upskilling
demand
Mega trends
Demographics
AI
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 6
Powered by learning science and
data-informed design, our AI tools
deliver engaging, personalised
experiences that spark critical
thinking and drive student success.”
Tony Prentice
Chief Product Officer
Using AI to improve efficiency, performance
and learning outcomes
From operations to products, AI is enhancing execution at scale.
Improving efficiency and speed to market
• AI-enabled authoring and editorial tools that shorten product development cycles
• Multilingual content translation with human-in-the-loop governance
• AI-powered customer support and employee productivity tools that improve speed
and consistency
Embedding AI into trusted products
• AI Study Tools in Higher Education, including ‘Go Deeper’, designed to prompt higher-
order thinking
• Communication Coach: a Microsoft Teams–integrated product providing real-time,
role-specific feedback
• AI-enhanced exam preparation, including adaptive practice tests and the GCSE Exam
Practice Assistant
• AI-enabled tools aligned to trusted frameworks, including speaking practice aligned to
the Global Scale of English
Scaling AI through a disciplined operating model
The AI Centre for Enablement (C4E) provides shared standards, tools and expertise to accelerate
experimentation and scale reusable AI solutions. It enables faster innovation while ensuring
consistency, efficiency and responsible AI practices across Pearson.
Operating AI responsibly
Trust, safety and integrity are central to our AI deployments, supported by robust governance
aligned with global standards
Hyperscalers
• Microsoft
• AWS
• Google Cloud
Breadth of strategic and innovation partnerships
Innovation partners
• Meta for Education
• AndroidXR
• Vū Technologies
Professional services
• Salesforce
• HCLTech
• Cognizant
• IBM
• Deloitte
• TCS
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 7
A year of delivery, performance and progress
Chair’s note
Executing with discipline to deliver
sustainable returns
I would like to thank everyone at Pearson for their contribution
to another successful year. Thanks to the execution of
Pearson’s people, strong leadership and disciplined financial
management, alongside the trust of customers in our market-
leading products and services, Pearson has delivered sales
and earnings growth in line with expectations. This
performance enables the company to continue delivering
returns to shareholders.
Pearson’s robust results and strong financial position
underpin our ability to invest in continuously enhancing our
offerings and addressing significant opportunities in faster-
growing segments of the learning market, particularly within
our medium-term growth vectors of Early Careers and
Enterprise Skills.
Reflecting our confidence in the outlook for the business, the
Board is recommending an increase in the final dividend,
resulting in a full-year dividend of 25.2p per share, payable on 8
May 2026 to shareholders on the register on 20 March 2026.
Our dividend is supplemented by a strong track record of
share buybacks, with a further £350m programme completed
in 2025 and, in January 2026, the announcement of an
additional £350m programme – demonstrating our ongoing
commitment to shareholder value creation through disciplined
capital allocation.
Strategic partnerships and innovation
Pearson’s progress in 2025 has been significant and broad-
based. Long-term strategic partnerships with Microsoft, AWS
and Google Cloud are totemic examples of Pearson’s
commitment to innovation and impact. These partnerships
extend our reach across enterprise, Higher Education and K12,
accelerate our cloud transformation and provide unique
go-to-market opportunities.
In addition, recently signed professional services strategic
partnerships with HCLTech, Cognizant, IBM, Deloitte and TCS
are helping Pearson to scale delivery, enhance operational
agility and unlock new opportunities. These relationships are
instrumental in supporting Pearson’s transformation and
enabling the company to move faster and more effectively in
serving learners, institutions and enterprises worldwide.
Pearson has continued to embed AI more deeply across its
products and services, bringing enhanced learning
experiences to more people, faster. When applied thoughtfully
AI supports higher-order outcomes in reasoning and problem-
solving. When a learner uses AI as a teleportation device, taking
them straight to the answer, they don’t learn, but when AI is
used as a map – accompanying them through the different
stages to get to the endpoint – it enhances learning.
Investment in AI across products and services is increasingly
translating into differentiated offerings, improved customer
outcomes and commercial opportunity.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 8
The company has delivered another
year of sales and earnings growth,
strengthened its financial position
and continued to invest in areas that
support sustainable value creation
over the medium-term.”
Omid Kordestani
Chair
Pearson’s role in an evolving world
of learning
Reflecting on my observations in last year’s annual report, and
the extraordinary changes we have witnessed over the last 12
months with the seismic forces of AI and demographic change
continuing to reshape our world, it is clear to me that Pearson’s
purpose – helping people realise the life they imagine through
learning – has never been more relevant. Pearson is evolving to
meet these challenges and opportunities head-on.
As skills requirements evolve and the pace of change in the
workplace continues to accelerate, demand for learning and
the validation of skills is increasing. Pearson’s deeply
embedded position within global learning ecosystems,
trusted brands and operational scale position the company
well to support learners, institutions and employers as they
navigate this transition.
Board and governance
Pearson benefits from the counsel of a strong and effective
Board, whose members bring diverse experience and
expertise from a range of sectors. This year, we were delighted
to welcome two new independent Non-Executive Directors,
Arden Hoffman and Costas Maglaras.
Arden is currently Chief Human Resources Officer at General
Motors and brings valuable workforce and talent expertise
spanning a range of industries. Costas serves as Dean of
Columbia Business School and brings deep experience in
economics, decision-making and leadership. Together, their
insights enhance the Board’s focus on ensuring Pearson’s
strategy remains aligned with the demands of a rapidly
changing global landscape.
We also said farewell to Lincoln Wallen, who stepped down
from the Board at the end of the year. I would like to thank him
for the valuable contribution he has made to Pearson over his
long tenure.
During the year, the Board oversaw a managed succession
process for the role of Group Chief Financial Officer. I would
like to thank Sally Johnson for her significant contribution to
Pearson over many years, and welcome Simon Robson, who
will join the company in March 2026. The Board is confident that
this orderly transition supports continuity, strong financial
stewardship and effective execution of Pearson’s strategy.
We engage regularly with shareholders on a broad range of
topics and welcome the opportunity to hear their views. This
engagement helps ensure alignment with shareholder
expectations and governance best practice. Further details on
the Board’s activities and governance arrangements can be
found in the Governance report starting on page 70.
Outlook
The Board is pleased with Pearson’s performance and
progress in 2025. We are confident that Pearson’s strategy
positions the company well to capitalise on opportunities in its
target markets over 2026 and beyond, alongside continuing to
deliver sustainable growth and returns for shareholders.
Thank you for your continued support.
Omid Kordestani
Chair
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 9
Delivering growth through execution
Dear shareholders,
2025 was another year of financial delivery and significant strategic
progress. We set out with a clear set of priorities and I’m proud to
say that our teams across Pearson have delivered against these
with a customer execution focus, agility and ambition. We’ve
grown our business, strengthened our foundations and
accelerated our strategy.
Our financial performance reflects this momentum. In 2025, we
achieved underlying sales growth of 4%, with adjusted
operating profit of £614m – an increase of 6% on an underlying
basis. Free cash flow conversion remains strong at 125%,
underscoring the resilience of our model and the discipline
with which we execute.
Beyond the numbers, we are encouraged by the growing
adoption of our products and the strengthening demand
across key markets, which reinforces our confidence in the
strategy. As the half-life of skills is shrinking and the pace of
change is accelerating, Pearson is uniquely positioned to help
learners, institutions and enterprises adapt and succeed.
Powering growth through execution
Great execution on our strategy is at the heart of our progress. It’s
how we stay ahead of the curve, meet evolving customer needs
and unlock new opportunities. In 2025, we made significant strides
embedding AI and digital technologies across our portfolio and
accelerating our enterprise learning capabilities and business. All
our efforts are helping us to drive outcomes for learners and
enhancing the experience of customers across the business.
• In Assessment & Qualifications, all sub-business units
contributed to growth with standout performances from
Clinical Assessment and UK & International Qualifications.
Clinical Assessment grew through strong demand for our
digital products together with expanding its customer base
with the first state-wide adoption of our digital offering. We
also launched Revibe, an AI-enabled wearable powered by
Samsung Electronics to support focus and self-regulation.
In UK & International Qualifications, we introduced the
GCSE Exam Practice Assistant – an AI-powered tool for
personalised revision. Pearson Professional Assessments
secured several new contracts, and US Student
Assessment announced a partnership with McGraw Hill to
unlock opportunities in formative assessment.
• In Higher Education, our core US courseware business led the
way by delivering a good performance, supported by the
expansion of AI features in our offering. The new ‘Go Deeper’
functionality in our AI study tools encourages critical thinking by
prompting learners with challenging follow-up questions. As our
AI becomes more embedded in the student learning process,
we are seeing learners deepening their cognitive ability and
becoming more engaged with our materials.
• In Virtual Learning, we saw strong growth in the second half
of the year, driven by capturing strong market demand
through targeted marketing, streamlined enrolment
processes and enhanced career offerings. We opened two
new schools, bringing our total to 41 schools across 31
states, and embedded our career programme across the
network. Our AI tools are contributing to improved student
outcomes with higher grades and pass rates.
• In English Language Learning, Institutional saw continued
growth, with customer wins in key markets, for example in
Latin America, and Pearson Test of English continued to
show resilience, performing well despite a tough market
backdrop. We advanced our offering with the launch of the
PTE Express Test and launched Communication Coach,
which was co-developed with Microsoft and in
collaboration with our Enterprise Learning & Skills business
unit, to improve the communication ability of both native
and non-native English speakers. The product is aligned
with Pearson’s Global Scale of English, our proprietary
framework for benchmarking English language proficiency.
• In Enterprise Learning & Skills, we refocused our Global
Enterprise Sales Team and signed long-term strategic
partnerships with a range of key hyperscalers and leading
professional services enterprises.
Meeting the moment: skills for an
evolving workforce
The world of work is changing – fast. AI is reshaping industries, roles
and expectations. Learners, workers and employers alike are
grappling with how to keep pace. We believe this gives Pearson a
profound opportunity to lead. We’re better placed than ever to
Chief Executive’s review
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 10
We remain focused on
disciplined execution, targeted
investment and delivering for
our shareholders. We’ve made
great strides in 2025. We’ve grown
our business, deepened our impact
and laid the groundwork for future
success. But we’re only just
getting started.”
Omar Abbosh
Chief Executive
4%
underlying sales growth
strengthen the connection between learning and success, due to
our unique characteristics and enduring competitive strengths.
The traditional ‘learning to earn’ model – where education ends
when work begins – is no longer fit for purpose. We must
embrace a ‘learning to learn’ mindset, where education is a
lifelong journey, seamlessly integrated into work and life – and
where learning becomes the most important skill for success.
That’s why we’ve identified Early Careers and Enterprise
Skilling as strategic growth engines. These are not just
commercial opportunities; they’re areas where Pearson
can make a real societal impact. In 2025, we featured in
the GSV 150 list of companies transforming digital learning
and workforce skills development, validating our impact
(https://www.asugsvsummit.com/gsv-150).
In Early Careers, we’re helping young people build job-ready
skills as they transition from school or university into the
workforce. Our Virtual Schools are already delivering career
readiness initiatives, and through our career programme,
students gain access to internships, employer connections
and specialised classes that prepare them for the world of
work. This year, we acquired eDynamic Learning, which is a core
pillar of our Early Careers strategy. eDynamic Learning is a
leader in Career and Technical Education. Combined with
Pearson’s scale, this creates a powerful platform to equip the
next generation with the skills they need to succeed.
In Enterprise Skilling, we’re helping those already in work to
reskill and upskill. Our unique skills ontology enables
employers to understand their workforce capabilities and
identify gaps. By combining our expertise in learning with the
reach and technology of our strategic partners, we’re creating
scalable solutions that deliver learning in the flow of work. Our
Communication Coach is just the beginning. Imagine a future
where employees receive real-time, personalised learning
without leaving their daily workflow. That future is already here.
Building AI literacy for all
As AI becomes ubiquitous, AI literacy will be a foundational skill
– essential for all learners, workers and organisations. At
Pearson, we want everyone to have the tools to understand
and harness this transformative technology, and we have
expanded our AI-related content, training programmes and
certifications. For example, in 2025 we introduced AI
Essentials, a short course that provides a foundational
understanding of AI.
We’re also investing in our own people. Across Pearson,
employees have access to Microsoft Copilot, and we have
rolled out live training sessions across the organisation. Our AI
Ambassador Community has grown to over 1,000 members,
supported by a vibrant programme of training and learning
events. This is about more than tools – it’s about mindset: we’re
empowering our teams to reimagine how they work,
collaborate and innovate.
Leadership and succession
I would also like to thank Sally Johnson, who will be leaving
Pearson in May 2026, for her outstanding contribution to the
company over nearly 26 years, including six years as Group
Chief Financial Officer. She has been a trusted partner to me
and to the Board, and played a pivotal role in strengthening the
company and positioning it for the future. I am pleased to
welcome Simon Robson, previously Group Chief Financial
Officer at Sky, who will join Pearson in March 2026. I am
confident he will support the continued delivery of our strategy
and long-term value creation.
Looking ahead
We remain focused on disciplined execution, targeted
investment and delivering for our shareholders. We’ve made
great strides in 2025: growing our business, deepening our
impact and laying the groundwork for future success. But
we’re only just getting started.
Our unique capabilities, trusted brand and global reach place
us at the heart of a societal shift shaped by AI, evolving skills
and changing expectations.
Thank you for your continued support.
Omar Abbosh
Chief Executive
6%
underlying adjusted
operating profit growth
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 11
Strategic framework
An integrated strategy
Performance culture
Driving performance in
the core business
Excellence in business units
Execution
synergies
Operational systems
Modern software & product
development
Strategic partnerships
The world’s lifelong learning company
Helping people realise the life they imagine through learning
Innovation Capital allocation
1. Why
2. What
3. How
Medium-term
growth vectors
Early Careers
Enterprise Skilling
Overview
In 2024, we launched a refreshed strategy with a single, unifying purpose: to help
people everywhere to realise the life they imagine through learning (the ‘why’ section of
our framework). This strategy is now deeply embedded across the organisation, and its
execution has generated strong momentum across the business. We continue to
accelerate our transformation – harnessing the power of AI and capitalising on the
demographic shifts reshaping the world.
As we move into the second year of this journey, our execution plan rests on three
interconnected components:
1. Drive performance in our core business
We are driving excellence across our business units, focusing on strengthening core
performance and capturing market share, with specific examples outlined in the
business unit overview section. We will continue to drive value by scaling our presence
across multiple verticals and solution types. We will build on our commercial execution
and accelerate the introduction of innovative products and services, providing a solid
foundation for future growth.
2. Deliver execution synergies
We will unlock value from execution synergies. We remain committed to further
advancing our ambition of a fully integrated, customer-centric operation which
executes at pace. We are implementing new approaches to company-wide
operational systems that will support more effective workflows, such as transforming
revenue operations and AI-driven simplification to customer services. We will refine and
modernise our software, as well as simplifying our product estate to improve customer
navigation and enhance product discovery and development. In parallel, we aim to
establish long-term strategic partnerships that support sales expansion, create unique
go-to-market pathways and advance innovation.
3. Expand into medium-term growth vectors in Early Careers and
Enterprise Skilling
We continue to see significant growth opportunities in our two medium-term growth vectors:
Early Careers and Enterprise Skilling. We will further strengthen Pearson’s leadership in career
and technical education, to support learners as they transition from formal education into the
workforce. Additionally, we will support enterprises as they develop the capabilities needed
for talent planning, sourcing and development in the AI era.
Lastly, to support the execution of our strategy (the ‘how’ section of our framework), we
will continue to invest in our people, strengthen our performance culture, drive
innovation and optimise our capital allocation. Our focus is on creating a highly
motivated and customer-centric organisation by delivering a strong employee-
employer contract, quickly allocating capital to faster-growing opportunities and
making innovation a core part of our DNA. We believe we are well-positioned to capture
growth in the rapidly evolving learning market.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 12
Our business model and value drivers
Brand
Our brand stands as a symbol of trust, respect and
excellence, embodying the quality that defines our
company and strengthens our position in the
marketplace. In 2025, we delivered a refreshed Pearson
brand, modernising our visual identity, tone of voice and
value proposition.
Thought leadership
Our industry expertise and unique position in the learning
ecosystem allow us to be a global thought leader.
We develop deep, rigorous and analytical perspectives,
share domain insights and shape the conversation on
key trends. We launched our ‘Lost in Transition’ and
‘Mind the Learning Gap
1
’ research reports, anchored in
proprietary insights covering skills gaps, digital
disruption, learner behaviour and the impact of AI on
learning and the workforce.
1. Why
Helping people realise the life they imagine
through learning
Learning
Cognitively
Physically
Emotionally
Purposefully
Socially
Economically
Individuals
Institutions
Enterprises
For our stakeholders
AI is creating transformative
opportunities across education
and we have a responsibility
to harness it for the benefit of
those we serve. Through our
strategy we are building a
stronger business,
unlocking new growth,
driving better
outcomes for our
customers and
delivering value
for our stakeholders.”
Sue Kolloru
Chief Strategy Officer
Learning is a very human trait. Like sleep and nutrition,
learning is vital in our lives, and we know that when we
learn more we get happier, we get healthier, we live
longer and we can earn more.
1. Published in Jan 2026
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 13
Our business model and value drivers continued
What we’re doing to progress against our strategy
Core
performance
Progress in FY25Growth drivers Plans for FY26
2. What
Excellence in business units
We continued to strengthen our core business through high contract renewal rates,
the acquisition of new customers, increased share of wallet and disciplined
improvements in execution across our business units. Further detail on strategic
progress within our business units is set out on pages 4-5, with performance against
our ‘power metrics’ reported on page 23.
We will focus on delivering strong contract renewals, generating incremental revenue
across our established customer base and building a robust pipeline of ‘Elite’ and
‘Advanced’ customers as reported in our ‘power metrics’ on page 23. We will maintain this
momentum through a continued emphasis on disciplined execution and ongoing
innovation. Our 2026 priorities across the business units are outlined on pages 4-5.
Operational systems
We merged several teams into a dedicated Revenue Operations unit to standardise
sales processes, strengthen pipeline management and unify data sources –
delivering clearer, more actionable insights – while launching the next phase
of the Pearson Promise to reinforce our high-performance culture and streamline
the organisation, bringing teams closer to customers and accelerating
decision-making.
At the same time, we significantly expanded our AI capabilities, scaling our Content
Generation Suite, leveraging AI code assist capabilities, expanding chatbot use, and
embedding AI in customer services to boost efficiency and impact. For example, we
are also deploying Claude and Claude Code across engineering and business
functions to accelerate development and enhance productivity and quality.
We will accelerate our data-driven, customer-centric sales motion by refining incentives
to reward growth and harnessing AI for deeper customer insights, while building on our
‘One Marketing & Communications’ foundation to elevate our global brand and embed
AI-powered tools that amplify creativity and measurable performance.
In parallel, we will increase our use of agentic operations by deploying AI agents,
including a transformative knowledge agent that redefines customer support, alongside
specialised agents that verify customer identity during enrolment, review statements
of work and conduct deep competitive and market analysis – increasing speed,
accuracy and intelligence across every touchpoint. Underpinning these efforts is
our continued commitment to developing future-ready talent, cultivating adaptive
leadership and increasing organisational agility to ensure flawless execution and
sustained, profitable growth.
Modern software & product development
We accelerated the shift to true customer-centricity and rolled out our product
operating model organisation-wide, delivering significant improvements in product
governance and aligning Pearson to a unified architecture. We launched targeted
training pilots to deepen customer empathy and embed real-time feedback into
every product cycle, while strengthening business reviews to drive disciplined
capital allocation and strategic planning – establishing the foundation for consistent,
measurable and market-leading product outcomes.
We will continue to roll out our Product Excellence programme to establish a unified product
operating model. Key priorities include disciplined discovery, standardised artefacts, as well as
tools and training, backed by rigorous governance through roadmap reviews and financial
alignment. We will accelerate reusable services and empower cross-functional teams to
deliver faster, higher-quality outcomes with greater accountability.
Execution
synergies
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 14
What we’re doing to progress against our strategy
Progress in FY25Growth drivers Plans for FY26
2. What
Execution
synergies
Growth
pillars
Strategic partnerships
We have consolidated our suppliers and deepened our relationships with a smaller
number of key partners to create customer impact, drive efficiencies and grow our
businesses. We signed and established robust operational governance for 360°
partnerships, encompassing balanced trade, joint go-to-market programmes and
co-innovation with leading hyperscalers (AWS, Microsoft and Google Cloud) and
professional services partners (including Deloitte, IBM, HCLTech and Cognizant).
These strategic alliances are unlocking significant commercial opportunities, and
enabling innovation and product advancements to deliver market-leading,
customer-aligned solutions.
We will deepen and expand our strategic partnerships to drive product innovation,
co-create solutions for new markets and tap the vast client ecosystems of our global
partners. We will also continue to scale collaboration in high-impact domains – sales
operations, marketing and software technology – with multiple transformative projects
already underway.
Early Careers
We established a dedicated direct sales force to deepen and expand our
relationships with US school administrators and completed the acquisition of
eDynamic Learning, strengthening our leadership in digital Career and Technical
Education (CTE) and career-pathway programmes while accelerating our vision of a
seamless learner journey from exploration through certification. We deepened
partnerships with industry associations tackling critical workforce shortages,
including early collaboration with the Ohio Health Care Association. Through
Certiport, we also forged meaningful enterprise partnerships, engaging students
worldwide in Microsoft and Adobe certification competitions.
We will continue shaping a scalable Early Careers ecosystem: supporting learners from
early exploration in middle school to industry-recognised certifications that open
pathways to high-demand careers. We see significant potential to deepen partnerships
with industry associations, workforce boards and employers in high-demand sectors –
building a sustainable, skills-ready talent pipeline. Internationally, we will extend this proven
model through localised programmes in technology, digital skills, data and AI. At the same
time, we will also leverage existing assets — including our Career and College Readiness
portfolio and Certiport assessment capabilities — to expand into adjacent markets such as
workforce training within higher education.
Enterprise Skilling
We unified our sales, marketing, revenue operations, delivery, product and
technology under one cohesive framework. Our newly established go-to-market
approach led to nine important strategic enterprise partnerships, piloted high-
impact bundles in priority segments and forged new go-to-market collaborations
that significantly broaden our reach and accelerate growth in the corporate market.
Our enterprise business will contribute meaningful shareholder value over the
medium term and we are pleased by the progress so far.
We will scale comprehensive Enterprise Skilling solutions built on our DEEP framework:
• Diagnoseskill gaps and align talent to business strategy
• Embedlearning directly into workflows
• Evaluatemastery with rigorous, data-backed assessment
• Prioritiseverified skills, fix signalling gaps, deliver AI-driven coaching and unlock
workforce potential at scale – creating clear competitive advantage for our customers
We will also scale bundling globally, embedding it deeply into pricing and incentive
structures to accelerate adoption while expanding bundles to include emerging products
and services.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 15
Our business model and value drivers continued
How we create long-term stakeholder value
We will remain committed to the needs, interests and development of our
people by continuing to invest in their growth. We will provide greater clarity
on what success looks like and what it takes to progress through the
evolution of our Career Navigation System and Learning Hub, where we will
also empower our people to explore new roles and possibilities.
We will drive greater consistency and parity across business units and
corporate functions, underpinned by a streamlined, well-governed and
accessible data foundation. This foundation will enable better decision-
making, deeper insights and measurable outcomes.
We will scale our London Innovation Lab into a global hub for prototyping
and customer co-creation, and plan to establish a second lab in North
America. Across this expanded footprint, our work will remain grounded in
learning science and focused on delivering meaningful outcomes for
learners and educators.
We will further embed AI across our product ecosystem, guided by
learning science and enabled by the C4E. We will focus on scaling
proven solutions, advancing responsible practices, investing in targeted
ventures and leveraging strategic partnerships to deliver innovative,
research-driven learning experiences to more learners, educators and
enterprise customers worldwide.
We will continue to apply our disciplined capital allocation policy to drive
long-term stakeholder value, including continuing to invest both organically
and inorganically in high-growth segments to contribute to a higher,
sustained growth rate over time. We demonstrated proactive capital
management through the launch of our £350m share buyback programme
in January 2026.
Growth drivers Progress in FY25 Plans for FY26
People
Our people are the driving force behind our mission, passionately dedicated to empowering
learners worldwide. Their commitment and expertise form the foundation of our success, shaping
our identity and achievements as a company.
Data & insight
We established a dedicated data function to enable data as a strategic asset, standardise
capabilities and ensure a governed, accessible foundation for better decisions and insights. We are
building a scalable data ecosystem with event-driven architecture, positioning us to move from
enablement to enterprise-wide execution and strategic impact.
Ventures & labs
We unified our Ventures, Ecosystem Partnerships, Responsible AI and Labs into a powerful
engine for applied research and emerging-technology acceleration. We officially launched
our first Innovation Lab in London – designed for deep customer and stakeholder collaboration –
and expanded innovation partnerships with Meta for Education, Google’s Android XR, and
Vū Technologies.
Artificial Intelligence
We established our AI Centre for Enablement (C4E) to unify standards, tools and expertise, enabling
the responsible and scalable deployment of AI solutions. This operating model has accelerated our
shift from experimentation to operational scale, highlighted by launches such as Communication
Coach in Microsoft Teams and the Exam Prep feature in Study Prep, both based on rigorous learning
science principles.
Capital allocation
We aligned our investment priorities with clear opportunities for growth, returns and value creation.
We established a Capital Committee that allocates investment towards faster growth segments
across time horizons to optimise capital deployment and drive shareholder returns.
Performance
culture
Capital
allocation
Innovation
3. How
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 16
Engaging
with our
stakeholders
Engaging with those who have a
direct interest in Pearson’s
long-term success is an important
part of how the Board oversees
strategy, performance and
governance. The Board considers
the perspectives of shareholders,
customers, employees, partners
and suppliers, and the wider
community when making
decisions, with a clear focus
on sustainable value creation
over time.
Investors/shareholders
Why and how we engage
Our shareholders are central to the long-term success of
Pearson. They provide the capital that enables investment in
the business and play a critical role in holding the Board and
management to account for strategy, performance,
governance and capital allocation.
We place a high priority on maintaining open, regular and
constructive dialogue with shareholders throughout the year.
Engagement is led by the executive team, with active
involvement from the Chair, Senior Independent Director and
Committee Chairs where appropriate, ensuring that investor
views are understood at Board level.
In 2025, we held 218 meetings with 198 institutions, across
both virtual and in-person formats, through results roadshows,
investor conferences, focused teach-ins and our Annual
General Meeting. Discussions covered financial performance,
strategy execution, portfolio positioning, capital allocation,
remuneration and governance, reflecting the breadth of topics
of interest to shareholders.
Outcome of engagement
Shareholders consistently emphasised the importance of clear
strategic priorities, disciplined execution and capital allocation,
and transparency around performance and value creation.
Feedback also highlighted the need for a strong and consistent
equity story, particularly in the context of market volatility and
recent valuation performance. In response, we have:
• Sharpened our external communication on strategy and
financial delivery
• Increased the depth of engagement on capital allocation
and returns
• Ensured clearer linkage between performance, incentives
and shareholder outcomes
• Strengthened Board-level oversight of investor feedback
and sentiment
The Board receives regular updates on shareholder views and
engagement themes, which inform decision-making on strategy,
remuneration, succession planning and governance. Further
detail on how investor feedback influenced decisions during the
year can be found in the Directors’ Remuneration Report (pages
117-152) and the Governance section of this Annual Report.
As AI reshapes learning and work,
Pearson sits at the nexus of learners,
educators and employers – helping
people prepare for what’s next
and converting ambition into
meaningful impact.”
Naseem Tuffaha
Chief Business Officer
Educational institutions
and educators
Why and how we engage
Our engagement with educators is a key part of our ability to
understand and cater to the needs of the teaching profession,
as well as providing us with insights into the attitudes of
learners. We also draw from the experience of educators to
shape our approach, inform the development of our AI tools
and training, and anticipate trends shaping the world of
learning today and in the future.
In our Virtual Learning business unit, our annual teacher and
school leader conferences bring together teachers, school
staff and Pearson teams to attend sessions facilitated by
experts across the learning and education industry.
In US Student Assessment, we held over 400 meetings with
school specialists, administrators and educators, and more
than 300 professional development sessions, in 2025 to ensure
our assessments continue to deliver meaningful insights,
support instructional goals, meet compliance requirements
and inform decision-making.
We also hold our Annual GED Conference in the US, a gathering
of hundreds of educators, leaders and changemakers. The
GED exam provides a recognised pathway for those seeking
their high school equivalency diploma.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 17
Engaging with our stakeholders continued
Outcome of engagement
We have a strong network of relationships with educators, who
view us as a trusted partner. Through our educators, we gather
valuable insights on attitudes, trends and feedback on our
learning tools and content.
Many Pearson authors are educators, as well as experts in their
fields. They provide us with deeper insights into how students
engage with our tools, and we collaborate with them to
develop new features to use in conjunction with the
courseware they have written.
In our Virtual Learning business unit, we hold conferences to
ensure that educators learn from one another in peer-to-peer
engagement, tailoring solutions and exploring learnings that
support the needs of students.
In our Higher Education business unit, our faculty engagement
provides ongoing feedback on new AI product features and
helps us understand how to best tailor those features for the
faculty and students, helping to enhance the teaching and
learning experience.
The Pearson School Report is another example of how listening
to and engaging with educators builds trust in Pearson
and provides visibility over student and teacher attitudes
towards learning.
Employers
Why and how we engage
As technological innovations such as AI accelerate change in
the workforce, employers increasingly recognise the need to
reskill their people so they are future-ready. Enterprise Skilling
is a medium-term growth vector for the business.
We work closely with employers to build a more skilled,
certified and adaptable workforce. Through our Enterprise
Learning & Skills, English Language Learning and Assessment &
Qualifications business units, we deliver career-focused
training, professional certifications and talent solutions
that support evolving business needs and long-term
workforce development.
We also provide employers with data, thought leadership and
unique insights on the evolving labour market and skills
demands – cementing trust in Pearson as a leader in workforce
upskilling and career learning. For example, the Pearson Skills
Outlook Report provides employers and HR managers with a
deeper understanding of in-demand skills and how they may
change in the future.
Pearson National Teaching Awards
Sally Johnson, Pearson’s Chief Financial Officer, and
Sherry Coutu CBE, a Non-Executive Director on
Pearson’s Board, representing the company at the
Pearson National Teaching Awards – celebrating the
outstanding achievements of educators across the UK.
We partner with global enterprises to
accelerate talent development, support
seamless career transitions and equip
workforces to thrive in the era of AI.”
Vishaal Gupta
President – Enterprise Learning & Skills
Leading the way in research
In the UK, we released our 2025 Pearson School Report,
which brings together more than 14,000 voices from
across the education landscape in the UK. This report
builds a snapshot of life in schools, including how
educators are navigating the application of innovative
technologies such as AI. We also once again brought
together members of the UK education community as
part of The Pearson National Teaching Awards, which
champion the impact of teachers and the difference
they can make on people’s lives.
In our Higher Education business unit, our team of active
faculty advisers supports instructors in setting up and using our
products. This business unit delivered over 100 in-person and
virtual events in 2025 to engage more educators on topics
including AI and skill development, which were attended by
thousands of college and university instructors from over
120 countries.
The English Language Learning business unit collaborated with
teachers globally to refine the Smart Lesson Generator, an
AI-powered tool that creates high-quality lessons in minutes.
Developed in partnership with AWS, it reduces planning time
by up to 45 minutes per lesson plan for educators.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 18
As part of our aim to remain at the forefront of technological
change, we have forged innovation partnerships with Meta for
Education, Android XR and Vū Technologies. Together, we are
exploring the potential to incorporate immersive technologies
such as XR and VR into our learning products.
We regularly engage with a targeted pool of suppliers to
ensure we work efficiently in a mutually beneficial way.
Outcome of engagement
By building out strategic partnerships and continuing to
engage with suppliers, we will help to grow Pearson’s
reputation as a responsible, collaborative and forward-looking
business. Over time, we believe that this approach will bring
efficiencies and transformative technologies, and more
possibilities to collaborate and develop innovative products
for our customers.
Learners
Why and how we engage
Our interaction with learners is key to better understanding
how they perceive our products and the company, and also in
helping us bring to life our ambition to create vibrant and
enriching learning experiences designed for real-life impact.
We gain understanding of learners’ needs in a number of ways,
including studying trends in usage and behaviour, analysing
sentiment and the competitive landscape, and conducting
focus groups and in-depth surveys.
Our Connections Academy Virtual Schools conducted two
major research initiatives in 2025. One surveyed 1,200 US
parents of high school students (grades 9-12) and 12,000
Connections Academy Virtual Schools students to explore
college and career preparation needs. The other engaged
1,000 hiring managers to identify industry partnerships and
workforce readiness programming.
Our English Language Learning business unit collaborates with
learners to inform product research and development. In 2025,
this input played a key role in the go-to-market plans for the
PTE Express Test.
In 2025, Pearson Professional Assessments launched its Value
of IT Certification Candidate Report, the ninth in an ongoing
series, analysing the experiences of nearly 24,000
professionals worldwide who have earned IT certifications with
Pearson Professional Assessments. This global study offers
insights into why individuals pursue certifications, how they
benefit personally and professionally, and the effect on their
organisation’s performance.
Clinical Assessment held its 2025 Virtual ADHD Summit and
Virtual Autism Summit, bringing together clinicians, educators
and allied professionals to advance care and understanding of
neurodiversity in learning. Consumer and educator
engagement in the clinical space has been key to the
development of Revibe, our AI-powered and research-backed
wearable powered by Samsung Electronics, designed to build
focus and boost learning.
We also aim to cultivate an ‘outside-in’ approach, making use
of employee learning sessions and newsletters, to better
understand learners and the trends shaping how they learn.
AI in education isn’t a trend – it’s a
transformation that unlocks
opportunities, sparking deeper curiosity
and critical thinking.”
Tom Ap Simon
President – Higher Education and Virtual Learning
Participation in industry events and executive forums provides
the opportunity for us to share insights and reinforce our
reputation as a leader in workforce learning. In 2025, we
connected with enterprise leaders at events including the
Walmart Opportunity Summit, the AWS re:Invent Summit and
Microsoft Ignite.
We are also working directly with industry-leading enterprises
through our strategic partnership agreements, including with
Microsoft, Google Cloud and AWS.
In 2025, we launched our exclusive multi-year collaboration to
be the sole provider of Salesforce certifications worldwide,
equipping employees and employers with Salesforce skills to
drive greater value for their businesses and customers.
Outcome of engagement
Engagement with our enterprise customers is helping us refine
our offering and evolve our go-to-market approach. For
example, our partnership with Microsoft combines our
expertise in learning with Microsoft’s cloud and AI technologies
to co-create products such as Communication Coach to help
workers succeed and employers upskill their workforces,
leading to enhanced productivity and performance.
By better understanding the needs of customers and
employees, we gain deeper insight into the evolving mindsets
of millions of workers. With shared expertise, data and insights,
we are able to collaborate on joint go-to-market offerings that
deliver learning and skilling solutions to employers while
supporting our own long-term growth.
Business partners
Why and how we engage
We work with a range of business partners including strategic
partners, innovation partners, vendors and suppliers.
We have made substantial progress over the year in
establishing new global strategic partnerships with industry
leaders to bring transformative benefits to the business and to
our customer offering.
We have also consolidated some of our vendor relationships to
select service partners, ensuring better outcomes through
deeper 360° partner relationships and opening opportunities
for joint go-to-market activities.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 19
Engaging with our stakeholders continued
Governments and regulators
Why and how we engage
Government policymakers globally want to ensure that
children and adults have the right opportunities in their
education and work life to achieve their life goals, as well as
contributing to economic productivity.
Economies face labour shortages in crucial sectors, while
students and workers are seeking to reskill or upskill. Across
the globe, countries are exploring how to best facilitate
businesses, private citizens and public services to thrive in a
changing world, and how to leverage innovation to give people
high-quality education and training that meets the needs of
rapidly evolving workplaces.
Furthermore, the rise of AI use – particularly in the labour market
– is challenging governments to devise policies that take
advantage of the opportunities this technology brings while
mitigating risks to the labour force, innovation and social equity.
We are an important partner to governments, schools,
colleges, universities and the business sector, helping
people and organisations to achieve economic and
educational goals. Our assessments are a reliable currency
of competence and achievement, and we often operate in
highly regulated environments.
We support governments on topics such as the impact of
technological innovation on the workforce, skills-based hiring,
certifications, and training and apprenticeships through
meetings, symposia and presentations with elected and
appointed government officials.
We are engaging on issues around AI in education and the
workforce. For example, we have participated in consultations
launched by the UK Government on: narrowing the digital
divide in UK schools and colleges and its digital inclusion
action plan; developing frameworks and tools to support
responsible data and AI use across the public sector; and
strengthening AI copyright legislation to protect creative
industries while boosting the potential of AI. Additionally,
in the United States, Pearson is partnering with schools and
universities to deliver AI-powered study tools and
personalised learning for students.
We have also joined forces with the federal government
through the Pledge To America’s Youth: Investing in AI
Education, working to upskill high school teachers nationwide
by providing AI training and certification, all with the aim of
better equipping educators to improve student outcomes.
Outcome of engagement
We work with governments in key markets as they develop
policies and programmes to meet their economic needs
related to skills, training, education and assessment, and our
engagement helps inform policy decisions and share best
practice and innovative approaches.
The launch of our Country Ambassador programme in 2025,
with dedicated CEOs for our core markets, has enabled us to
elevate engagement globally, with our senior executives
collaborating with senior politicians and policymakers. For
example, our US CEO Art Valentine represented Pearson at the
White House Task Force on Artificial Intelligence event, sharing
our pledge to provide 250,000 teachers across the US with
training on AI. Our UK CEO Sharon Hague joined the UK-China
Joint Economic and Trade Commission as part of a UK trade
mission led by Peter Kyle, the UK Secretary of State for
Business and Trade.
Communities and civil society
Why and how we engage
We play a key role in increasing access to education around
the world through high-quality products and services tailored
to the needs of learners. Our partnerships and collaborations
advance research on key issues and deliver positive social and
environmental impact through joint initiatives.
We are supporting more learners through accessible,
technology-enabled solutions. In 2025, we continued
developing and delivering our suite of AI-driven products,
supported by AI Literacy Modules designed to help educators
and learners understand how to use AI effectively, building
valuable skills for the workforce. We are working with partners
such as Code.org to support AI literacy and have launched a
strategic partnership with the Digital Education Council to
support digital transformation in higher education across
global markets.
Outcome of engagement
Learner feedback is critical in the development and extension
of our generative AI tools. Its role is not only an important
consideration throughout all stages of product development,
but also in how we measure, evaluate and gain insights into the
usage of our products.
For example, we have found that students using the AI tools in
our Higher Education courseware were four times as likely to
remain or become more active, efficient studiers compared to
those who did not use the AI study tools. We have also seen
evidence of positive student outcomes through the Pearson AI
study tool embedded in Biology and World History learning
materials for our Connections Academy Virtual Schools.
Biology students using the tools saw an 11% increase in
end-of-semester pass rates and a 5% boost in final course
scores, while World History students saw a 7% rise in pass rates
and a 5% increase in final scores.
Our unique insights into the needs of learners allow us to be
thoughtful and effective in ensuring we create our products
with them in mind.
Our reinvented brand brings our
purpose to life and reflects our belief in
learning’s power to strengthen health,
happiness and connection. We have a
clearer, more focused identity, which
elevates what sets us apart and helps us
to build stakeholder trust.”
Ginny Cartwright Ziegler
Chief Marketing Officer
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 20
Employees
Why and how we engage
In 2025, we advanced the next chapter of our Pearson Promise:
to create exceptional employee experiences, meaningful
career opportunities and a high-performing culture that
empowers our people to deliver for our customers.
As part of our efforts to fully engage employees in Pearson’s
mission, we delivered more content and higher engagement
with our global internal platform for employees (‘The Hub’).
This platform ensures we’re sharing information and support
in a timely way across our global workforce. In total, page
views rose by 7% year over year, while views per employee
increased by 35%.
In 2025, we fully implemented our new Career Architecture to
provide clarity of career and growth pathways for our people.
We simplified our structure from 1,600 to 140 roles, introduced
two career tracks (‘Management’ and ‘Expert’), and
standardised our approach to role scope and seniority through
a new tier structure.
Building on the simplification of our career architecture, we
launched our Career Navigation System (CNS) – a digital-first,
personalised system designed to build skills and empower
career ownership. So far, we’ve delivered new CNS capabilities
across three releases, with key features including: an
interactive ‘Role Library’ enabling individual interaction
with our Career Architecture and clarity of role scope,
skills and KPIs; launch of CARA, our interactive career
architecture and navigation agent; a career inspiration
library; and the ‘Learning Hub’, our new learning experience
platform powered by Degreed, providing personalised
learning content and pathways.
We continue to focus on AI as a critical skill for our people to
power Pearson’s strategy and to help their personal and
professional development. In addition to a wealth of learning
materials on AI-related topics in the Learning Hub, we
delivered 140 live training sessions on Microsoft Copilot in
2025, with 4,722 employees attending a session live. These
efforts resulted in a 25% increase in Copilot interactions
compared to the number of interactions prior to the training.
Our AI Ambassador Community continues to grow and now has
over 1,000 members, an NPS of 69 and a regular programme of
learning events. It is one of several professional communities at
Pearson, which also includes our AI Developer Community for
those who are building AI products and services.
In addition to helping our employees build their skills, we have
also established clarity on expectations and how to be
successful in role. Our approach to setting performance
objectives and key results (OKRs) is informed by our strategic
priorities and leadership objectives. To strengthen our
performance management approach this year we introduced
‘BarUp’, a new AI companion that supports individuals in
setting their OKRs and assessing their performance.
To encourage the continued development of our leaders, this
year we embedded our Leadership Model and activated tools
and insights to provide clarity on leadership talents. We’ve
scaled our leadership talent assessments, CliftonStrengths
evaluation, and introduced 360° feedback to inform
development priorities and strengthen impact.
Outcome of engagement
87% of employees shared their feedback in our 2025 global
engagement survey, with our overall Grand Mean score
improving by +0.07 to 4.23 out of 5. Across the survey, we saw
meaningful progress in areas that reflect how we deliver on our
Pearson Promise to our people. This included more support for
development and growth, encouraging more frequent
conversations about progress and goals, stronger
collaboration across teams, and greater adoption of
technology to help people work productively.
We’re transforming talent and careers at
Pearson, focusing on the skills and
learning our people need in an era of AI.”
Ali Bebo
Chief Human Resources Officer
To address the impacts of our products and our broader digital
transformation, we have joined DIMPACT, a coalition that brings
together companies through topic-specific working groups to
understand the environmental impact of digital products and
develop science-based solutions. We are also a member of
the Coalition for Sustainable AI, which aims to develop
standardised metrics for AI impact reporting.
We have been a member of the B Team (an organisation that
works with multinational companies committed to good
tax practices) since 2018, and are part of their Responsible
Tax Working Group, which includes engagement with civil
society organisations.
To support our objective of targeting hard-to-reach learners
and communities, we issued a 10-year Social (Education)
Bond in 2024 to support eligible projects. The full £350m of
proceeds have now been fully allocated to eligible projects
in Connections Academy, Clinical Assessments and the
GED programme.
We participate in multi-stakeholder initiatives such as: the UN
Global Compact to ensure we maintain best practice in the
stewardship of our sustainability focus areas; the Responsible
Media Forum to identify industry-specific issues and share
best practice; and WorldSkills UK, which sets global
benchmarks, raises industry standards and empowers young
people to build world-class careers.
Outcome of engagement
Governments from all regions are prioritising AI, digital
transformation and energy transition when developing policies
and allocating investment to education and skills. Our
partnerships and collaborations help to inform policy and
strategic decision-making, and our engagement means we
can share best practice in focus areas related to education,
training and recruitment.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 21
Directors’ duties statement
In accordance with Section 172 of the Companies Act 2006
(see box to the right), the Directors fulfil their duties to promote
the success of the company through a well-established
governance framework. Typically, in large and complex
businesses such as Pearson, this framework includes
delegation of day-to-day decision-making to employees of
the Group.
This governance framework, summarised throughout this
document, is far more than a simple delegation of financial
authority, and includes the values and behaviours expected of
our employees and business partners, including: the standards
to which they must adhere; how we engage with stakeholders,
including understanding and taking into account their views
and concerns; and how the Board ensures that we have a
robust system of control and assurance processes in place.
In this annual report, we provide examples of how the Directors
promote the success of Pearson while taking into account the
consequences of decisions in the long term, building
relationships with stakeholders (including our eight key
stakeholder groups, as mentioned previously), and ensuring
that business is conducted ethically and responsibly.
While there are many parts of this annual report that illustrate
how the Directors do this, with the support of the wider
business, the following sections in particular are relevant:
• Engaging with our stakeholders (pages 17-22),
which outlines:
• How we serve and engage with each of our eight key
stakeholder groups, listen to their key concerns and
provide our responses
• How we have adapted our business to meet their needs
• How we have had regard to the need to foster the
company’s business relationships with each of the
stakeholder groups
Section 172 of the
CompaniesAct
In summary, as required by Section 172 of the
Companies Act 2006, a director of a company must act
in the way they consider, in good faith, would most likely
promote the success of the company for the benefit of
its shareholders as a whole. In doing this, the director
must have regard, among other matters, to:
a. The likely consequences of any decisions in the
long term
b. The interests of the company’s employees
c. The need to foster the company’s business
relationships with suppliers, customers and others
d. The impact of the company’s operations on the
community and environment
e. The company’s reputation for high standards of
business conduct
f. The need to act fairly as between members of
the company
• Understanding our stakeholders (pages 86-88),
which summarises:
• How Directors have engaged with employees and
shareholders, and had regard to their interests
• Sustainability (pages 32-54), which describes:
• Initiatives through which we strive to enable more
engaging learning experiences, that are accessible to
more people, and with a smaller carbon footprint
• Our commitment to creating a culture that prioritises
our customers, employees and sustainable
procurement practices
• How we align with widely accepted sustainability
reporting frameworks including GRI, SASB and TCFD
For further details on TCFD reporting, please see pages 45-49.
A continued understanding of the key issues affecting
stakeholders is an integral part of the Board’s decision-making
process. The insights that the Board gains through its
engagement mechanisms form an important part of the
context for all the Board’s discussions and decision-making
processes. For an insight into how the Board has considered
the interests of various stakeholders in its decision-making,
and the matters the Directors considered when balancing
various stakeholder perspectives, please see our case study
on page 89.
Engaging with our stakeholders continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 22
Monitoring our progress
We have replaced our previous set of strategic KPIs
with power metrics to make it easier to track progress
against our strategic priorities.
Under Assessment & Verification, we track metrics on renewal and the level of new business
growth. For Enterprise, we track the number of enterprise customers in our most commercially
and strategically material tiers.
Assessment & Verification
Objective: To track the stability and growth of our core assessments & verification business
Scope: Pearson Professional Assessments and US Student Assessment
Enterprise Skilling
Objective: To monitor how we are tracking against our enterprise growth ambition
Scope: Enterprise customers include all enterprises and non-education government
bodies within Assessment & Qualifications, English Language Learning and Enterprise
Learning & Skills
Key performance indicators for 2025
Renewals
96%
(2024: 99%)
(2023: 87%)
Growth
£33m
(2024: £36m)
(2023: £7m)
Total ‘Advanced’ and ‘Elite’ tier
customers
49
(2024: 45 Enterprises)
(2023: 47 Enterprises)
Definition of ‘Advanced’ and ‘Elite’ tier customers: Enterprise
customers with total recognised sales across Pearson enterprise
products in the reported year of £2.5m–£10m (Advanced) or
above £10m (Elite).
Definition: Average annual bookings for contracts with
new customers.
Definition: Total value of contracts renewed / (total value of
contracts renewed + lost). Contracts renewed include wins and
scope increases from existing customers.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 23
A strong financial position
Sales
b
This is our sales as reported
in our income statement.
Free cash flow and
conversion
a
Free cash flow is an adjusted
measure and is presented
in order to align the cash
flows with corresponding
adjusted earnings measures.
Adjusted operating
profit
a
A non-GAAP financial
measure that enables
management to
consistently track the
underlying operational
performance ofthe Group.
Net cash generated
from operations
b
This is our net cash
generated from operations
as reported in our cash
flowstatement.
Operating profit
b
This is our operating
profit as reported in our
income statement.
Dividend per share
This is the proposed
full-year dividend. Our
dividend policy is to be
progressive and sustainable.
Net debt
This is a non-GAAP financial
measure and is used by
management to assess
theGroup’s debt position.
Total shareholder
returns
c
This is a measure of financial
performance of shares
overtime.
Adjusted earnings
per share
a
A non-GAAP financial
measure used to
evaluate performance.
Return on capital
a
A non-GAAP measure of
how efficiently we are
generating returns from our
asset base.
Basic earnings
per share
b
A measure of the amount
ofprofit that can be
allocated to one share
ofourcommon stock.
a. See pages 235-240
for an explanation
and reconciliation
of these alternative
performance measures
and non-GAAP measures
b. Statutory measure
c. Source: Eikon
from Refinitiv
d. Comparatives were
restated in 2022
£3,552m
25
24
23
22
21
£3,577m
£3,674m
£3,841m
£3,428m
25
24
23
22
21
527m (125%)
£490m (117%)
£387m (93%)
£222m (58%)
£133m (51%)
£600m
£573m
£456m
£385m
£614m
£731m
£811m
£682m
£527m
£570m
£507m
£541m
£498m
£271m
£183m
25.2p
24.0p
22.7p
21.5p
20.5p
£1,069m
£853m
£744m
£557m
£350m
1 year
3 year
5 year
+20%
+74%
(16)%
62.1p
58.2p
51.8p
34.9p
64.5p 51.4p
64.5p
53.1p
32.8p
23.5p
d
25
24
23
22
21
11.3%
10.5%
10.3%
8.7%
7.9%
Key performance indicators for 2025 continued
£3,577m
£527m £731m 25.2p (16)% 11.3%
£614m £507m £1,069m 64.5p 51.4p
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 24
Financial
review
Financial Summary
2025 was another year of good financial
performance, with 4% underlying sales
growth, margin expansion and excellent
cash generation. Our consistent financial
progress over recent years reinforces our
confidence in the Group’s strategy, the
resilience of our portfolio and our ability
to deliver sustainable growth and
attractive returns in 2026 and over the
medium term.
Sally Johnson
Chief Financial Officer
£m 2025 2024
Business performance
Sales 3,577 3,552
Adjusted operating profit 614 600
Operating cash flow 571 662
Free cash flow 527 490
Adjusted earnings per share 64.5p 62.1p
£m 2025 2024
Statutory results
Sales 3,577 3,552
Operating profit 507 541
Profit for the year 336 435
Net cash generated from operations 731 811
Basic earnings per share 51.4p 64.5p
Throughout this section: a) Growth rates are on an underlying basis unless otherwise stated. Underlying growth rates exclude currency movements and portfolio changes; b) The ‘business performance’ measures
are non-GAAP measures, and reconciliations to the equivalent statutory heading under IFRS are included in the financial key performance indicators section on pages 235-240; c) Constant exchange rates are
calculated by assuming the average FX in the prior year prevailed through the current year.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 25
Underlying
sales
growth
Adjusted operating
profit
Free
cash flow
conversion
Interest** Tax**
Mid-
single
digit
Mid-single digit underlying
sales Compound Annual Growth
Rate (CAGR)
Average margin growth of 40 basis
points (bps) per annum*
90-100% free cash flow
conversion, on average, across
the period
90-100% c.£80m c.25%
£640m-£685m
at FX rates as at
the end of 2025
(£:$ 1.35)
Financial review continued
* Adjusted operating profit margins.
** As reflected in adjusted earnings.
Operating results
On a headline basis, sales increased by £25m or 1% from £3,552m in 2024 to £3,577m in 2025 and reported operating profit
decreased by £34m from £541m in 2024 to £507m in 2025. In addition, adjusted operating profit increased by £14m or 2%
from £600m in 2024 to £614m in 2025 (for a reconciliation of this measure see page 27 and note 2 to the consolidated
financial statements).
The reported operating profit of £507m in 2025 compares to an operating profit of £541m in 2024 due primarily to unfavourable FX
movements, inflation and an £87m non-cash, one-off impairment of legacy product development assets arising from strategic
platform convergence, partially offset by operating leverage on sales growth, continued cost savings and the reversal of prior
property provisions.
The headline basis simply compares the reported results for 2025 with those for 2024. We also present sales and profits on an
underlying basis which excludes the effects of exchange, the effect of portfolio changes arising from acquisitions and disposals
and the impact of adopting new accounting standards that are not retrospectively applied when relevant. Our portfolio change is
calculated by excluding sales and profits made by businesses disposed in either 2025 or 2024 and by ensuring the contribution
from acquisitions is comparable year on year. For prior year acquisitions, the corresponding pre-acquisition period is excluded
from the current year, and for current year acquisitions, the results for the current year are excluded. Portfolio changes mainly relate
to the acquisition of eDynamic Learning and disposal of Copp Clark in 2025.
On an underlying basis, sales increased by 4% in 2025 compared to 2024 and adjusted operating profit increased by 6%. Currency
movements decreased sales by £112m and adjusted operating profit by £26m. Portfolio changes increased sales by £7m and
adjusted operating profit by £2m. There were no new accounting standards adopted in 2025 that impacted sales or statutory or
adjusted operating profits.
Group Financial Expectations
2026 outlook
We expect Group underlying sales growth of mid-single
digit and adjusted operating profit will be £640m-£685m
at FX rates as at the end of 2025 (£:$ 1.35), which includes
lower amortisation in 2026 following the 2025 product
development impairment. We expect a free cash flow
conversion of 90-100%.
By business unit:
• In Assessment & Qualifications we expect sales growth
of low to mid-single digit, driven by new contracts,
products and pricing.
• In Virtual Learning we expect stronger growth than
2025, particularly in H1, driven by a full year of
enrolment growth.
• In Higher Education we expect to grow more than
2025, supported by continued product and platform
innovation, pricing and Inclusive Access in our core
US courseware business, with improvement in the
K12 channel.
• In English Language Learning we expect higher growth
than 2025 driven by market share gains and pricing,
with PTE returning to growth.
• In Enterprise Learning & Skills we expect growth to be
driven by a solid performance in Vocational
Qualifications and strategic account growth in
Enterprise Solutions.
Our adjusted net finance costs will be c.£80m reflecting
the associated costs of funding the recently announced
£350m share buyback. We expect the effective tax rate on
adjusted profit before tax to be c.25%.
2026 expectations
Medium term
guidance
reconfirmed
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 26
All figures in £ millions 2025 2024
Operating profit 507 541
Add back: Cost of major reorganisation – (2)
Add back: Product development impairment 87 –
Add back: Property charges (25) –
Add back: Intangible charges 42 41
Add back: UK pension discretionary increases – 13
Add back: Other net gains and losses 3 7
Adjusted operating profit 614 600
Adjusted operating profit includes the results from discontinued operations when relevant but
excludes charges for acquired intangible amortisation and impairment, acquisition related costs,
gains and losses arising from disposals, the cost of major reorganisation and associated
property charges, one-off costs related to the UK pension scheme and certain other one-off
material items. A summary of these adjustments is included below and in more detail in note 2 to
the consolidated financial statements.
In 2025, there are no costs of major reorganisation. In 2024, there was a release of £2m relating to
amounts previously accrued.
Product development impairment charges in 2025 relate to the impairment of product
development assets as a result of courseware platform convergence. There are no such
amounts in 2024.
Property charges in 2025 are a gain of £25m, relating to reversals of impairments of property
assets that were previously impaired through property charges. Impairment reversals have arisen
from new sublets on previously vacant space in corporate properties. There were no such
amounts in 2024.
Intangible amortisation charges in 2025 were £42m compared to a charge of £41m in 2024.
This is due to increased amortisation from recent acquisitions partially offset by decreased
amortisation from assets reaching the end of their useful economic lives.
UK pension discretionary increases in 2024 relate to one-off pension increases awarded
to certain cohorts of pensioners in response to the cost of living crisis. There were no such
amounts in 2025.
Other net gains and losses in 2025 relate to the gain on disposal of Copp Clark, a business in our
Higher Education division, a fair value gain relating to a previous disposal and costs relating to
current and prior year acquisitions and disposals. Other net gains and losses in 2024 related to
costs related to prior year acquisitions and disposals, partially offset by a gain on the partial
disposal of our investment in an associate.
Business Unit Results
£m
2025
2024
1
Headline
growth
Underlying
growth
Sales
Assessment & Qualifications 1,604 1,591 1% 4%
Virtual Learning 511 489 4% 8%
Higher Education 775 781 (1)% 2%
English Language Learning 405 420 (4)% 1%
Enterprise Learning & Skills 282 271 4% 6%
Total 3,577 3,552 1% 4%
Adjusted operating profit/loss
Assessment & Qualifications 361 368 (2)% 1%
Virtual Learning 81 66 23% 29%
Higher Education 93 96 (3)% 0%
English Language Learning 50 50 0% 16%
Enterprise Learning & Skills 29 20 45% 40%
Total 614 600 2% 6%
1. Comparative amounts have been restated to reflect the move between segments of IT Pro from Higher
Education to Enterprise Learning & Skills.
Assessment & Qualifications
In Assessment & Qualifications, sales increased 1% on a headline basis and 4% on an underlying
basis. Adjusted operating profit increased 1% in underlying terms due to operating leverage on
sales growth partially offset by investment and inflation, and decreased 2% in headline terms due
to currency movements offsetting trading.
Pearson Professional Assessments sales increased 1% on an underlying basis driven by new
contract launches partially offset by the pause in a contract delivered in 2024, which resumed
in Q3, and headwinds in PDRI, which has been impacted by US federal government hiring and
spend reductions.
In US Student Assessment, sales increased 2% on an underlying basis supported by scope
increases with existing customers.
In Clinical Assessment, sales increased 8% on an underlying basis due to the continued traction
of our products in the market, pricing and digital product growth.
In UK & International Qualifications, sales increased 9% on an underlying basis driven by volume,
pricing and strong International growth.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 27
Financial review continued
Virtual Learning
Virtual Learning, sales grew 4% on a headline basis, with a
strong performance in the second half of the year driven by
enrolment performance, favourable mix and funding, partially
offset by currency movements, and 8% on an underlying
basis. Adjusted operating profit increased 29% in underlying
terms, due to operating leverage on sales growth, and
23% in headline terms due to this partially offset by
currency movements.
Enrolments for the 2025/26 academic year increased by 13%
in the Fall semester, benefiting from targeted marketing
investments to capture demand. We also successfully opened
two new schools for the 2025/26 academic year bringing our
total number of schools to 41 across 31 states and renewed all
six of our long term school contracts.
Higher Education
In Higher Education, sales decreased 1% on a headline basis
due to currency movements more than offsetting trading and
portfolio changes, and increased 2% on an underlying basis.
Adjusted operating profit was flat in underlying terms driven by
operating leverage on sales growth offset by investment in the
business and inflation, and decreased 3% in headline terms
due to currency movements more than offsetting trading and
portfolio changes.
In US Higher Education, underlying sales grew 3%, driven by
enrolment growth and pricing in our core Courseware
business, partly offset by expected declines in the K12 channel
due to the transitionary period, with adoption share
maintained. We delivered strong growth in Inclusive Access, up
19%, and achieved 2% growth in US digital subscriptions. In
addition, we continued to see strong monetisation of our
Study Prep tool and sustained engagement with our AI-
powered study tools. International Higher Education faced
ongoing challenging trading conditions in mature markets,
declining 7% for the full year.
English Language Learning
In English Language Learning, sales decreased 4% on a
headline basis due to currency movements more than
offsetting trading, and grew 1% on an underlying basis driven
by Institutional. Adjusted operating profit increased by 16% in
underlying terms due to cost savings partially offset by
inflation and was flat in headline terms due to currency
movements offsetting trading.
PTE continued to perform well against a challenging market
backdrop of tightening migration policies. While volumes
declined 5%, sales remained flat and we continued to gain
market share. Our Institutional business delivered a solid
performance, with strength in key Latin American markets
and Asia.
Enterprise Learning & Skills
In Enterprise Learning & Skills, sales were up 4% on a headline
basis due to currency movements more than offsetting
trading, and 6% on an underlying basis. Adjusted operating
profit increased by 40% in underlying terms due to operating
leverage on sales and increased 45% in headline terms due to
trading performance and favourable currency movements.
Vocational Qualifications delivered a solid performance while
Enterprise Solutions growth improved quarter on quarter as we
build momentum in our enterprise approach and related sales
capability, driven by the recently announced partnerships.
Net Finance Costs
Net finance costs increased on a headline basis from a net
cost of £31m in 2024 to a net cost of £50m in 2025. The
increase is primarily due to increased net borrowing costs
given increased average net debt following last year’s share
buy back and movements on derivatives.
Adjusted net finance costs reflected in adjusted earnings in
2025 was £57m, compared to a net cost of £45m in 2024. The
difference is primarily due to increased net borrowing costs
given increased average net debt following last year’s share
buy back and movements on derivatives.
Net finance income in respect of retirement benefits has been
excluded from our adjusted earnings as we believe the income
statement presentation does not reflect the economic
substance of the underlying assets and liabilities. Also included
in the net finance costs (but not in our adjusted measure) are
interest costs relating to acquisition or disposal transactions
as it is considered part of the acquisition cost or disposal
proceeds rather than being reflective of the underlying
financing costs of the Group. Foreign exchange, fair value
movements on investments classified as fair value through
profit and loss (FVTPL), and other gains and losses on
derivatives are excluded from adjusted earnings as they
represent short-term fluctuations in market value and are
subject to significant volatility. Other gains and losses may not
be realised in due course as it is normally the intention to hold
the related instruments to maturity. Interest on certain tax
provisions is excluded from our adjusted measure in order to
mirror the treatment of the underlying tax item.
In 2025, the total of these items excluded from adjusted
earnings was income of £7m compared to income of £14m
in 2024.
All figures in £ millions 2025 2024
Adjusted net finance costs (57) (45)
Finance income in respect of
retirement benefits 25 21
Fair value movements on
investments held at FVTPL (7) (11)
Other net finance costs (11) 4
Net finance costs (50) (31)
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 28
Taxation
The reported tax on statutory earnings in 2025 was a charge of
£121m compared to a charge of £75m in 2024. This equates to
an effective tax rate of 26.5% (2024: 14.7%), with the increase
from prior year principally due to the release of the State Aid
uncertain tax provision in the prior year.
The total adjusted tax charge in 2025 was £136m (2024:
£136m), corresponding to an effective tax rate on adjusted
profit before tax of 24.5% (2024: 24.4%).
In 2025, there was a net tax payment of £2m (2024: £119m net
tax payment). This includes a £97m receipt from HMRC in
respect of the State Aid matter, with an additional £17m of
associated interest also received in the period. The interest
element is classified within interest received in the cash flow
statement. This repayment is a result of the Court of Justice of
the European Union handing down its decision on 19
September 2024 determining that the United Kingdom
controlled foreign company group financing partial exemption
did not constitute State Aid, thereby resulting in a refund of the
£97m of tax paid (plus £17m of interest) under the Charging
Notices issued by HMRC in 2021. The balance excluding the
State Aid repayment, principally relates to tax payments in the
US and the UK, and decreased due to lower tax liabilities and
instalment payments for 2025.
A net deferred tax liability of £31m is recognised in 2025
compared to a net deferred tax liability of £11m in 2024. The
overall amount increased mainly due to the ongoing utilisation
of tax losses and other tax attributes. The current tax creditor
principally consists of provisions for tax uncertainties.
Earnings per share
Basic earnings per share is 51.4p in 2025 compared to 64.5p in
2024. The decrease in 2025 is mainly due to decreased
operating profits, increased tax charges and increased
interest charges, partially offset by a decrease in the number
of shares following the share buy back.
Adjusted earnings includes adjusted operating profit and
adjusted finance and tax charges. The reconciling items
between the statutory inputs to earnings per share and the
adjusted inputs are discussed in the previous sections.
Adjusted earnings per share increased 4% to 64.5p (2024:
62.1p) reflecting adjusted operating profit growth and the
reduction in issued shares due to the 2025 share buyback,
partially offset by increased interest costs. Adjusted earnings
per share increased 9% at constant exchange rates.
Other comprehensive income
Included in other comprehensive income are the net exchange
differences on translation of foreign operations. The loss on
translation of £193m in 2025 compares to a loss in 2024 of
£35m. The loss in 2025 arises from an overall weakening of the
majority of currencies to which the Group is exposed, in
particular the US dollar. A significant proportion of the Group’s
operations are based in the US and the US dollar closing rate at
31 December 2025 was £1:$1.35 compared to the opening
rate of £1:$1.25. At the end of 2024, the US dollar rate was
£1:$1.25 compared to the opening rate of £1:$1.27.
Also included in other comprehensive income in 2025 is an
actuarial gain of £10m in relation to the retirement benefit
obligations of the Group. The gain arises mainly from a
decrease in liabilities driven by lower long-term inflation
assumptions and updates to commutation factors. The
actuarial gain in 2025 of £10m compares to an actuarial gain in
2024 of £5m.
Fair value losses of £7m (2024: losses of £2m) have been
recognised in other comprehensive income and relate
to movements in the value of investments in unlisted
securities held at fair value through other comprehensive
income (FVOCI).
Cash flow and working capital
Net cash generated from operations, was £731m in 2025
compared to £811m in 2024. The decrease is largely explained
by unfavourable movements in working capital and
unfavourable currency movements.
Our operating cash flow measure is an adjusted measure
used to align cash flows with our adjusted profit measures.
Compared to net cash generated from operations, this
measure excludes reorganisation costs and acquisition
costs but includes regular dividends from associates.
It also includes capital expenditure on property, plant,
equipment and software, and additions to right-of-use
assets as well as disposal proceeds from the sale of property,
plant, equipment and right-of-use assets (including the
impacts of transfers to/from investment in finance lease
receivable). In 2025, reorganisation cash outflow was £nil
compared to £8m in 2024.
Operating cash flow decreased on a headline basis by
£91m from an inflow of £662m in 2024 to an inflow of £571m
in 2025 due to an increase in working capital given high Q4
sales growth.
Free cash flow increased on a headline basis by £37m from
£490m in 2024 to £527m in 2025. When compared to
operating cash flow, free cash flow includes tax paid, net
finance costs paid, special pension contributions and net
costs paid for major reorganisation. The increase year on year
is mainly due to the receipt of monies in respect of the State
Aid tax matter offset by the reduction in operating cash flow.
In 2025, there was an overall £210m decrease in cash and cash
equivalents compared to an increase of £234m in 2024. The
decrease in 2025 is primarily due to the cash inflow from
operations of £731m being more than offset by dividends paid
of £160m, share buyback programme payments of £352m,
own share purchases of £72m, capital expenditure on
property, plant and equipment and intangibles of £134m,
payments for the acquisition of subsidiaries of £167m, and
payments of lease liabilities of £77m.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 29
Financial review continued
All figures in £ millions 2025 2024
Net cash generated from operations 731 811
Dividends from joint ventures
and associates 1 2
Purchase / disposal of PPE
and software (131) (118)
Net addition of right-of-use assets (45) (46)
Net costs paid for
major reorganisation – 8
Other net gains and losses 13 5
Special pension contributions 2 –
Operating cash flow 571 662
Tax paid (2) (119)
Net finance costs paid (40) (45)
Special pension contributions (2) –
Net cost paid for
major reorganisation – (8)
Free cash flow 527 490
Liquidity and capital resources
The Group’s net debt increased from £853m at the end of
2024 to £1,069m at the end of 2025. The increase is largely due
to free cash flow of £527m being more than offset by the share
buy back programme, dividend payments and cash outflows
related to acquisitions.
In May 2025, the Group repaid its €300m bond and closed out
various related derivatives. In June 2025, the Group secured a
new three-year, $800 million revolving credit facility (RCF). This
facility can be utilised for general corporate purposes,
enhancing our liquidity, and is in addition to the Group’s
existing RCF. At 31 December 2025, the Group had drawn
£0.3bn on its Revolving Credit Facilities.
At 31 December 2025, the Group had approximately £1.3bn in
total liquidity immediately available from cash and its RCFs,
maturing in February 2028 and February 2029, but which have
options to extend the maturities until 2030. In assessing the
Group’s liquidity and viability, the Board analysed a variety of
downside scenarios including a severe but plausible downside
scenario, where the Group is impacted by a combination of all
principal risks from H1 2026, as well as reverse stress testing to
identify what would be required to either breach covenants or
run out of liquidity. The severe but plausible scenario modelled
a severe reduction in revenue, profit and operating cash flow
from risks continuing throughout 2026 and 2027. In all
scenarios, the Group would maintain comfortable liquidity
headroom and sufficient headroom against covenant
requirements during the period under assessment even before
modelling the mitigating effect of actions that management
would take in the event that these downside risks were to
crystallise. The directors concluded that the likelihood of the
reverse stress test scenario was remote.
At 31 December 2025, the Group was rated BBB (stable
outlook) with Fitch and Baa2 (stable outlook) with Moody’s.
Net debt
All figures in £ millions 2025 2024
Cash and cash equivalents
(excluding overdrafts) 333 543
Overdrafts – –
Investment in finance lease 66 83
Derivative financial instruments 13 (7)
Bonds (706) (955)
Revolving Credit Facilities (297) –
Lease liabilities (478) (517)
Net debt (1,069) (853)
Post-retirement benefits
Pearson operates a variety of pension and post-retirement
plans. The UK Group pension plan has by far the largest defined
benefit section. The Group has some smaller defined benefit
sections in the US and Canada but, outside the UK, most of the
companies operate defined contribution plans.
The charge to profit in respect of worldwide pensions and
post-retirement benefits amounted to £43m in 2025 (2024:
£60m), of which a charge of £68m (2024: £81m) was reported
in operating profit and income of £25m (2024: £21m) was
reported in other net finance costs. In 2024, a charge of £13m
related to one-off discretionary pension increases was
excluded from adjusted operating profit, with no such
amounts in 2025.
The overall surplus on UK Group pension plans of £484m at the
end of 2024 has increased to a surplus of £514m at the end of
2025. The increase has arisen principally due to asset returns
being higher than expected and inflation over the period being
slightly lower than was expected at the beginning of the year.
In total, the worldwide net position in respect of pensions and
other post-retirement benefits increased from a net asset of
£450m at the end of 2024 to a net asset of £482m at the end
of 2025.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 30
Businesses acquired and disposed
On 24 July 2025, the Group completed the acquisition of 100%
of eDynamic Holdings LP (‘eDynamic Learning’), a leading
Career and Technical Education (CTE) curriculum solutions
provider for cash consideration of £168m.
The cash outflow in 2025 relating to the acquisition of
subsidiaries of £167m includes £4m arising from the payment
of deferred consideration in respect of the prior year. The cash
outflow in 2024 relating to acquisitions of subsidiaries was
£39m, arising from the payment of deferred consideration in
respect of prior year acquisitions, mainly Credly and Mondly,
which were acquired in 2022. In addition, there was a cash
outflow relating to investments of £5m (2024: £7m).
The Group disposed of Copp Clark in 2025 for consideration of
£9m, resulting in a gain on disposal of £8m, which has been
recorded within other net gains and losses. There were no
disposals of subsidiaries in 2024 with cash outflows relating
primarily to prior year disposals. In 2025, the cash inflow
relating to the disposal of businesses was £8m (2024: outflow
of £7m).
Dividends
The dividend accounted for in our 2025 financial statements
totalling £160m represents the final dividend in respect of
2024 (16.6p) and the interim dividend for 2025 (7.8p). We are
proposing a final dividend for 2025 of 17.4p bringing the total
paid and payable in respect of 2025 to 25.2p. This final 2025
dividend, which was approved by the Board in February 2026,
is subject to approval at the forthcoming AGM. For 2025, the
dividend is covered 2.6 times by adjusted earnings.
Share buyback
On 27 February 2025, the Board approved a £350m share
buyback programme in order to return capital to shareholders.
The programme completed in 2025. During 2025, c32m shares
have been bought back at a cash cost of £352m. The nominal
value of the cancelled shares of £8m has been transferred to
the capital redemption reserve.
On 21 January 2026, a further £350m share buyback
programme was announced. The programme commenced on
21 January 2026.
Climate change
The Group has assessed the impacts of climate change on the
Group’s financial statements. The assessment did not identify
any material impact on the Group’s significant judgements or
estimates, the recoverability of the Group’s assets at 31
December 2025 or the assessment of going concern for the
period to June 2027.
Conclusion
2025 was another year of good financial performance, with 4%
underlying sales growth, margin expansion and excellent cash
generation. Disciplined capital allocation enabled us to
increase the dividend and continue returning surplus cash to
shareholders through our share buyback programme.
Our consistent financial progress over recent years reinforces
our confidence in the Group’s strategy, the resilience of our
portfolio and our ability to deliver sustainable growth and
attractive returns in 2026 and over the medium term.
This will be my last Annual Report for Pearson as I leave this
fantastic business after nearly 26 years — including the last six
as Group CFO — to take on a new challenge.
I will miss working with this extraordinary group of Pearson
people every day. I’m incredibly proud of what we’ve achieved
together: delivering stronger and more consistent financial
performance, driving significant business and finance
transformation, and sharpening our approach to capital
allocation. None of this would have been possible without the
talent, commitment, and good humour of the teams I’ve had
the privilege to work alongside.
I’m delighted that Simon Robson will be joining Pearson as the
next Group CFO. He is an excellent leader and a great fit for
Pearson’s culture, and I know the finance team — and the wider
business — will be in very good hands.
Thank you in particular to the finance team for the support, hard
work and commitment over so many years.
Sally Johnson
Chief Financial Officer
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 31
Sustainability
at Pearson:
Learning for
Impact
Letter from our Executive Lead
for Sustainability
Our digital transformation
is grounded in learning
science and innovation,
ensuring technology
delivers clear benefits for
learners and enhances
outcomes for society.”
Cinthia Nespoli
General Counsel and Executive Lead for
Sustainability
Guided by our purpose of helping people realise the life they
imagine through learning, we focus on excellence in everything
we do to protect the trust of learners, institutions, enterprises
and governments as we help them upskill and reskill in a rapidly
changing world.
Championing innovation and
technology leadership
We believe lifelong learning is the cornerstone of a successful
digital economy, helping to create a future-ready workforce
with the skills to harness the potential of AI and drive growth.
Our digital transformation is grounded in learning science and
innovation, ensuring technology delivers clear benefits for
learners and enhances outcomes for society.
We know that rapid workplace evolution and shortening skill
lifespans require an increasingly agile approach to learning
and development. Our 2025 research report ‘Lost in Transition’
(https://plc.pearson.com/en-GB/news-and-insights/
lost-in-transition) revealed the huge economic and personal
costs that occur without access to effective learning.
By responding to this need through our innovative learning
solutions, we are creating more accessible, engaging
and impactful experiences, helping learners build their
capabilities and increase their employability, and driving our
own company growth. In 2025, we were featured in the GSV
150 list of companies transforming digital learning and
workforce skills development, validating the impact of our
approach (https://www.asugsvsummit.com/gsv-150).
We continue to enhance learning for everyone, exploring how
purpose-built AI tools can aid conceptual learning. Our Higher
Education business unit applied our findings to launch the ‘Go
Deeper’ functionality in our AI Study Tools, which encourages the
critical reasoning skills needed for both academic success and
real-world problem solving. By integrating AI into resources
across selected topics for our Connections Academy Virtual
Schools, we are personalising learning, increasing both end-of-
year pass rates and final grades.
Investing in our talent
Our success depends on empowering our people to create
impactful learning and assessment solutions. We are fostering
a culture of belonging and engagement to attract and retain
talent. Through continuous learning, we enable our people to
fulfil their roles and shape their future careers as the world of
work and our business evolve. Our new Career Architecture
helps our employees map their career progression, identify
clear development pathways and find learning opportunities.
We have expanded AI training with courses for every role
across the organisation, while our leadership model sets clear
expectations on driving a culture of innovation. By building their
AI capabilities, our employees not only enhance their careers but
also better understand how innovative technology can improve
outcomes for learners, businesses and the wider economy.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 32
Building long-term resilience
Our focus on excellence builds customer trust and business
resilience, positioning Pearson for future growth. Our
partnerships are integral to balancing our digital
transformation with responsible environmental stewardship.
We continue to reduce our greenhouse gas (GHG) emissions,
which are down by 44% (location-based methodology)
against our 2018 baseline, and drive energy efficiency
measures to reduce operating costs. Purchasing 100%
renewable electricity increases our energy security and
protects our business from price shocks in international fossil
fuel markets, while maintaining our path towards
decarbonisation. We updated our climate risk analysis in 2025
to ensure we are aware of any potential risks to the long-term
value of our business in a rapidly changing world.
Though emissions from our AI use are currently low compared
to emissions from other activities, they will represent an
increased portion of our footprint in the future as we expand
our AI-driven learning experiences. Through our strategic
partnerships with organisations and suppliers including
Microsoft and AWS, we are supporting the use of responsible,
energy-efficient AI across different industries. We are working
with others across our industry and beyond to better
understand the impacts of AI, including becoming a signatory
to the Coalition for Sustainable AI in 2025.
Transforming learning responsibly
Helping learners navigate the technological disruption to
skills and careers requires us to look at every aspect of the
technology we use – its educational benefits and its impacts,
including those related to accuracy, accessibility, cyber
security and data privacy. In 2025, we welcomed a new Senior
Lead for Responsible AI to lead our Responsible AI function.
Our new AI Centre for Enablement (C4E) fosters a unified
approach to product development and is founded on trust,
safety and the principles of security and accountability.
Together, the C4E and our Responsible AI function are laying
the foundations to align our AI activities with ethical, legal and
compliance standards. Read more on page 38.
Our Interactive Labs’ immersive science-based simulations
won the 2025 CODiE Award for Best Science Instructional
Solution. Designed with accessibility at their core, the
simulations reflect the latest Web Content Accessibility
Guidelines, the gold standard for website accessibility.
1
Continuing to drive impact
We are committed to innovating in response to the evolving
world of work, making learning more effective, enhancing
learning experiences and building a strong foundation for our
long-term growth. Guided by our Learning for Impact
framework, we will progress our climate commitments while
maintaining a sharp focus on the social impact of our products
and services. We will advance our employee upskilling and
learning programmes to maintain a talented and engaged
workforce and will continue to build dialogue with our
stakeholders on the issues that matter to them.
1. https://www.levelaccess.com/compliance-overview/wcag-web-content-accessibility-guidelines/
I’m excited to share our progress to date as we seek to give
everyone the opportunity to participate in the future of
education and work.
Cinthia Nespoli
General Counsel and Executive Lead for Sustainability
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 33
As the world’s lifelong learning
company, we support learners,
educators and institutions around the
world, delivering sustainable value at
each stage of the learning journey.
We integrate content creation, digital distribution, assessment
and credentialling within a unified value chain to enable
accessible, high-quality learning opportunities for all. For more
information about our business model, see pages 12-16.
Our greatest impact is through the learning benefits our
products create, driving value for society and for Pearson.
We reinvest that value into improving our product offerings
and expanding educational opportunities across the world.
This allows us to hire the skilled people needed to support our
mission and ensure the ongoing development of high-quality
products and services. Like any company, our operations and
value chain have an impact on the environment and society.
We are committed to managing these impacts responsibly to
ensure the long-term resilience of our business. By doing this,
we help strengthen access to education, an essential human
right, and contribute to improved learning outcomes for
more people.
The natural alignment between our business strategy and the
positive impact delivered through our Learning for Impact
framework is one of our core strengths, and reflects our
shareholders’ expectations. The framework underpins our
responsible business strategy, guiding us to focus on areas
where we can create the greatest positive outcomes while
managing key risks. A foundation of robust corporate
governance, a strong culture and a suite of comprehensive
policies and practices support us to achieve our ambitions.
Non-financial and sustainability
information statement
Contributing to sustainable
development globally
The UN Sustainable Development Goals (SDGs) exist to
achieve a better and more sustainable future for all. Through
our Learning for Impact framework, we contribute to the
following SDGs:
SDG 4 — Quality education. Pearson uses
innovative technology to ensure students
maximise the benefits of AI-enabled
learning. Our ‘Go Deeper’ functionality for
AI Study Tools encourages critical thinking
by providing students with follow-up
questions. See page 38.
SDG 8 — Decent work and economic
growth. We work closely with
organisations around the world to build the
skills needed for tomorrow’s workforce.
For example, we are working with the
Digital Education Council to develop
research and resources that will drive
digital transformation in higher education
across global markets. See page 37.
SDG 10 — Reduced inequalities. We
develop inclusive products that support
every learner’s needs. We launched
Revibe, an AI-enabled wearable device
designed to help learners with ADHD
improve focus and self-regulation,
supporting access to learning for
neurodiverse individuals. See page 39.
Rankings and recognition
Independent rankings help our investors evaluate our
performance and management of sustainability risks and
opportunities. In 2025, we received the following recognition:
• CDP: Scored A- rating for Climate, B- rating for Forest and C
rating for Water
• EcoVadis: Retained Bronze status, placing us in the top 35%
of companies assessed
• FTSE4Good: Constituent of the FTSE4Good Index Series in
the top 1% of our sector
• ISS: Improved our score to B
• MSCI: Maintained AA rating
• S&P CSA (Dow Jones Sustainability Indices): Achieved the
joint highest score in our industry and a listing in the S&P
Sustainability Yearbook
• Sustainalytics: Classified as negligible risk
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 34
Our sustainability pillars: Learning for Impact
Our purpose – Helping people realise the life they imagine through learning
1. Driving learning
for everyone
2. Empowering our people
to make a difference
3. Leading responsibly
for a better planet
We create impact and contribute to shareholder value by:
Widening access to learning through business growth
opportunities powered by technology and application of
learning science
Building high-performing teams through a strong sense
of purpose
Meeting our environmental and clean energy goals in
partnership with our value chain
We maintain stakeholder trust through diligent management of our strategically significant sustainability focus areas:
• Learning science and innovation
• Responsible AI
• Responsible content
• Accessibility
• Cyber security and data privacy
• Culture of engagement
• Talent development
• Employee learning and upskilling
• Culture of community and wellbeing
• Greenhouse gas emissions
• Energy use
• Supply chain due diligence
Our strategy is underpinned by robust governance, human rights and environmental due diligence, strong culture and comprehensive policies
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 35
Our approach to reporting
1
This Non-financial and sustainability information statement
(pages 34-54) is written in accordance with Sections 414CA
and 414CB of the Companies Act 2006 and the UK Corporate
Governance Code (2024), which include mandatory
requirements for non-financial and sustainability reporting
for UK listed companies. For ease of reference, we have
produced an index table covering the topics in this Non-
financial and sustainability information statement, here:
https://plc.pearson.com/en-GB/sustainability/our-
sustainability-reporting.
As the sustainability reporting landscape continues to
evolve, we are focused on our reports remaining compliant
with regulatory standards and comparable and useful
for stakeholders.
Our statement outlines significant sustainability topics for
our business and our approach to managing them. These
topics cover those identified through our most recent
materiality assessment and align with our Learning for
Impact framework. For more information see our Materiality
summary, here: https://plc.pearson.com/en-GB/
sustainability/our-sustainability-reporting, which explains
how we identify priority topics and assess our key sustainability
risks and opportunities.
While this statement focuses on the topics we understand
to be of greatest importance to our stakeholders, we
continue to manage a broad range of sustainability issues
across our operations.
Sustainability governance
The Reputation & Responsibility Committee (RRC)
manages the integration of sustainability into Pearson’s
business strategy, including overseeing related risks
and opportunities. It reviews and approves targets
associated with our sustainability priorities and monitors
performance against them, as well as against other public
sustainability commitments.
In 2025, the Committee included two Non-Executive Directors
with climate expertise specifically to advise on climate-related
risk management, which is also supported by other Board
Committees. For more information see pages 99-101.
The broader responsibilities of the RRC are detailed in its
terms of reference, here: https://plc.pearson.com/en-GB/
company/governance.
Information on specific governance and management
approaches across the key ‘focus areas’ within each of our
three Learning for Impact pillars is covered in the tables on the
following pages.
Our sustainability policies and due
diligence processes
We are committed to conducting business with integrity and
strive to reflect this in our interactions with colleagues,
customers and learners. We uphold a robust governance
framework that integrates responsible business conduct into
our operational management systems and decision-making
processes. This includes enforcing comprehensive policies for
employees and business partners, delivering mandatory
training to strengthen awareness and accountability, regularly
assessing our operations and supply chains to identify
potential adverse impacts and conducting regular internal and
external audits to monitor compliance and performance.
We work to identify, prevent and address potential adverse
impacts related to ethics, human rights and the environment
throughout our value chain. When issues arise, we act quickly
through established grievance mechanisms and engage
directly with affected stakeholders to implement remedial
actions. We report all due diligence processes and outcomes
as required by law.
Our policies and guidelines support our due diligence
processes and reflect our ethical and sustainability
commitments. Key documents include:
• Code of Ethics and Business Partner Code of Conduct
• Responsible Procurement Policy
• Environment Policy
• Modern Slavery and Human Rights Statements
• Anti-Bribery and Corruption (ABC) Policy
• Raising Concerns and Anti-Retaliation Policy
• Safeguarding Statement (including data privacy and
security principles)
We have outlined how we implement these policies in this
report and on our website: https://plc.pearson.com/en-GB/
corporate-policies.
Respecting human rights
We require all employees to complete annual Code of Ethics
refresher training to reinforce these commitments. We
maintain a confidential, third-party-operated ethics hotline for
employees and other stakeholders to raise concerns
anonymously and securely. Our Ethics and Compliance team
investigates all reported issues, including potential Code of
Ethics breaches, and oversees anti-bribery and anti-
corruption due diligence and sanctions screening, supported
by Local Compliance Officers. See page 54 for our
performance data related to business conduct.
We comply with all local labour and human rights regulations,
including establishing work councils where required.
Due diligence in supply chains
Strong due diligence procedures enable us to identify and
prevent potential adverse impacts in our supply chain. All our
suppliers must acknowledge and comply with our Responsible
Procurement Policy, which includes strict standards relating to
the environment, business conduct and human rights. Read
more on page 44 and in our Responsible Procurement Policy
at: https://plc.pearson.com/en-GB/corporate-policies.
We work with EcoVadis to conduct risk assessments and
monitor supplier sustainability, covering approximately
90% of our third-party and supplier landscape in 2025.
If we identify any risks, we collaborate with suppliers to
implement management processes to mitigate and minimise
these issues, and monitor progress to ensure effective
corrective actions.
Sustainability continued
1. This Non-financial and sustainability information statement includes several website addresses and references to additional materials found on those websites. These websites and materials, including the information on the
Company’s website, as may be referenced in this report, are provided for convenience only, and are not intended to be part of this report and are not incorporated by reference herein.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 36
The biggest positive impact that we
can have on the world is through our
products and services.
Our products equip people and communities with the skills
and knowledge that accelerate economic growth and power
societal progress. As demographic and technological shifts
transform industries and the global skills outlook, the need to
rapidly reskill has never been more important. This is true not
only for individuals seeking opportunities, but also for
businesses and economies to remain competitive. By striving
to meet this demand for more effective learning and clear
skilling pathways, we can help enhance productivity, increase
employability, support communities and drive business
resilience and growth for Pearson and beyond.
Expanding learning through innovation
and technology
Integrating innovative technologies into our learning and
assessment tools to help make learning more impactful and
effective is a key strategic priority. AI is reshaping education,
enabling more personalised learning, more learner-centred
assessments and better data insights for educators. However,
realising this potential requires stakeholders to trust
technology’s role in learning and assessments.
We focus on integrating AI and other technologies into our
products in a responsible, evidence-driven way. Leveraging
technology to create accessible and personalised learning
solutions strengthens learner outcomes, reinforces our brand
and supports sustainable growth. This in turn helps us balance
commercial goals with our commitment to equitable access
and long-term stakeholder trust.
Case study
Partnering to transform
education through
digitalisation and AI
We work with a diverse range of organisations to accelerate
growth and unlock new opportunities, from co-creating
advanced AI-infused products to supporting industry
initiatives that are transforming education through
digitalisation. By combining our deep educational expertise
with leading capabilities from across the technology
ecosystem, our strategic partnerships enable us to scale
innovation and deliver more digitally advanced products that
better support learners in an AI-enabled world.
Alongside our strategic partnerships with hyperscaler
partners and professional services enterprises (see pages 7
and 15), we are working with a number of NGOs to help
accelerate the pace of modernisation at Pearson and
influence how we leverage AI for positive impact. For example:
• We aim to drive digital transformation in higher education
with the Digital Education Council by modernising learning
models, co-developing research and providing resources
for institutions and policymakers
• We are focused on advancing AI literacy with Code.org, an
education innovation non-profit
• We are supporting innovative, AI-driven ventures through
our investment in the AI Fund, which operates as a venture
studio, building scalable businesses designed to address
real-world problems. Through this partnership, we will
co-create ventures with the Fund that drive innovation and
align with our vision for the future of education
Through these collaborations and investments, we are
strengthening our capabilities, expanding our reach and
translating AI innovation into meaningful value for learners,
educators and institutions.
Driving learning for everyone with our products
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 37
Our product focus areas
Focus areas Approach and governance 2025 actions
Learning science and innovation
One of Pearson’s strengths is
delivering trusted, outcome-
focused content as part of learning
experiences grounded in learning
science. Applying evidence-based
insights to product design helps us
to create more effective and
innovative learning products that
enhance learner outcomes and
secure stakeholder trust.
The Chief Strategy Office has a central team of learning science experts, who
ensure that learning science is embedded within our Quality Standards and
applied across all our products and services.
Our Learning Design Principles help us integrate learning theory throughout our
products, processes, methodologies and organisational structures. Read more
here: https://www.pearson.com/en-gb/efficacy/learning-evidence.html.
Pearson Labs and our dedicated team of researchers and developers are
committed to developing scalable solutions through generative AI and immersive
learning technologies. Working closely with learning scientists, they have
developed a strategy to guide the integration of new technologies across our
portfolio, including a focus on grounding innovation in educational research.
• We remain committed to investing in research and innovation aimed at understanding large-
scale educational challenges and to help develop scalable technology-driven solutions.
Examples include:
• ‘Lost in Transition: Fixing the ‘Learn to Earn’ Skills Gap’ report: reviews the global skills outlook
and identifies strategies to transform workforces and unlock trillions in trapped value. Read
more here: https://plc.pearson.com/en-GB/news-and-insights/lost-in-transition.
• ‘Asking to Learn’: our large-scale analysis of students’ interactions with AI Study Tools,
informing development of the ‘Go Deeper’ functionality, which supports deeper learning in
higher education by prompting students with follow-up questions to encourage critical
thinking skills. Read the report here: https://plc.pearson.com/AskingToLearn.
• Launched Pearson Labs, a new research space in London dedicated to accelerating
emerging learning technologies and innovation.
Responsible AI (RAI)
Ensuring the AI we use and embed
in our products is safe, fair,
transparent and contributes to
improved learning outcomes is
essential to protect learners,
maintain trust with customers and
support responsible innovation
across our portfolio.
We have established consistent technology standards, and our Chief Technology
Officer oversees the digital experience at Pearson. Our Senior Lead for
Responsible AI leads this area of work, ensuring all AI activities align with ethical,
legal and compliance standards.
We continue to strengthen our strategy and governance processes around AI to
ensure we use and apply this technology responsibly:
• Our RAI Principles and AI Governance Framework were established in 2025 to
support our AI strategy and underpin our AI-related research and product
development. Based on internationally-recognised frameworks and aligned
with our policies and Global Quality Standards, the principles cover fair,
reliable and effective experiences, transparency and accountability, and
trustworthy and safe AI.
• The Governance Framework provides a structured approach to managing AI
systems and aligns to the NIST AI Risk Management Framework, the EU AI Act,
ISO 42001/27001/27701, and SOC2.
• Launched AI Literacy Modules to help educators instruct students about using AI. These modules
cover topics such as validating AI-generated results and appropriately citing AI outputs. Ongoing
research into how students are using our AI tools already shows promise in relation to course
scores and pass rates.
• Expanded our portfolio of RAI learning content, including certifications across multiple formats
and disciplines, featuring agentic AI, large language models, machine learning and ethical
AI implementation.
• Continued to upskill employees on AI, focusing on using AI responsibly and how to avoid
introducing bias. Read more on page 42.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 38
Focus areas Approach and governance 2025 actions
Content
We are committed to the highest
standards of quality to help protect
learner wellbeing, maintain trust
with educators and institutions and
meet educational standards.
The Global Quality Standards Governance Board, comprising leaders from
each business unit, will be active from Q1 2026, and will oversee our Global
Quality Standards.
Our Global Quality Standards are structured across six pillars: accessibility,
learning science, AI, breakthrough technology, user experience and social
impact. These standards support our employees and business partners to deliver
accurate, trusted, evidence-based learning experiences that meet our
user-centred and data-led standards of excellence.
• Introduced our AI-enabled AI Quality Standards Agent, OBI, to embed the Global Quality
Standards directly into our workflows to ensure consistency, accountability and adherence to
quality practices across Pearson.
Accessibility
We strive to provide products,
services and solutions that are
accessible to all users, including
people with disabilities. This
expands the reach of our products,
supports global regulatory
compliance, enhances user
experience and reinforces our
commitment to high-quality
education for all.
The Global Accessibility Steering Committee, composed of representatives from
across Pearson, is responsible for embedding accessibility initiatives throughout
the organisation.
Our Global Accessibility framework requires each business unit to adopt
accessibility standards and processes aligned with their specific customers,
geographies and regulatory environments. Read more here: https://plc.pearson.
com/sites/pearson-corp/files/pearson/corporate-policies/pearson-global-
accessibility-framework-sept-2024-v1.pdf.
• Our Interactive Labs tool is designed to meet Web Content Accessibility Guidelines 2.1 AA
standards for screen reader compatibility and keyboard navigation. It won the 2025 CODiE
Award for Best Science Instructional Solution, which recognises innovation and accessibility in
science education.
• Continued to produce assessments transcribed into Braille as part of ongoing efforts to provide
inclusive educational experiences.
• Launched Revibe, an AI-enabled wearable device designed to help learners with ADHD improve
focus and self-regulation, to enhance accessibility of learning for neurodiverse individuals.
Cyber security and data privacy
Protecting the information we
manage is essential for
safeguarding learners, maintaining
trust with customers, meeting
global regulatory requirements,
preventing operational disruptions
and ensuring the integrity and
reliability of our digital learning
products and assessments.
Our Chief Information Security Officer oversees our global information security
programme. We are maturing our ‘Zero Trust’ security approach (‘never trust,
always verify’) as our proactive defence stance against modern cyber threats. We
are embedding automation throughout our policies and processes to support
the Zero Trust approach: we apply the ‘least privilege’ principle to ensure our data
is secure and compliant by default.
Our data privacy programme addresses compliance with applicable data
protection legislation. Our programmes are based on the NIST Cybersecurity
Framework and NIST Privacy Framework, respectively.
1
We provide mandatory training to all employees to raise awareness of cyber
security and data privacy risks and equip them with the skills, knowledge and
resources to safeguard all personal information entrusted to us.
Our cyber security hub offers a range of resources across topics such as data
privacy, incident reporting, supplier onboarding and data classification.
• Implemented additional data protection initiatives to protect the data we manage, including
major platform upgrades, cyber security investments and platform consolidation.
• Expanded the use of tools such as Microsoft’s Cloud Access Security Broker to automate and
scale our privacy and cyber security programmes.
• Introduced AI Security Agent and privacy bots – agentic AI assistants integrated into Microsoft
Teams providing employees with fast, user-friendly access to essential cyber security and data
privacy resources.
• Strengthened our employee cyber security training programme with a new dynamic, easily
consumable series on reducing risks related to human error, accessible on the third-party
platform, KnowBe4.
• Organised interactive webinars, Q&A sessions and live demos during Cybersecurity Awareness
Month to empower employees to safeguard their data and systems.
For more information on the Board’s oversight and management actions during the year,
see page 107.
1. Read more here: https://www.nist.gov/cyberframework and https://www.nist.gov/privacy-framework
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 39
Our success depends on the
knowledge, skills and leadership
abilities of our employees.
Investing in employee development enhances performance,
deepens commitment and improves employee retention.
We foster a culture of performance, focusing on engagement,
talent development and belonging, to enable everyone
to leverage their strengths and contribute to growth. Our
three Power Skills – Learning to Learn, Adaptability and AI –
underpin our approach to employee development,
supporting our digital transformation to create a sustainable
competitive advantage.
2025 was a transformational year for human capital
development at Pearson. We launched a new Career
Architecture and Career Navigation System, providing
clarity and consistency across our business on how we
describe roles and career progression, and support employee
growth. Through our people and culture strategy, we maintain
an unwavering focus on high performance, enhancing
employee experience and career opportunities, tightening
our customer focus and driving growth for our people and our
business. We were proud to be recognised with a Gallup
Exceptional Workplace Award (https://www.gallup.com/
workplace/657323/announcing-2025-gallup-exceptional-
workplace-award-winners.aspx) acknowledging our progress
across these areas.
Case study
Building a future-ready
workforce
Building a modern workforce with the skills to maximise
the potential of AI is at the core of what we do. Our new
Career Navigation System builds on our deep expertise
in technology and skills development for the benefit of
our employees and our business. The platform enables
employees to understand their role, explore possible
career directions in the era of AI and create a path for
development. It empowers them to take control of their
careers, while building a highly skilled workforce to drive
our long-term success.
The Career Navigation System establishes the
foundation for career progression and growth at
Pearson. With the help of a digital assistant, employees
can assess the skills proficiency required in their current
role and the evolution needed to progress to the next
level. The integrated Learning Hub, which is powered by
Degreed, provides seamless access to career guidance
and over 800 learning pathways. Courses are
personalised, and include microlearning, podcasts and
curated specialist content related to Pearson’s three
Power Skills.
Empowering our people to take control of their careers
is part of how we are driving a culture of performance.
The Career Navigation System connects employees to
future possibilities, encouraging them towards higher
performance standards and stretching them to reach
their goals. For Pearson, investing in our workforce is the
key to unlocking future growth.
Empowering our people to make a difference
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 40
Our people focus areas
Focus areas Approach and governance 2025 actions
Culture of engagement
We believe empowered
employees are more productive
and help to create more innovative
learning experiences for
our consumers.
Our Chief Human Resources Officer leads our HR strategy, inclusive of the topics
listed in this table. For more information on the Board and Pearson Executive
Management’s oversight of human resources, see pages 84-85.
Since 2022, we have used Gallup’s employee engagement survey to track
engagement through scientifically validated questions that capture our people’s
daily experiences and behaviours most strongly tied to performance outcomes.
• Continued to analyse and apply the results of our engagement survey to inform our approach to
engagement, at both the company and team levels. We achieved an overall Grand Mean score of
4.23 out of 5 (2024: 4.16) in our 2025 survey. The biggest improvement related to learning and
growth, for which we scored 82% (2024: 77%)
1
, reflecting the effectiveness of our investment in
talent and development.
Talent development
When employees have a sense of
ownership over their own careers,
they are more motivated, proactive
and have higher levels of job
satisfaction. This boosts
performance and their ability to
support our purpose of helping
people realise the life they imagine
through learning.
Our structured performance management approach enables employees to
understand how their role aligns with Pearson’s strategic aims. We use objectives
and key results in goal setting and performance management to unite around
shared priorities, fostering motivation and clarity.
Pearson’s leadership model defines the behaviours we expect to scale and the
culture we need to succeed. For leaders, we provide a robust development
framework combining talent assessments, 360° feedback, and the
CliftonStrengths evaluation to deepen self-awareness and leadership impact.
• Redesigned Pearson’s Career Architecture to provide a clear and consistent structure for every
role across Pearson, and a shared language for career progression and growth. This resulted in a
refresh of the nomenclature applied to employee career levels across Pearson. We have
reported our employee data for 2025 in accordance with these new career levels, as shown on
page 54.
• Introduced Pearson’s Role Library and a digital Career Architecture assistant, CARA, to help
employees explore their own and other roles within our Career Architecture.
• Introduced BarUp, an AI companion that supports individuals and managers, from goal setting to
assessing performance and delivering feedback.
• Equipped our managers with strengthened guidance on providing personalised feedback
and coaching.
• Over 90% of the senior leadership team have completed a talent assessment, in line with our
leadership framework.
Employee learning and upskilling
Our ability to delight learners within
an evolving education landscape
depends on building and
maintaining a talented and
engaged workforce. Our learning
and development programmes
focus on building the diverse skills
needed to fuel our growth.
Our three Power Skills – Learning to Learn, Adaptability and AI – combined with our
core job family and role-based skills are multipliers for performance and growth.
Pearson’s Learning Hub sits at the core of our Career Navigation System to help
employees achieve actionable skills growth through rating themselves on the
skills that matter, getting personalised learning recommendations, building
habits and applying learning in the flow of work.
• Launched the Learning Hub, powered by Degreed and integrated with LinkedIn Learning, as a key
component in our Career Navigation System. Employees have completed 23,521 hours of
learning and 376,352 microlearning items since March 2025.
• Established professional communities across Pearson aligned to job families and priority skills to
foster collaboration and knowledge sharing across the organisation.
1. Data represents the % of respondents who agree or strongly agree with the relevant Gallop Q12® survey questions.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 41
Focus areas Approach and governance 2025 actions
Learning and Responsible AI (RAI)
Applied responsibly, AI and digital
technologies can transform access
to learning and acquisition of
knowledge. We upskill our
employees so they can integrate
technology responsibly and
effectively in our products and
operations, accelerating progress
for individuals, businesses and
wider society.
Equipping employees with the knowledge and skills they need now and in the
future is central to our success. With this in mind, Pearson has introduced an AI
upskilling development goal for all Pearson employees. We integrate AI skills into
individual development plans and performance reviews, ensuring RAI literacy is
embedded in our work.
For our Product Development teams, the Centre for Enablement (C4E) – created
in 2025 – brings together AI knowledge, tools and resources from across Pearson.
The C4E supports collaboration and innovation by enabling our teams to share
best practices and apply AI in a responsible and consistent way. Working in close
partnership with the RAI team, the C4E ensures we have embedded ethical
principles and robust governance in our AI initiatives.
• Continued to develop our employees’ technical capabilities. Our workforce completed 48,000+
hours of AI-related learning.
• Provided resources on using AI responsibly, including:
• 140 training sessions in partnership with Microsoft, upskilling 4,700 employees on Copilot and
boosting adoption by 25%
• A new AI Developer Excellence Community for those who build our AI products and services
• AI literacy content integrated into our Learning Hub
• Guidance to employees on understanding and addressing bias when using AI
• Regular live sessions and newsletters on the latest trends and tools in AI
• Hosted the first internal AI Summit, attended by colleagues including members of our AI
Ambassador Professional Community. The Community, which has more than 1,000 members,
also provided expert advice to curate learning pathways for everyone.
Culture of community and wellbeing
Having a positive state of mind
ensures our employees can thrive
at work and contribute fully
towards creating impactful
learning and assessment solutions.
We promote fairness in the workplace, fostering an open and accessible
environment where all employees, including those with disabilities,
feel supported.
We also give full and fair consideration to all applicants and support the
employment of people with disabilities, making reasonable adjustments in line
with our reasonable accommodations and accessibility guidelines, to address
individual needs. Recruitment, promotion and training are conducted based on
merit, against objective criteria that avoid discrimination.
We are committed to promoting the importance of positive mental and physical
health for employees, and to providing solutions that support their health and
wellbeing. All employees have access to a comprehensive suite of mental health
services, including our Global WELL platform, working with Unmind, a mental
health app that offers clinically backed tools. We model our proactive approach
to health and safety on best practice and internationally recognised frameworks,
including ISO 45001.
We offer eligible employees five days of paid leave every year for volunteering to
support educational or charitable causes. We also organise community
programmes and events, supporting our employees in making a meaningful
local impact.
• Developed new Neurodiversity Guidelines to help managers accommodate differences in how
every employee thinks and works. Designed with our Able Employee Resource Group, they
outline what neurodiversity is and how to make adjustments to accommodate it. These guidelines
will be rolled out across Pearson in 2026.
• Introduced a dedicated section for managers in Unmind to help them support team mental
health, including guidance on handling mental health conversations sensitively.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 42
We implement environmental
management systems throughout
our business to promote compliance
with regulatory requirements,
achieve our targets and meet
stakeholder expectations.
Our targets, approved by the Science Based Targets initiative
(SBTi), include:
• Achieve a 50% reduction in greenhouse gas (GHG)
emissions across our operations and value chain by 2030
from a 2018 baseline
• Achieve at least 90% reductions in GHG emissions across
our value chain from a 2018 baseline, and meet our net zero
target by 2050
As we expand our digital products and services, energy
reduction remains at the heart of our decarbonisation strategy.
We are committed to ongoing procurement of 100%
renewable electricity using renewable virtual power purchase
agreements, spot market Energy Attribute Certificates (EACs)
and grid supply. These actions contribute towards our target of
halving our GHG emissions by 2030 from a 2018 baseline.
By aligning our sustainability principles with business
objectives, we aim to deliver lasting value for learners while
safeguarding the environment. Embedding effective
environmental management into our business strategy plays
an important role in reducing costs and enabling business
resilience. In turn, this will enable us to reinvest in innovation,
grow our business and reach more learners.
Case study
Understanding the
environmental impact of AI
AI is rapidly reshaping how we design and deliver
transformative learning experiences, and our goal is to
harness AI’s potential for society and the environment
while managing its impacts.
Though the GHG emissions associated with Pearson’s AI
usage are relatively low compared to other emissions
sources, we anticipate they will continue to steadily rise
alongside demand for data storage and processing.
Managing this growth carefully is key to our long-term
climate strategy and future business resilience. Our
approach centres on maintaining our commitment to
renewable energy use, and ensuring the efficiency of our
data usage and AI systems.
To achieve more at a bigger scale, we are also pursuing
best practices around transparency. For example, we
are working with DIMPACT, a network dedicated to
deepening members’ understandingofthe
environmental impact of digital products and creating
science-based solutions.
Leading responsibly for a better planet
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 43
Our planet focus areas
Focus areas Approach and governance 2025 actions
Greenhouse gas (GHG) emissions
We aim to reduce GHG emissions
across our operations and value
chain to effectively manage
climate-related risks and
opportunities, support long-term
business resilience and meet
external targets and expectations.
Our General Counsel serves as the Executive Sponsor for our sustainability
strategy and leads the Environmental Steering Group. The Steering Group
convenes quarterly to oversee the execution of our GHG emissions reduction
plan, supported by the central Sustainability team and relevant subject matter
experts throughout the business.
Our global environmental management system is based on ISO 14001 principles,
and our four main UK sites (production sites and offices) are third-party-certified
against the ISO 14001 framework.
For more detailed information on our approach and targets, see pages 45-49 and
our Climate Action Plan: https://plc.pearson.com/en-GB/sustainability/
our-sustainability-reporting.
• Achieved an overall reduction of 44% in GHG emissions against our 2018 baseline (location-
based methodology). See page 51 for a detailed breakdown. Reductions in our value chain GHG
emissions were primarily driven by shifting our supplier base in higher-emitting categories, such
as paper and printing, to lower-emitting categories, including technology. We also increased
in-market printing, reducing associated transportation emissions.
• Decreased our operational energy consumption by 15% from 2024. This was mainly driven by the
reduction of our overall physical footprint by 6%, and the introduction of more stringent
environmental criteria for building selection, which helped us reduce our natural gas and
electricity consumption.
Responsible AI and digital supply chain management
As we continue to expand our
AI-enabled learning experiences,
our demand for data storage and
processing will increase
accordingly. To use AI responsibly,
we must ensure we manage and
reduce any potential adverse
environmental impacts.
Our approach to minimising the impacts of our digitally enabled products will
continue to evolve in line with the business. We are currently focusing on:
• Further understanding the complexity, data use and energy needs of our
AI usage.
• Identifying and assessing the environmental impacts of the processing
centres our partners use to host Pearson’s data.
• Working with cloud service providers that invest heavily in renewable power
and directly funding projects that bring additional renewable energy to
the grid.
See pages 6-7 and 38 for information on how we govern AI.
• Continued to consolidate our data centres for energy efficiency, and transitioned to cloud-
based infrastructure for greater resource efficiency.
• Worked with our sustainability data and analytics partner, Watershed, to identify two renewable
energy projects for Pearson to invest in, increasing the proportion of renewable energy in the grid
and, in turn, accelerating sector-wide decarbonisation. Combined, these projects are estimated
to cover approximately 50% of our annual electricity consumption by 2026.
Physical supply chain management
Taking a proactive approach to
identify, prevent and address
potential adverse impacts across
our value chain is crucial to meeting
legislative requirements,
maintaining stakeholder trust and
protecting our reputation.
Our approach to supply chain due diligence is covered in detail in our Responsible
Procurement Policy, which sets out our minimum standards for suppliers: https://
plc.pearson.com/sites/pearson-corp/files/pearson/our-corporate-policies/
pearson-responsible-procurement-policy-v3.pdf.
We aim to procure our paper from certified sources (FSC, PEFC and SFI)
1
that set
standards for sustainable forest management. We implement standard Master
Service Agreement terms to guide requirements for our print suppliers,
supported by specific Book Manufacturing Product and Services standards, and
we use Book Chain to conduct due diligence in our direct supply chain.
• Achieved our target to procure our paper from certified sources (FSC, PEFC and SFI).
2
This will be
our minimum standard going forward. Our total paper consumption increased by 2% from 2024
due to increased customer demand and business growth.
• Continued the consolidation of suppliers and third-party payees to strengthen our supply chain,
improve supplier relationships and support long-term business resilience. Active suppliers and
third-party payee numbers dropped by 13% in 2025 from 17,998 to 15,660.
1. The Forest Stewardship Council (https://fsc.org/en), Programme for the Endorsement of Forest Certification (https://pefc.org), and Sustainable Forestry Initiative (https://forests.org).
2. Of the paper purchased by Pearson in 2025, 83 tonnes were not certified due to local market constraints. This represents 0.4% of all paper purchased across the year.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 44
Task Force on Climate-related
Financial Disclosures (TCFD)
Identifying, assessing and
managing climate-related risks
and opportunities
Introduction and objectives
The following report sets out our climate-related financial
disclosures in alignment with the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations and
subsequent annex and implementation guidelines, available
here: https://www.fsb-tcfd.org/. We engage with TCFD
recommendations to minimise business risk and ensure our
continued financial performance and growth.
This year, Pearson engaged SLR, a specialist environmental
consultancy, to update the analysis previously conducted in
2022. Each year, we use these comprehensive external
assessments to guide our internal reviews and annual
reporting obligations.
The aim of this report is to outline the risks and opportunities
that may impact Pearson’s operations and resilience across
various climate scenarios and timeframes. Our analysis
specifically aims to:
• Evaluate how transition and physical climate risks may
affect Pearson over the short, medium and long term.
• Quantify potential cost and sales impacts under alternative
climate pathways to inform Pearson’s strategic planning
and scenario analysis.
• Support compliance readiness with evolving regulatory
requirements, including TCFD, which require companies to
disclose anticipated financial effects of material climate-
related risks and opportunities.
• Ensure Pearson's climate disclosures support decision-
making, enabling a more robust link between sustainability
and enterprise risk management.
It is worth noting that this analysis is not intended to forecast
actual financial outcomes, but to provide directional
estimates of exposure and sensitivity under different plausible
climate scenarios, helping Pearson prioritise adaptation and
transition strategies.
Sustainability governance
Board oversight
The Board retains overall oversight of Pearson’s climate
change strategy and progress towards our targets.
Responsibility for Pearson’s sustainability strategy, including
climate-related risks and opportunities, is delegated to the
Board’s Reputation & Responsibility Committee (RRC).
The RRC is responsible for managing the integration of
sustainability into Pearson’s business strategy, including
overseeing sustainability and climate risks and opportunities. It
reviews and approves targets associated with key sustainability
and climate priorities and monitors performance against them
through oral or written updates in July and December, as well as
against any other public sustainability commitments. The
Committee keeps abreast of developments in the regulatory
landscape and oversees external sustainability reporting to
ensure transparency and compliance. In addition, it reviews due
diligence processes within the organisation’s supply chains and
business partnerships to promote responsible and ethical
practices, and monitors sustainability rankings and ratings to
benchmark progress and identify opportunities for continued
improvement. These responsibilities are reflected in the
Committee’s terms of reference which can be found on the
Governance section of our website: https://plc.pearson.com/
en-GB/company/governance.
The RRC includes two Non-Executive Directors with
climate expertise, in addition to a wide range of capabilities
relevant to Pearson’s wider strategy, business model and
organisational characteristics.
The RRC meets at least three times per year. The committee
receives written and oral presentations on sustainability-related
topics, including progress against our decarbonisation pathway
twice a year. It keeps the Board informed through reports
produced following each Committee meeting, which highlight
material decisions, discussion points and challenges, and offer
recommendations accordingly.
Other Board Committees support the RRC on sustainability-
related risk management, ensuring alignment with Pearson’s
business strategy, controls, and audit procedures. The Audit
Committee oversees risk management and governance –
including those related to sustainability – and provides assurance
to the Board through audits and targeted risk reviews.
The General Counsel serves as the Executive Sponsor for our
sustainability strategy and leads the Environmental Steering
Group, which convenes quarterly to oversee the execution of our
greenhouse gas (GHG) emissions reduction plan, supported by
the central Sustainability team and relevant subject matter
experts throughout the business. For more information on the
management of climate and the sustainability agenda more
broadly, please see the ‘Sustainability governance’ section on
page 36 and the table showing governance structures for risk
management on page 56.
Our Climate Action Plan provides the framework for delivering
our objectives. For more detailed information visit:
https://plc.pearson.com/en-GB/sustainability/our-
sustainability-reporting.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 45
Strategy
Our 2025 climate risk and opportunity analysis shows that
Pearson remains resilient to climate change and is not
materially affected by current climate conditions. In making
this assessment, we considered the actions needed to
achieve our decarbonisation commitments, as well as the
strategic and financial impacts of potential risks and
opportunities. We concluded that these did not have a
material impact on the carrying value of any assets and
liabilities as of 31 December 2025, or the assessment of going
concern, as we explain in further detail in note 1c to the
financial statements.
By aligning our environmental priorities and business
objectives, we are well placed to advance our sustainability
commitments. For Pearson, most physical climate-related
risks are associated with the company’s print-based value
chain, as these risks are influenced by physical hazards that can
disrupt production or increase operating costs (including
paper procurement, printing, logistics and distribution).
Therefore, the company’s drive towards digitalisation will
further enhance our long-term resilience.
Our analysis also shows that large-scale cloud providers –
including our business partners – are continuing to make
significant investments in renewable energy. The increased
availability of renewable energy overall is anticipated to
accelerate the global transition towards cleaner power
sources, supporting Pearson’s own decarbonisation ambitions
and helping to reduce operational costs.
Nonetheless, effective environmental management remains a
priority, as climate change could raise the cost of doing
business across the board due to increasingly scarce
resources and rigorous regulations. We will therefore continue
to pursue our decarbonisation objectives, collaborate with key
partners, and comply with evolving requirements.
Thematic consolidation of identified risks
and opportunities
To better understand how climate-related risks and
opportunities relate to external drivers, all risks and
opportunities were categorised under five overarching
themes. These themes reflect the primary market,
operational, regulatory and stakeholder dynamics
influencing Pearson’s risk exposure:
• Digital transformation: Captures transition and physical
risks associated with Pearson’s increasing reliance on
digital infrastructure and hyperscaler partnerships. This
includes exposure to rising energy costs, grid instability,
and potential physical hazards affecting data centres, as
well as opportunities linked to the efficiency and
resilience of the digital value chain.
• Operational delivery and non-digital product:
Encompasses impacts linked to Pearson’s print-
based value chain - in particular paper procurement,
printing, logistics, and distribution. These risks are
influenced by evolving carbon pricing mechanisms and
climate-related hazards that can disrupt production or
increase operating costs within Pearson’s print-based
product lines.
• Climate policy and regulation: Relates to the direct and
indirect impacts of climate policy on Pearson’s business
operations and compliance obligations. This includes
regulatory costs from emerging disclosure and
reporting frameworks, emissions-reduction
requirements, carbon offsetting, and energy-price
volatility arising from shifts in policy ambition and
regional carbon markets.
• Changing markets: Reflects the financial and strategic
implications of shifting market dynamics driven by the
global low-carbon transition. This theme captures both
the risks and opportunities arising from evolving
consumer preferences, investor expectations, and
macroeconomic responses to climate change.
• Stakeholder relations: Encompasses reputational risks
associated with meeting stakeholder expectations on
climate performance and target delivery. This theme
covers exposure to scrutiny from investors, governments
and customers, including reputational consequences of
delayed decarbonisation or misalignment with supplier
sustainability commitments.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 46
The table below provides an overview of Pearson’s climate-related risks and opportunities:
Risk/opportunity description Scale* Mitigation levers
Physical risks
Digital transformation — Potential
interruptionto digital contentprovision
and purchasing platforms due to
electricity power outages
Timeframe: Short-term
Likelihood: Low
Magnitude: Low
Impact: Sales
Migrating content from cloud
regions impacted by power
outages to more resilient regions
Operational delivery and non-digital
products — Physical hazards disrupting
production and distribution from
manufacturing, test centres and offices
Timeframe:Long-term
Likelihood: Medium-High
Magnitude: Low
Impact: Sales
Shifting services to alternative
locations. We have insurance
policies in place that would cover
the costs of structural damage
and some lost sales.
Operational delivery and non-digital
products — Physical hazards disrupting
print production
Timeframe:Short-term
Likelihood: High
Magnitude: Low
Impact: Opex
Shifting services to alternative
locations and accelerating our
transition to digital
Operational delivery and non-digital
products — Increase in insurance
cost/premium driven by climate and
physical hazards
Timeframe: Long-term
Likelihood: Low
Magnitude: Low
Impact: Opex
Reducing our property portfolio
and shifting to lease agreements
Transition risks
Digital transformation — Increased
operating costs associated with
electricity demand of digital
infrastructure from data centres
and hyperscalers
Timeframe: Long-term
Likelihood: High
Magnitude: Low
Impact: Opex
Partnering with hyperscalers
using high share of renewable
electricity. Strengthening
cloud efficiency and digital
architecture optimisation
Operational delivery and non-digital
products — Increased cost of raw
materials and commodities as price of
carbon grows and becomes more
tangible in supply chain
Timeframe: Medium-term
Likelihood: High
Magnitude: Low
Impact: Opex
Accelerating our transition
to digital
Changing markets — Fluctuating
operating costs due to fossil fuel
derived energy versus renewables
Timeframe: Medium-term
Likelihood: Medium-High
Magnitude: Low
Impact: Opex
Securing long-term virtual power
purchase agreements
Risk/opportunity description Scale* Mitigation levers
Climate policy and regulation —
Increased costs of climate-related
compliance with uptick in regional
regulatory requirements
Timeframe: Short-term
Likelihood: Low
Magnitude: Low
Impact: Opex
Part of Pearson’s
compliance approach
Climate policy and regulation —
Increased costs of compensating
10% of GHG emissions or less in 2050
and beyond
Timeframe: Long-term
Likelihood: High
Magnitude: High
Impact: Opex
Included in Pearson’s
Climate strategy
Stakeholder relations —
Missingdecarbonisation
goalsduetovalue chain partners
missingGHG emission reductions
Timeframe: Long-term
Likelihood: Medium-High
Magnitude: Low
Impact: Sales
Working with companies that
are also implementing and
strengthening climate
mitigation strategies
Opportunities
Digital transformation — Having a
lesscarbon intensive value chaindue to
digitalisation and reducingexposure to
transition risks
Timeframe: Long-term
Likelihood: Medium-High
Magnitude: Moderate
Impact: Opex
NA
Changing markets — Expanding
climate-related learning and
qualification services in response to
greater demand for green skills
Timeframe: Long-term
Likelihood: Medium-High
Magnitude: High
Impact: Sales
NA
* Impact scales:
Time horizons:
Short-term: within one year (2026)
Medium-term: between one and three
years (2027-2029)
Long-term: more than four years
(2030-2050)
Likelihood:
Low: 25%
Medium: 50%
High: 75%
Magnitude of impact:
Low: below £5m
Moderate: £5 - £20m
High: £20m and above
Financial impact
Sales – Sales generation
Opex – Operating costs
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 47
Risk management
The following section outlines the process used to analyse Pearson’s climate-related risks and opportunities (R+Os):
Steps Description Methodology
1. Risk and opportunity
identification and
streamlining
Refreshed the long list of climate-related R+Os and grouped these by
overarching themes (listed on page 47). A long list of 36 risks and seven
opportunities were identified at this stage.
After internal workshops, the list of R+Os has been refined with some items
consolidated to improve clarity. At this stage, 11 physical R+Os and 23 transition
R+Os were shortlisted.
• Integrate list of R+Os from Double Materiality Assessment.
• Internal refinement workshops.
2. Impact scenario analysis
Independent environmental specialists, SLR, conducted in-depth research,
climate scenario modelling and targeted data extraction (including web-scraped
datasets) to obtain relevant emission factors, carbon price projections and
macroeconomic indicators. Internal inputs were also used to ensure the
analysis reflected business-specific exposure, including paper procurement
volumes, energy consumption, operational expenditure and decarbonisation
commitments. After several validation sessions, we were able to identify
a list of ten key risks and two key opportunities as priority for further
financial quantification.
• Three time horizons were defined and three climate scenarios were selected.
• For each R+O, three aggregated risk scores were used, averaging the impact score under each
climate scenario and three time horizons.
• Each score was computed by combining the assigned magnitude and likelihood ratings.
• An absolute materiality rating was derived using a normalised scale from 0% to 100%. This
standardisation allowed all R+Os to be plotted along a common scale and prioritised based on
their relative financial significance.
3. Financial risk
scenario analysis
The financial materiality assessment was designed to ensure direct alignment
with Pearson’s Enterprise Risk Management (ERM) framework, enabling
consistency between climate-related financial analysis and existing corporate
risk processes.
• Modelled financial impacts by linking internal value drivers (e.g. spend on hyperscalers) to
external scenario projections (e.g. electricity price forecasts).
• The most stringent/conservative scenario attached to each risk and the maximum annual value
for the period covering 2026 – 2050 was used to define the financial quantification.
4. Internal and
external validation
Results are reviewed and validated to ensure alignment with internal risk
materiality thresholds and financial reporting.
• The current analysis has been verified and validated by SLR’s independent quality control team.
• Results were validated by Internal Risk and Financial Reporting teams.
• Relevant Executive team members, and the RRC, examined the results.
5. Building resilience
Results are embedded into the strategy to transition to a low emissions economy. • Integrate climate risks into ERM processes.
• Improve data and analytical systems to monitor ongoing climate exposure.
• See our Climate Action Plan for transition-specific strategies: https://plc.pearson.com/en-GB/
sustainability/our-sustainability-reporting.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 48
Assessment parameters
Business scope and boundaries: The analysis of climate-
related risks and opportunities was conducted across
Pearson’s global operations, covering the company’s five core
business units, key geographies, and value chain stages to
ensure comprehensive representation of both operational and
market exposure.
Climate scenarios: Climate scenario analysis is used to help
organisations develop a more comprehensive and robust
climate-ready business strategy. It entails examining how
future changes in our climate could impact our business
operations, finances, markets and supply chains in order to
mitigate the impacts and build resilience.
To assess the potential impacts of climate-related risks and
opportunities, SLR, a specialist environmental consultancy,
applied a multi-scenario approach designed to test Pearson’s
exposure and resilience to physical risks (such as extreme
weather events) and transition risks linked to policy changes,
technological advances and market evolution towards a
low-emissions economy. SLR used multiple reference models
to define overarching scenario ‘families’ for the analysis:
Scenario 1. Orderly Transition — Represents a rapid,
coordinated policy response consistent with limiting
global warming to below 1.5°C.This scenario reflects
decisive action and assumes early implementation of
global carbon pricing and energy system transformation.
Scenario 2. Disorderly Transition — Reflects a delayed
policy response, where substantive global climate
action only occurs late in this decade or early 2030s. The
result is a steeper and more disruptive decarbonisation
pathway characterised by higher carbon prices,
stranded asset risks, and accelerated cost escalation,
resulting in a 1.6°C–2.7°C temperature rise.
Scenario 3. Hot House World — Assumes minimal further
policy intervention beyond current commitments,
leading to a high-warming trajectory (2.8°C–4.4°C) and
significant increases in physical climate impacts, such as
heat stress, flooding and supply chain disruption.
Our climate-related risks are integrated into our various risk
management processes, depending on the nature of the risk.
For example: physical risks are integrated into business
continuity planning by the Central Workplace team; the
Centralised Procurement team oversees the costs and
availability of paper; and other transition risks, such as changes
in regulations, are managed by regulatory alert systems held in
the Legal function.
The Sustainability team and the relevant Communications team
share the responsibility of managing wider stakeholder
expectations and stakeholder engagement.
Metrics and targets
Our GHG emissions reduction targets, which have been
approved by the Science Based Targets initiative (SBTi), include:
• Achieve a 50% reduction in GHG emissions across our
operations and value chain by 2030 from a 2018 baseline
• Achieve at least 90% reductions in GHG emissions across
our value chain from a 2018 baseline, and meet our net zero
target by 2050
Our GHG emissions data (metric tonnes CO
2
e)
1
2025 2024
Scope 1 3,701 4,094
Scope 2 (location-based) 11,598 13,938
Scope 2 (market-based) 9 11
Scope 3 (location-based) 248,645 261,700
Scope 3 (market-based) 250,005 263,048
Total — location-based 263,945 279,732
Total — market-based 253,715 267,153
Intensity ratio — tCO
2
e/£m sales
(market-based methodology) 71 75
Our full set of environmental data and the methodology used
for calculations can be found in the next section of this report.
The most material categories of scope 3 GHG emissions
represented in our figures include: Purchased goods and
services; Upstream transportation and distribution; Business
travel; and Employee commuting. These categories represent
approximately 90% of our location-based emissions.
A breakdown of data for each category can also be
found in the external assurance report on our website:
https://plc.pearson.com/en-GB/sustainability/our-
sustainability-reporting.
1. In 2025, we updated our 2018 baseline alongside our 2023 and 2024 GHG emissions data to reflect methodology changes as well as acquisitions
and disposals, contributing to more granular data insights. An independent third party, SLR, verified and assured this process.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 49
Notes on our data
This report provides a summary of Pearson’s business and
sustainability governance, strategy, risk management
approach and performance for the financial year 2025.
Qualitative and quantitative information in the sustainability-
related disclosures refers to 1 January 2025 to 31 December
2025, aligned with our financial reporting period.
We have included all Pearson entities in the sustainability-
related disclosures, across all material topics and data. The
Reputation and Responsibility Committee has reviewed
progress against our key areas of responsibility throughout
this report.
We continue to provide information about sustainability-
related risks and opportunities in line with the Global Reporting
Initiative (GRI) standards and the Sustainability Accounting
Standards Board (SASB) standards. See our GRI and SASB
disclosures here: https://plc.pearson.com/en-GB/
sustainability/our-sustainability-reporting.
Our sustainability performance data
Environmental data: GHG emissions and energy
calculation methodology
We calculate our GHG emissions data following the
requirements of the GHG Protocol Corporate Accounting and
Reporting Standard (revised edition: https://ghgprotocol.
org/sites/default/files/standards/ghg-protocol-revised.
pdf). For scopes 2 and 3, we use the dual reporting
methodology (location- and market-based approaches),
in accordance with best practice. We use some of the latest
emission factors from recognised public sources, including
(but not limited to) the UK Department for Energy Security
and Net Zero (DESNZ), the International Energy Agency,
the US Energy Information Administration, Watershed’s
Comprehensive Environmental Data Archive (CEDA) and
the Intergovernmental Panel on Climate Change (IPCC).
We also use the latest global warming potential projections
from the IPCC’s Fourth Assessment Report (https://www.
ipcc.ch/assessment-report/ar4/).
In 2025, we updated our 2018 baseline alongside our 2023 and
2024 GHG emissions data, contributing to more granular data
insights. An independent third party, SLR, verified and assured
this process.
Our energy use data includes fuel combustion and purchase of
electricity, heat, steam and cooling consumption in MWh, and
vehicle fuel use converted from mileage into MWh using DESNZ
conversion factors.
For more information, including a breakdown of our GHG
emissions data per category, see SLR Consulting’s assurance
statement, here: https://plc.pearson.com/en-GB/
sustainability/our-sustainability-reporting.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 50
Environment
Pearson was not subject to any environmental fines in 2025.
Greenhouse gas (GHG) (carbon dioxide equivalent) emissions overview (metric tonnes CO
2
e)
1
2025 2024
1
Notes
Scope 1 3,701 4,094 Our GHG emissions reduction targets include:
• Achieve a 50% reduction in GHG emissions across our operations and
value chain by 2030 from a 2018 baseline
• Achieve at least 90% reductions in GHG emissions across our value chain
from a 2018 baseline, and meet our net zero target by 2050
Our total market-based GHG emissions decreased by 5% and total
location-based GHG emissions decreased by 6% from 2024.
Compared to our 2018 baseline, we have cut total market-based
emissions by 43% and location-based emissions by 44%, putting us on
track to achieve our target of halving our emissions by 2030.
We have achieved our 2030 target for market-based GHG emissions
(scope 2 – emissions from purchased electricity), primarily by downsizing
our property portfolio, decommissioning emissions-intensive buildings
and shifting to renewable electricity.
Our scope 3 GHG emissions decreased 5% from 2024, primarily by
downsizing our property portfolio, decommissioning emissions-intensive
buildings and shifting to renewable electricity. We achieved a 43%
decrease in scope 3 GHG emissions (location-based methodology) from
our 2018 baseline, reflecting our transition to digital supply chains, reduced
business transport and distribution operations and adoption of a hybrid
working model.
Read more about our net zero strategy and progress in our Climate Action
Plan and external assurance report, both accessible here: https://plc.
pearson.com/en-GB/sustainability/our-sustainability-reporting.
Scope 2 (location-based
2
) 11,598 13,938
Scope 2 (market-based
3
) 9 11
Scope 3 (location-based
2
) 248,645 261,700
Scope 3 (market-based
3
) 250,005 263,048
Total – location-based
2
263,945 279,732
Total – market-based
3
253,715 267,153
Total scope 1 and 2 (location-based
2
) 15,299 18,032
Total scope 1 and 2 (market-based
3
) 3,710 4,105
UK scope 1 550 561
UK scope 2 (location-based
2
) 818 831
UK scope 2 (market-based
3
) 6 5
Total UK scope 1 and 2 (location-based
2
) 1,368 1,392
Total UK scope 1 and 2 (market-based
3
) 556 566
Intensity ratio
tCO
2
e/£m revenue (market-based methodology)
3
71 75
Energy
% electricity from renewable sources 100% 100%
Total electricity consumption from renewable sources (MWh) 30,770 36,876
Total electricity consumption from non-renewable sources (MWh) 0 0
On-site generated electricity (MWh) 0 216
Total gas consumption (MWh) 12,610 14,364
Total fossil fuel consumption (MWh) 13,266 14,813
Total energy consumption (gas, fuel, electricity, transport and other sources) (MWh) 44,090 51,851
Total energy consumption UK (gas, fuel, electricity, transport and other sources) (MWh) 5,764 6,058
1. In 2025, we updated our 2018 baseline alongside our 2023 and 2024 GHG emissions data to reflect methodology changes as well as acquisitions and disposals, contributing to more granular data insights. An independent third
party, SLR, verified and assured this process.
2. The location-based methodology reflects the average emissions intensity of what is physically consumed through the grid.
3. The market-based methodology reflects emissions from electricity we have purposefully chosen through the purchase of unbundled EACs and green tariffs. We purchase renewable electricity in countries of consumption
wherever possible. Where this is not possible due to market constraints or instrument availability, we purchase from neighbouring countries/regions.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 51
2025 2024 Notes
Resource use
Paper used (t) 19,720 19,255 We achieved our target to procure our paper from certified sources (FSC,
PEFC and SFI)
1
that set standards for sustainable forest management use.
This target will be our minimum standard from 2026 onwards.
% Forest Stewardship Council (FSC) 72% 59%
% Programme for the Endorsement of Forest Certification (PEFC) 2% 4%
% Sustainable Forestry Initiative (SFI) 26% 30%
2025 2024
2
Notes
Waste
2
Total waste generated (t) 2,070 1,754 We note an increase in year-on-year figures and this is due to an
improvement in data quality.
% office waste recycled 13% 33%
2025 2024 Notes
Water
Total water consumption (m
3
) 193,537 127,014
We note an increase in year-on-year figures and this is due to an
improvement in data quality.
1. Of the paper we purchased in 2025, 83 tonnes were not certified due to local market constraints. This represents 0.4% of all paper purchased across the year.
2. In 2025, alongside our GHG rebaselining process, we updated our 2024 waste data to reflect methodology changes as well as acquisitions and disposals. An independent third party, SLR, verified and assured this process.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 52
Social
Our employees
2025 2024
Total average number of employees for the year
1
17,062 17,024
Employees by geography (regional representation)
2
16,665 17,116
US as of 31 December 8,260 8,821
UK as of 31 December 3,472 3,394
Rest of world as of 31 December 4,933 4,901
Gender diversity breakdown
% permanent, regular employees 98% 98%
Male 41% 40%
Female 58% 59%
No data 0% 1%
% temporary, limited-term employees 2% 2%
Male 31% 31%
Female 68% 67%
No data 1% 2%
% full-time, regular employees 82% 79%
Male 44% 44%
Female 56% 56%
Not disclosed 1% 1%
% part-time, regular employees 18% 21%
Male 28% 28%
Female 71% 71%
Not disclosed 0% 0%
1. We calculate total average number of employees using a Full-Time Equivalent (FTE) methodology, as
an average across the reporting period. Seasonal/temporary staff are excluded from the calculation.
All other data in this table is as at 31 December 2025.
2. The 2025 employee volume excludes approximately 500 seasonal workers that have been reclassified to
align with Pearson’s current business structure and broader casual/seasonal worker policies.
Our Board and Pearson Executive Management team*
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
Pearson
Executive
Management
Percentage of
Pearson
Executive
Management
Board and Pearson Executive Management team’s gender identity or sex
Male 5 42% 3 7 58 %
Female 7 58% 1 5 42 %
Other categories 0 0% 0 0 0 %
Not specified/prefer
not to say 0 0% 0 0 0 %
Board and Pearson Executive Management team’s ethnic background
White British or other
White (including
minority-white groups) 8 67% 3 7 58 %
Mixed/multiple
ethnic groups 2 17% 0 1 8 %
Asian/Asian British 1 8% 0 2 17 %
Black/African/
Caribbean/
Black British 0 0% 0 0 0 %
Other ethnic group 1 8% 1 2 17 %
Not specified/prefer
not to say 0 0% 0 0 0%
*Prepared in accordance with UK Listing Rule 6.6.6R(10) as at 31 December 2025. As prescribed
by this rule and for the purpose of this disclosure, the Pearson Executive Management includes
the Company Secretary. We collected the data contained in the tables above as part of the
annual declaration process, whereby the Board and the Pearson Executive Management team
received declaration forms for self-completion. The declaration forms included, for all individuals
whose data is being reported, the same questions relating to ethnicity and gender. The data is
used for statistical reporting purposes and is provided with consent.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 53
Female leadership breakdown (%)
2025
1
2024
2
Senior leadership 29% 33%
Operational leadership 47% 46%
Management 54% 47%
Turnover
2025 2024
Turnover rate, total average for the year
3
3,031/18% 3,331/19%
Voluntary turnover 2,192/13% 2,309/13%
Involuntary turnover 839/5% 1,022/6%
Turnover by gender
Total female 1,854/11% 2,052/12%
Total male 1,118/7% 1,239/7%
Non-binary 13/0% 8/0%
Not disclosed 46/0% 32/0%
Turnover by age group
Under 30 years old 789/5% 901/5%
30-50 years old 1,307/8% 1,462/8%
Over 50 years old 914/5% 961/6%
No data 21/0% 7/0%
New hires
2025 2024
Total number and rate of new employee hires
(number of hires/average headcount)
3
3,117/18% 2,799/16%
Total number of new hires – female 1,849/59% 1,710/61%
Total number of new hires – male 1,144/37% 1,018/36%
Total number of new hires – non-binary 11/0% 13/0%
Total number of new hires – not disclosed 113/4% 58/2%
New hires by age group
Under 30 years old 1,007/32% 893/32%
30-50 years old 1,396/45% 1,248/45%
Over 50 years old 695/22% 647/23%
No data 19/1% 11/0%
1. 2025 employee leadership categories and data reflect Pearson’s new career architecture, rolled out in 2025.
2. For comparability with 2025 data, our 2024 employee leadership data has been recalculated to align with the
new Career Architecture. Relevant employees who left the company by 31 December 2024 have not been
included in these calculations as it is not possible to determine what their positions would have been within
the new Career Architecture.
3. % calculated using average annual headcount (17,062 in 2025), not year-end position.
Governance
2025 2024
Total number of concerns raised and investigated 130 115
Percentage of employees completing Code of
Ethics certification or training* 99% 100%
* The figure stated here was correct at 31 December 2025. 100% was achieved by 31 January 2026.
Sustainability continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 54
Risk
management
Effective risk management is
essential to executing our
strategy, achieving sustainable
shareholder value, protecting
our brand and ensuring
good governance
Risk oversight
Risks are managed by members of the Pearson Executive
Management (PEM) team, either on a business unit basis or by
function (as set out in the Accountability for principal risks
section on pages 66-67.
Risk owners conduct regular risk reviews with their leadership
teams, consulting others where appropriate, including
technical specialists within their business unit or operating in
one of the centres of expertise. Risk reports are shared with
key stakeholders, including the Enterprise Risk Management
team, and are discussed at PEM meetings.
The Audit Committee has the delegated responsibility for
reviewing the effectiveness of our procedures for identifying,
assessing, managing and reporting risk.
Each business unit is expected to present an overview of its risk
register to the Board at least annually, and to provide an annual
deep dive on key risks, supported by central Risk team experts
as required. Deep-dive sessions are also held at the Audit
Committee with enterprise-wide functions such as Tax,
Treasury and Cyber security.
The Board uses these deep-dive sessions to understand the
rigour of management’s risk scanning and to challenge any
judgements in response to risks.
The Internal Audit team provides independent assurance to the
Audit Committee on the design and effectiveness of internal
processes, to mitigate strategic, financial, operational and
compliance risks. Internal audit plans are aligned to the
principal risks but also consider other key risk areas and other
assurances available. Plans are agreed in advance with the PEM
team and the Audit Committee.
We have also been looking at addressing the requirements of
the new UK Corporate Governance Code Provision 29,
effective 1 January 2026. We aim to achieve a proportionate
and practical response to the new declaration, and we have
identified ‘material controls’. We have worked with peers,
accountancy firms and our auditors to understand emerging
best practice in this area. Throughout 2025, the team has been
reviewing the mapping of controls to principal risks, and we
have worked closely with the Audit Committee which has
oversight of this process. Further information can be found in
the Governance section on page 110.
Risk environment
We operate in markets in learning, content, assessment
andqualifications where we have held leading positions
overseveral years as businesses and markets have become
more digital.
Factors affecting the markets in which we operate include
ourposition as an accredited provider of high-stakes tests,
organisational capability, competitive dynamics, learner
preferences and delivery methods, including the growing
adoption of AI tools and the reputation of companies
operating in the market. We seek to maximise the
opportunities arising from these changing market conditions,
balanced with appropriate monitoring and understanding of
associated risks.
Further information on our business units and key markets are
in the Strategy section on pages 12-16.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 55
Risk management continued
Internal Audit function (assurance)
Our Internal Audit function is responsible for providing independent assurance to management, theBoard and the Audit Committee on the design and effectiveness of internal controls, to mitigate
strategic, financial, operational and compliance risks.
1. Pearson plc Board (oversight)
• Responsible for Pearson’s strategy
• Responsible for reviewing management’s assessment of our principal risks
• Approves the annual budget and long-term financial plans
• Determines risk appetite in line with our strategy
• Monitors and reviews the internal control framework, covering all material controls as
identified by the requirements of the new UK Corporate Governance Code Provision 29,
and their effectiveness, with support from its Committees as it deems appropriate.
• Conducts targeted reviews of key risks
2. Audit Committee (oversight)
• Provides oversight to the Board concerning the integrity of Pearson’s procedures for
identifying, assessing, managing and reporting on risk and obtains assurance from internal/
external auditors
• Monitors and evaluates our compliance and risk management processes and
control programmes
• Approves our risk management framework
• Approves internal audit plans
3. Reputation & Responsibility Committee (oversight)
• Considers our impact on the communities in which we operate, including ensuring that we
have risk management processes in place to manage relevant risks
4. Pearson Executive Management (PEM) (identification, assessment and mitigation)
• Comprises the CEO, CFO and other senior leaders (see pages 76-78)
• Accountable for ensuring that risks are mitigated in line with risk appetite
• Responsible for executing our strategy
• Responsible for reviewing and approving our principal risks, mitigation plans and controls
• Reports to the Audit Committee on risks, where required
5. Enterprise Risk Management function (identification, assessment and mitigation)
• Prepares our risk management framework
• Maintains our risk register and list of principal risks
• Reviews risks with business units to assess and monitor risk exposures
• Prepares a consolidated risk view for the PEM
• Provides oversight over risk management activity
• Reports to the Audit Committee on risks
6. Senior leadership (identification, assessment and mitigation)
• Responsible for monitoring, mitigating and reporting on risk
• Responsible for operation and effectiveness of material controls
• Risk committees within each business unit assess the principal risks and implement further
sub-committees as appropriate for business unit-specific exposures
7. Technical specialists (identification, assessment and mitigation)
• Functional heads work in conjunction with Group technical experts to monitor and manage
significant risks. These experts provide operational support, guidance, policy and advice
8. Risk management experts (identification, mitigation and assurance)
• Dedicated teams providing guidance, review and assurance over key operational and
financial risks including finance, legal and compliance
9. Pearson personnel (identification, assessment and mitigation)
• Personnel across Pearson are trained in relevant risk management to identify, assess,
mitigate and escalate risks
• Responsible for operation and effectiveness of individual controls, including SOX controls
The table below sets out our governance structure for risk management.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 56
Risk identification and monitoring
Our risk identification processes follow a dual approach.
Firstly, we take a top-down view that considers strategic risks
across Pearson. We then take a bottom-up approach at a
business unit or functional level, to identify and assess a
complete list of each business unit’s risks, with key risks
highlighted in management reporting and in each business
unit’s long-range plan.
We conduct detailed interviews throughout the year with each
business unit to assist with risk assessment and management.
We then rank risks according to their likely impact as principal
risks, significant near-term risks, emerging risks or other risks.
Classification as principal risks, significant
near-term risks and emerging risks
We define our principal risks as those that could have a
significant and ongoing effect on the Group’s valuation by
reducing the demand for, or profitability of, our products and
services. Our Group assessment considers multiple dynamics
including the duration, velocity and size of the potential
impact. Effective management of these risks is essential to
executing our strategy, achieving sustainable shareholder
value, maintaining our reputation and ensuring good
governance. However, these risks do not comprise all risks
associated with our business and are not set out in priority
order. Additional risks that are as yet unknown to management,
or currently deemed to be less material, may also have an
adverse effect on our business.
Significant near-term risks are risks that could have a
significant near-term cash impact or affect our short-term
results but would not be expected to have a significant
ongoing effect on the Group’s valuation.
Emerging risks are risks that we believe are well mitigated in the
short term but may represent a significant future opportunity
or threat. These include company-specific risks and risks
affecting the macro economy.
Principal risks
The Board has undertaken a robust assessment of the current
risks facing Pearson, in accordance with Provision 28 of the
2024 UK Corporate Governance Code. This assessment
identified the following principal risks, as well as a number of
emerging risks and risks that, while more modest, could have a
significant near-term impact.
For each of our principal risks, the tables on
pages 58-65 identify:
• change in the risk over the last 12 months
• movement and outlook for that risk
• management actions
• link between the risk and Group strategy
• our risk tolerance
• examples of the risk
• risk ‘contagion’, i.e. the extent to which issues in one area
could increase the risk in other areas
• assessed risk ‘velocity’, i.e. an indication of the speed at
which a risk could materially impact the Group
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 57
Link to strategy Assessment and verification is at the core of our strategy.
Risk tolerance Low – we seek to operate in stable, well-regulated markets with known
requirements to be accredited, and have a low tolerance for taking risks
that may jeopardise that accreditation.
Examples of
risks
• Political
• Regulatory
Risk contagion Accreditation risks are likely to have a financial impact but have limited risk
of contagion.
Risk velocity Changes in regulation or loss of contracts could occur within a
12-month period.
Accreditation risk
Description
Termination or modification of accreditation due to policy changes or failure to maintain the
accreditation of our courses and assessments by states, countries and professional
associations, reducing their eligibility for funding or attractiveness to learners. Regulatory bodies
may also require modification of tests to continue to receive accreditation which may reduce the
convenience to learners or increase the cost of delivery.
Movement and outlook
The risk increases from moderate-high to a high level. There are ongoing geopolitical
developments alongside proposed modifications to UK immigration testing and vocational
qualification frameworks, all of which present potential disruptions to markets where we have a
leading presence. Nonetheless, no significant reforms in US markets have occurred and we have
successfullyretaineda high levelof Assessment & Qualifications contracts in 2025. Pearson has
long-standing relationships and delivery capability across key markets, and Pearson’s brand and
track record are seen as competitive advantages in a changing environment. International
expansion is a key focus for many of the business units and assumptions are made that there are
no major geopolitical situations, or government policy changes, in key growth areas.
The risk is expected to remain at an elevated level for the foreseeable future.
Management actions
1. Focus on creating a culture where learners andregulatoryawardingbodies can depend on
Pearson and know that we will meet their standards. We recognise our obligations, particularly
in the testing space, to ensure a focus on flawless or near-flawless execution of marking and
delivering assessment results and take actions accordingly.
2. Continuing to evolve and enhance our security, data and governance standards to ensure we
continue to meet and exceed required standards to be an accredited provider.
3. Broadening the range of services we offer and our range of stakeholders.
4. Pearson has long-standing relationships, delivery capability and country ambassadors across
key international markets and Pearson’s brand and track record are seen as competitive
advantages in a changing environment.
Risk management continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 58
Description
The risk that our intellectual property is harder to protect as a result of increased content
generation through AI, and that our content and method of delivery (channel) is, or is perceived to
be, insufficiently differentiated in terms of outcomes or learner experience. This could lead to lost
sales and a significant decline in our market value.
Movement and outlook
The riskremainsat a moderate-high level.How learners access content presents a medium-term
risk, as institutions and students may question the value of traditional models. We are also
conscious that public sentiment and regulatory considerations have also emerged around the
use of AI in high-stakes assessments. Nonetheless, Pearson’s strength lies in delivering
outcome-focused, trusted, pedagogically sound content at the intersection of instructor,
learner and content.
Significant progresshas been made in our use of large language models. We have taken a
proactiveapproach inleveragingadvanced AI technology positions and have
successfullyintegrated AI toolsintocourses. Wehave continued to develop AI tools across
allbusiness units,seeing evidence of it driving commercial success as well as driving improved
learning outcomes and higher grades, as noted among Virtual Schools students.Our strategic
partnerships with hyperscalers are accelerating the modernisation of Pearson’s products,
facilitating us to leverage AI to better serve our customers. We are also implementing AI-driven
tools to customer service and enhance overall experience. Furthermore, in 2025,we hired a new
Chief Business Officertosupport sales teams in capturing upsell and cross-sell opportunities.
The risk is projected to remain heightened for the near term and beyond.
Management actions
1. Establishing a centralised data and AI solutions hub to set governance, and oversight,
supported by AI delivery squads that enable a cohesive, Pearson-wide Responsible
AI function.
2. Embedding AI into content creation products and services, creating efficiencies and helping
us reach the market quickly. For example, the broad roll-out of custom AI assessment tools to
all teachers in Virtual Schools is driving increased adoption and usage.
3. Driving innovation and development of next-generation products that infuse AI into
products across our business units and enable us to align to individual learning needs:
for example, creating AI chatbot integration in the Longman English app, and AI study tools
in Connections Academy Virtual Schools which have led to improved outcomes and higher
grades among students.
4. Reducing piracy and managing and enforcing intellectual property rights including via legal
enforcement, where appropriate.
5. Targeted approach to capital allocation focused on opportunities in the higher-growth
segments of the markets which we serve and a deep focus on product innovation.
6. Strategic partnerships with hyperscalers accelerating the modernisation of Pearson’s
products, enabling us to leverage AI for greater customer value.
Link to strategy AI has been identified as a key seismic trend providing
growth opportunity.
Risk tolerance Medium – this is a strategic risk, and we should be rewarded for
successfully developing and delivering products and services that
consumers value. Some risk is accepted to ensure the learner remains at
the centre of what we do.
Examples of
risks
• Intellectual property protection
• Method of delivery
• Speed of innovation
Risk contagion Failure to deliver high-quality and engaging products and services may
have an impact on our reputation and responsibility risks and on meeting
customer expectations.
Risk velocity Significant short-term impacts are less likely due to our 2025 product
strategy using AI as a growth driver and scaling AI across our products and
services. Due to longer-term contracts or the time required for educators
or learners to learn how to use new products and services, it is more likely
that any impact will be felt over years.
Artificial Intelligence (AI), content and channel risk
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 59
Description
Inability to meet our contractual obligations or to transform as required by our strategy, due to
infrastructure, systems or organisational challenges.
Movement and outlook
This risk reduces from a moderate-high to moderate level as we shift to execution against an
evolved strategy, although we are cognisant of risks around talent, operational capacity and
governance. Nevertheless, disciplined oversight of talent expenditure, alongside continued
workforce investment, positions the organisation to strengthen capabilities and maintain
operational resilience in the coming years. During 2025, a unified marketing organisation and
e-commerce strategy has beenestablished, enhancing both strategic alignment across our
business units and our operational efficiency. Strategic partnerships have been announced and
progressed across hyperscalers and professional services partners.
We expect the outlook to be similar for the near future.
Management actions
1. Risk ratings are assigned to each system, with plans to ensure system uptime. Recovery
strategies are established to minimise disruption, enabling customers to maintain
functionality or resume operations as quickly as possible in the event of downtime.
2. Regular patching, employee training and security measures, such as multi-factor
authentication, help to ensure the stability and security of our key systems.
3. Dedicated resources to focus on testing and developing AI products and to understand
evolving market capabilities.
4. Business continuity planning to ensure that we are able to respond should a key customer or
supplier fail.
5. Enhanced focus on developing products that serve new markets and user groups, and
cross-selling between business units, as well as product bundling.
6. Monitoring employee engagement and investing in our leaders to support key talent retention
and effective succession planning.
7. Increasing clarity on our performance expectations for every role across the company, driving
collaboration in pursuit of value.
8. Regularly reviewing our cost base to ensure competitiveness and identifying options
for efficiencies.
9. A focus on the remediation of technical debt, supporting platform consolidation and
creating a unified user profile, providing an integrated view of Pearson for users across
multiple products.
10. Robust governance over our strategic transformation initiatives is in place with strong
executive sponsorship.
Link to strategy Core performance has been identified as a key strategic growth
opportunity.
Risk tolerance Medium – we aim to ensure we have the capability to deliver strategic
objectives, requiring strong coordination and planning, without stifling
innovation.
Examples of
risks
• Business resilience
• Business transformation and change
• IT resilience
• Safety and corporate security
• Talent
Risk contagion Failures in capability could result in increased reputation and
responsibility risk and failures to meet customer expectations.
Risk velocity Failures of capability could impact within six to 12 months.
Capability risk
Risk management continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 60
Description
Significant changes in our target markets could make those markets less attractive. This could be
due to significant changes in demand or in supply, which impact the addressable market, market
share and margins (e.g. changes in enrolments, in-sourcing of learning and assessment by
customers, open educational resources, a shift from in-person to virtual learning or vice versa,
orinnovations in areas such as generative AI).
Movement and outlook
The risk remains high due to competitive pressures affecting business units, for example,
increased migration policy restrictions and tight migration policies impacting market size and
demand for Pearson Test of English and demographic headwinds in Higher Education.
Nonetheless, we remain focused on monitoring and proactively managing the evolving
competitive landscape throughout our businesses.
Across many of our business units, we are increasing exposure to markets with favourable
demographic shifts, successfully incorporating innovative technologies into our products and
launching new offerings that expand our addressable market, such as the PTE Express Test
offering an accessible test for US-bound learners, and Communication Coach launched inside
Microsoft 365. We are also expanding into faster-growing adjacent segments of the learning
market such as Early Careers.
In Virtual Learning we have seen strong enrolment growth for the 2025/2026 academic year
aswell as operational improvements and have expanded academic offerings including
careerprogrammes.
Our Enterprise Solutions product pipeline remains a key priority, complemented by the
development of strategic partnerships with hyperscalers and other major partners to increase
visibility and expand our presence within the enterprise market. Notably, we have secured a
strategic vocational skilling contract for the construction sector in Saudi Arabia.
The risk is expected to remain elevated for the next 12 months, due to the ongoing competitive
landscape in many of our business units.
Management actions
1. Working in partnership with customers, including IP owners, in our Assessment & Qualifications
and Virtual Learning business units, to ensure that our customers’ needs are being met,
resulting in high retention rates on the long-term contracts in place.
2. We are advancing Pearson’s presence within the enterprise market by making strategic
partnerships with hyperscalers including Microsoft, AWS and Google Cloud, while expanding
our reach with professional services partners such as HCLTech, Deloitte and Cognizant.
3. Undertaking competitive analysis to monitor and respond to competitive threats, with
decentralised teams able to mobilise quickly to maximise opportunities and manage risk.
4. Our strategy involves targeted expansion into adjacent markets, including Early Careers,
supported by the acquisition of eDynamic Learning, alongside increased investment in
emerging markets with positive demographic trends.
5. Accelerating Pearson Test of English recognition in key student mobility markets through
targeted marketing initiatives to drive growth, alongside expanding our offerings such as the
recent launch of the PTE Express Test to serve the US-bound study market.
6. The implementation of a unified brand architecture to clarify Pearson’s product offerings and
plans to reinforce market differentiation in the enterprise sector by leveraging its established
learning and assessment brands.
Link to strategy Targeted market expansion has been identified as a key strategic
growth opportunity.
Risk tolerance Medium – this is a strategic risk associated with successfully selecting
attractive global opportunities and seizing them. We seek to lead the shift to
digital ways of learning and consequently to maintain strong market positions.
Examples of
risks
• Substitutes
• Market pricing
• Product differentiation
• Consumer learning preferences
Risk contagion Changes in the competitive marketplace could increase portfolio change.
Risk velocity We expect changes in the global learning market over our five-year
planning horizon, but the timing and pace of such changes is uncertain.
Assessment & Qualifications and Virtual Learning benefit from long-term
contracts, which reduce potential velocity in these business units.
Competitive marketplace risk
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 61
Description
Rising end-user expectations increase our need to offer differentiated value propositions, risking
margin pressure to meet these expectations and potential loss of sales if not successful.
Movement and outlook
The risk has remained at a moderate level. Our delivery across business units has met
customer expectations.
Efforts across business units are focused on developing products to enhance customer
experience, such as the implementation of AI for personalised lessons, as exemplified by the
Digital Language Tutor and AI Study Tools launched in 2025. We are also integrating our
assessment capabilities directly into McGraw Hill’s K12 curriculum solutions, thereby enhancing
the personalised learning experience for students.We have also launched Revibe, an AI-enabled
wearable designed to help individuals build skills in focus, attention and self-regulation, and our
NPS in Virtual Learning remains strong.
The newly established Revenue Operations team aims to enhance the alignment between
marketing, sales and customer success operations, thereby providing Pearson’s customers with
a more seamless experience.
The creation of the Global Enterprise Sales team within Enterprise Learning & Skills
hasconsolidatedPearson’s enterprise sales efforts into a single, cohesive unit, enabling us to
meet customer needs with a comprehensive suite of solutions.
We expect theoutlookto be similar for the next 12 months.
Management actions
1. Monitoring and targeting strong NPS scores, responding to customer feedback.
2. The Group’s direct to consumer offerings such as Study Prep provide valuable insights
about usage.
3. Our service businesses conduct regular reviews with customers to ensure that their
expectations are well understood and met and, where gaps arise, we are taking steps to
address these concerns.
4. A unified Global Enterprise Sales team sharpens our focus and enables us to better meet
enterprise customers’ needs.
Link to strategy Focus on delighting our customers and meeting their expectations.
Risk tolerance Medium – this is a strategic risk, and we should be rewarded for
successfully developing and delivering products and services that
learners value. Some risk is accepted to ensure the customer remains at
the centre of what we do.
Examples of
risks
• Customer experience
• Data architecture and usage
• Accessibility
Risk contagion Failure to produce products and services meeting customer
expectations could also impact reputation and responsibility risks.
Risk velocity Typically, one to three years, as long-term contracts run off.
Customer expectations risk
Risk management continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 62
Description
Failure to effectively execute desired or required portfolio changes to promote scale or
capability and increase focus on key business units and geographic markets, due to either
execution failures or inability to secure transactions at appropriate valuations.
Movement and outlook
The risk remains at low-moderate. In 2025, we announced the acquisition of eDynamic Learning, a
leading Career and Technical Education (CTE) curriculum solutions provider, enabling us to
broaden capabilities and scale our position in the fast-growing Early Careers space.
We expect the outlook to be similar for the next 12 months.
Management actions
1. Including investment plans in our strategic plans, aligning requirements with business unit structure.
2. A Capital Committee governance structure is in place with an Executive Committee for the review,
analysis and approval of M&A transactions, as well as reviewing integration of acquisitions.
3. An experienced Corporate Finance team to execute transactions, supported by a dedicated
post-deal Operations team.
4. Pearson Ventures allows us to take stakes in companies in early funding rounds supporting
growth through innovation.
5. Clear rules of engagement for any M&A activity.
Portfolio change risk
Link to strategy Capital allocation is a core element of our strategy.
Risk tolerance Medium – we seek to carefully balance the opportunity to achieve growth
through increasing capability and/or scale with the execution risk of
portfolio change.
Examples of
risks
• Identification of requirements
• Achieving value on acquisitions/disposals
• Integration of acquisitions
Risk contagion Failures in managing portfolio change could impact capability and the
ability to meet customer expectations.
Risk velocity The speed of achieving the full benefits of an acquisition will vary
depending on the size and scope of the acquisition, but typically from
six months for a simple small acquisition, to two years for a larger
complex transaction.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 63
6. Strong financial controls are in place which are monitored by the Controls Steering
Committee and Compliance teams, as well as local management.
7. An Incident Management Framework operates for effective incident management across a
wide range of events and concerns. We undertake reviews after incidents and significant
near-misses to allow lessons to be learned and any remedial actions to be put in place.
8. A going concern model is reviewed by senior management and is completed twice a year, or
more often if there is a material event. We have a comprehensive treasury policy that
addresses key financial risks, including capital risk, liquidity risk, foreign exchange risk and
interest rate risk, with measurable targets and regular reporting to the Audit Committee.
9. Fraud assessments are completed by business units annually. A Speak-Up/ethics hotline is
available for employees.
10. Comprehensive steps to safeguard students are in place including staff vetting, training and
escalation processes. Staff sign an annual Code of Ethics declaration.
11. Our Government Relations team fosters constructive partnerships with policymakers
and regulatory bodies to ensure we are aware of and have appropriate safeguards
against emerging policy and political risks. It reports regularly to our Reputation &
Responsibility Committee.
12. A highly skilled Legal team, supported by a global network of compliance officers, ensures
our adherence to all applicable laws and regulations across our worldwide operations.
13. Governance is in place which ensures the timely and accurate reporting of all material and
relevant information to comply with UK and US stock exchange regulations, including
protocols relating to inside information.
Risk management continued
Description
Reputational and responsibility risks involve failing to meet obligations and demands of key
stakeholders, including legal, regulatory, ethical and behavioural expectations. These risks
extend beyond direct consequences to include broader societal and cultural perceptions. Risks
arise not only from our actions, but also from being perceived as misaligned with societal
expectations or ideological divides, especially in a polarised environment.
Movement and outlook
This risk remains at moderate-high. The market has experienced several high-profile data
breaches and incidents of fraud perpetrated through the use of deep fakes, and training has
been ramped up for both employees and contractors.
We aim to operate in a highly reputable and responsible manner and so we intend to maintain
strong mitigations to reputation and responsibility risks. However, numerous threats exist
including from those who seek to do harm to the Group or to its customers, including nation-
state actors, organised criminal rings and ransomware attackers, so constant vigilance is
required. We continue to implement targeted initiatives to uplift cyber and data governance
capabilities and protect against emerging threats in an evolving threat landscape.
The risk is expected to remain elevated for the next 12 months.
Management actions
1. Dedicated Risk Management teams throughout Pearson monitor and respond to key risks.
These teams provide regular updates to senior management and report to the Reputation &
Responsibility Committee or Audit Committee as relevant.
2. Mandatory training for all employees covers key reputational risks including cyber and
data risks.
3. Insurance cover, where available, supports the Group financially in the event of
major incidents.
4. Significant investment to ensure high levels of IT resilience, including enforcement of
multi-factor authentication for all critical systems. Tools are in place to repel cyber threats
and safeguard customer information.
5. A trust and safety governance framework is in place that covers data privacy, security and
risk, assessing business impacts and ensuring accountability. We also conduct several
industry assessments to benchmark against security best practices, namely National
Institute of Standards and Technology Cyber Security Framework (NIST CSF), the NIST
Privacy Framework (NIST PF) and Security Scorecard.
Reputation and responsibility risk
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 64
Link to strategy Our reputation and commitment to behaving responsibly underpin our
strategy to be a trusted partner.
Risk tolerance Low – we seek to be a highly trusted education and learning brand. Any
significant failures could negatively affect our relationship with customers
today and in the future.
Examples
of risks
• Compliance with laws and regulations
• Cyber security
• Data privacy
• Fraud
• Insolvency
• Safeguarding
• Test failure
• Use of third parties
• Culture wars/polarisation of political views
Risk contagion Significant failures in this area could increase our capability and
accreditation risks and weaken our position in the competitive
marketplace.
Risk velocity Reputational risks could have a significant impact in a short period in the
event of a significant issue.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 65
Risks Accountability Change since 2024
Accreditation risk
Political and regulatory General Counsel and Business
Unit Presidents
No
Artificial Intelligence, content and channel risk
Effective method of delivery
(podcast, video, test,
in-person, online)
Chief Product Officer and
Business Unit Presidents
No
Intellectual property protection General Counsel and Business
Unit Presidents
No
Products and services –
effective investment in own
and third-party content
Chief Product Officer and
Business Unit Presidents
No
Balance of content creation vs
content purchased
Chief Product Officer and
Business Unit Presidents
No
Speed of innovation Chief Executive Officer, Chief
Product Officer, Chief Strategy
Officer, Chief Technology Officer
and Business Unit Presidents
No
Risks Accountability Change since 2024
Capability risk
Capability in sales Chief Business Officer Yes
Business resilience General Counsel and Business
Unit Presidents
No
Business transformation and change Chief Executive Officer and
Business Unit Presidents
No
IT resilience Chief Technology Officer and
Business Unit Presidents
Yes
Safety and corporate security General Counsel and Business
Unit Presidents
No
Talent Chief Human Resources Officer
and Business Unit Presidents
No
Failure to attract talent/
succession planning
Chief Human Resources Officer No
Competitive marketplace risk
Consumer learning preferences Business Unit Presidents No
Market pricing Business Unit Presidents, Chief
Business Officer
Yes
Product differentiation Business Unit Presidents No
Substitutes Business Unit Presidents No
Accountability for principal risks
For each of our principal risks (shown in bold), the table below lists the accountable senior executive(s) for each sub-risk. In 2025, we added one new sub-risk, we created a new position of Chief
Business Officer and we combined the roles of Chief Technology Officer and Chief Information Officer, which has led to changes in accountability (marked in the table below).
Risk management continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 66
Risks Accountability Change since 2024
Customer expectations risk
Customer experience Chief Product Officer, Chief
Business Officer and Business
Unit Presidents
Yes
Accessibility Chief Human Resources Officer,
Chief Product Officer and
Business Unit Presidents
No
Data architecture and usage Chief Technology Officer and
Business Unit Presidents
Yes
Portfolio change risk
Achieving value on acquisitions/
disposals
Chief Financial Officer and Chief
Strategy Officer
No
Identification of requirements Chief Executive Officer, Chief
Financial Officer and Chief
Strategy Officer
No
Integration of acquisitions Chief Financial Officer No
Risks Accountability Change since 2024
Reputation and responsibility risk
Compliance with laws and regulations General Counsel and Business
Unit Presidents
No
Cyber security Chief Technology Officer Yes
Safeguarding General Counsel and Business
Unit Presidents
No
Test failure Assessment & Qualifications,
English Language Learning and
Enterprise Learning & Skills
Business Unit Presidents
No
Data privacy General Counsel and Business
Unit Presidents
No
Use of third parties Chief Financial Officer and
Business Unit Presidents
No
Polarisation of political views/
cultural wars
General Counsel and Business
Unit Presidents
No
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 67
The main near-term and emerging risks are shown in the table below, which also notes accountabilities and where the risk
represents a change since the previous year.
Risks
Description
Accountability
Classification and change
since 2024
Climate transition Risks relating to sustainability and climate are outlined
on pages 45-49. Expectations around climate change
commitments and measurements change on a
regular basis.
General Counsel
and Business
Unit Presidents
Emerging risk.
No change.
Economic changes Economic changes including high global inflation risks,
recessions in global markets, high interest rates and
supply chain disruption could increase the cost of
production for Pearson and put pressure on school,
enterprise and consumer budgets, reducing demand
for our products and services.
Chief Financial
Officer, Chief
Executive Officer
and Business
Unit Presidents
Significant
near-term risk.
No change.
Tax The outcome of tax decisions relating to prior year
transactions in Brazil and the UK could lead to significant
cash costs.
Chief Financial
Officer
Significant
near-term risk.
No change.
Sanctions and
geopolitics
High levels of geopolitical volatility have led to the
increased use of sanctions, which could inhibit our
ability to trade or, if inadvertently breached, could lead
to fines, penalties and actions against officers.
We have offices in Israel, which could be affected by the
ongoing conflict in the region, and further new conflicts
also pose risks.
Chief Executive
Officer and
General Counsel
Significant
near-term risk.
No change.
Significant near-term and emerging risks
We identify and monitor emerging and near-term significant
risks in several ways:
• Horizon scanning by teams
• Consulting with external advisers and subject
matter experts
• Drawing on external and academic publications such as the
World Economic Forum Global Risk Report
• Keeping up to date with regulatory changes and
industry benchmarks
• Bottom-up reviews by the management of each
business unit
• A top-down review of the business risk registers to identify
any new or emerging risks
Emerging risk management ensures that potential threats are
identified early, with response plans assessed to strengthen
the Group’s readiness should they arise. Our processes are
designed to detect new and evolving risks promptly and to
analyse them in depth to understand the potential impact on
the Group.
Risk management continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 68
Risk assessment of prospects
and viability
Corporate planning process
The Board assessed the prospects of the Group using the
Group’s five-year plan, reviewing going concern over the
period to 30 June 2027 and viability to 31 December 2030. The
five-year period corresponds to Pearson’s strategic planning
process, which is discussed by the Board at least annually and
represents the time over which the Group can reasonably
predict market dynamics and the impact of additions to the
product portfolio.
The strategic plan takes account of a range of factors including
market conditions, the likely impact of principal and other
significant risks to the Group, product and capital investment
levels, as well as available funding. Pearson’s strategy and
business model are discussed in more detail on pages 12-16.
Viability assessment approach and outputs
Base case five-year plan
In considering going concern and the viability of the Group, the
five-year plan was used as the base case model for
assessment. Sales, profits and cash are forecast to grow in the
base case. The company or its subsidiaries have no debt
maturities within the going concern assessment period.
Severe but plausible downside model
A severe but plausible model was prepared based on the base
case adjusted for the probability-weighted impact of all
principal risks as well as other significant risks. The net impact
of the risks modelled was to reduce free cash flow during the
18-month going concern assessment period by 41%.
At 31 December 2025, the Group had available liquidity of
£1.3bn comprising central cash balances and the undrawn
element of its $1.8bn Revolving Credit Facilities (RCFs)
maturing June 2028 and February 2029. While the current
extension options for both RCFs allow for a potential maturity in
2030, consistent with historical practice, Pearson anticipates
refinancing the facility within the next five years to ensure
liquidity beyond the testing period.
Under the severe but plausible downside case, the Group
would maintain comfortable liquidity headroom and sufficient
headroom against covenant requirements during the period
under assessment before considering mitigating actions.
Reverse stress tests
Two reverse stress tests were modelled to determine the
reduction in profit versus the plan that would be required to
exhaust liquidity.
In the case of the going concern assessment, the profit
reduction needed before 30 June 2027 was calculated. The
model showed that significant profit declines in excess of the
severe but plausible scenario were required in both 2026 and
2027 to exhaust liquidity.
For viability, the profit reduction and consequent reduction in
cash flow needed to exhaust liquidity in 2030 was calculated,
requiring a cumulative reduction in excess of those identified in
the severe but plausible downside case.
Conclusion
Based on the results of these procedures, and considering
the Group’s strong balance sheet, the Directors have a
reasonable expectation that Pearson will be able to continue
in operation and to meet its liabilities as they fall due over the
five-year period ending 31 December 2030. Further details
of the Group’s liquidity are shown in the Financial review on
pages 25-31.
Below are the major inputs included in the severe but
plausible scenario:
Accreditation
• Risks associated with potential political and regulatory
changes in US Student Assessment, UK & International
Qualifications and Virtual Learning
• Migration policy changes in key markets and the effect
they may have on demand and market size for Pearson
Test of English
AI, Content and Channel
• Loss of sales due to AI-related risks and poor choice of
content and/or channel
Capability
• Risks associated with transformation and efficiency
programmes if not executed or implemented with sufficient
speed, or failure to deliver successfully
• Strategic initiatives and partnerships affecting short-term
capability risk
Competitive Marketplace
• Long-term competitive pressure on US Student
Assessment contracts
• Revenue declines in Higher Education due to demographic
shifts as well as the general competitive environment
• Enrolment growth declines in Virtual Learning
• Strategic initiatives and partnerships affecting short-term
competitive market risk
• Challenging market environment in English
Language Learning
Customer Expectations
• Additional costs to provide higher than planned
functionality and levels of user experience
Portfolio Change
• Failure to achieve anticipated acquisition synergies
Reputation and Responsibility
• Potential cyber and data breaches negatively impacting
reputation on an ongoing basis
• Potential safeguarding incidents negatively impacting
reputation on an ongoing basis
Recession and inflation
• Potential for increased costs and lower sales because of a
weak macro environment
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 69
Dear fellow shareholders,
It is a pleasure to introduce our Governance report for 2025.
This was another successful year filled with strategic progress
and innovation, including long-term strategic partnerships,
further embedding of AI across our products and services, and
good financial performance, which you can read more about
throughout this annual report.
Strategy and performance
The Board continues to be heavily engaged with the
management team in overseeing the implementation of our
strategic goals, with particular focus on initiatives around
people and culture, product excellence and operationalising
the company’s new strategic partnerships. In addition to
execution oversight, the Board undertook a detailed strategy-
focused meeting with management in June 2025, reflecting on
and refining the strategic priorities. The Board also oversaw the
acquisition of eDynamic Learning in July 2025, a key step in
further developing Pearson’s capabilities in one of its medium-
term growth vectors, Early Careers. You can read more about
the Board’s consideration of this acquisition on page 89.
The Board continued to pay close attention to maintaining a
strong financial position, which enabled us to increase the
dividend again in 2025, in line with our progressive and sustainable
dividend policy. During 2025, we completed a £350m share
buyback programme to return capital to shareholders. On 21
January 2026, we launched a further £350m share buyback
programme, in line with the priorities and discipline embodied in
our capital allocation policy, which enables Pearson to create
sustainable, long-term value for every stakeholder. You can read
more about our capital allocation approach on page 153.
As part of monitoring execution and performance, the Board
regularly receives a dashboard that allows Directors to monitor
progress on Pearson’s financial and strategic priorities, supported
by agreed indicators and milestones identified as key measures of
performance. During the year we introduced our strategic ‘power
metrics’, a small number of metrics that track our progress against
our strategic priorities, which replaced the previous set of strategic
KPIs. You can read more about our financial KPIs and strategic
‘power metrics’ on pages 23-24 of this annual report.
The Board’s oversight of performance and risk includes
strategic risk deep dives presented by each business unit to
the Board throughout the year. This is further underpinned by
the excellent work of our Audit Committee, which you can read
more about on pages 102-116. This includes a continued
focus on data privacy and cyber security, the delivery of the
external audit plan, as well as overseeing our financial controls
and internal audit programmes. During 2025, the Audit
Committee has overseen preparations for the new
requirements relating to risk management and internal control
matters in the UK Corporate Governance Code, which came
into effect on 1 January 2026. You can read more about this
work on page 110.
Culture, employee and stakeholder
engagement and sustainability
During the year, the Board held engagement sessions with
employees in London and the US – in Hoboken, New Jersey, and
Boston, Massachusetts – to hear employee views. Read more
about these sessions, and plans for Board engagement with the
workforce in 2026, on page 87. You can read more information
on how we promote and embed a culture of community in the
workforce environment throughout Pearson on page 40.
The Board is also supporting the Pearson Executive
Management team to drive a culture of performance and
accountability throughout the organisation. Talent
development and succession planning are ongoing themes in
the work of the Board and its Committees.
Chair’s letter
The Board is focused on ensuring
Pearson is a successful and
effective company for the benefit
of all stakeholders.”
Omid Kordestani
Chair
Governance
report
Omid Kordestani
Chair
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 70
The Board has continued to work with Pearson’s Chief Human
Resources Officer to assess employee engagement levels and
consider how Pearson’s desired culture has been embedded
throughout the organisation. Our work in this area includes
analysing the results of the annual company-wide
engagement survey and conducting deep dives into
succession planning and the senior talent pipeline. During the
year, we introduced defined core essential behaviours, the
Pearson Promise, a modern career architecture framework
built on opening up clear career pathways, and a new
performance cycle with updated evaluation criteria. You can
read more on page 40.
Understanding the views and priorities of all our stakeholders is
key to running a successful, sustainable company that meets
the needs of learners, educators, governments and employers.
You can read more about the Board’s engagement activities in
the Stakeholder engagement section on page 17. The Board
has engaged extensively with our larger shareholders,
representing approximately 85% of Pearson’s equity,
regarding the company’s proposed new Directors’
Remuneration Policy to be tabled to shareholders at the 2026
AGM. More information on remuneration and the Board’s
engagement work, through the Remuneration Committee, is
included in the Directors’ Remuneration Report starting on
page 117.
As the world’s lifelong learning company, Pearson recognises
its enormous potential to make a positive impact on people
and the planet. A key pillar of our Learning for Impact
framework, which you can learn more about on page 35, is our
responsible use of AI, as well as sustainability matters. The
Reputation & Responsibility Committee oversees Pearson’s
responsible application of AI, oversight of government
relations matters, as well as monitoring and inputting into
Pearson’s sustainability strategy and initiatives on behalf of the
Board, with more on this described in the Committee’s report
starting on page 99.
Board composition, succession andevaluation
We have a fully engaged Board, with varied backgrounds,
perspectives and skill sets, whose range of expertise includes
technology, education and workforce learning, and leadership
of global, complex organisations. You can read more about the
Board’s skills and experience on page 72.
At the end of 2025, Lincoln Wallen stepped down after serving
ten years on the Board. During his tenure, Lincoln has been a
valuable member of the Audit and Reputation & Responsibility
Committees, and a steady and knowledgeable voice on the
Board, bringing a rare combination of commercial and
strategic insight with deep expertise in technology and AI,
from which Pearson has benefited enormously. On behalf of all
Directors, I would like to extend our warmest gratitude to
Lincoln for his commitment, his passion to Pearson’s mission
and his long-serving contribution to the company.
We were delighted to welcome two new Board members
during the year. Arden Hoffman joined the Board as Non-
Executive Director in June 2025, bringing strong expertise and
business perspectives on workforce and talent development
in an era of innovation and AI. Costis Maglaras joined the Board
as Non-Executive Director in November 2025. His expertise
includes the impact of transformative technologies on
businesses and he brings a focus on enhancing curriculum and
learning in the rapidly changing global business landscape.
Both Costis’ and Arden’s insights are already proving to be
invaluable as Pearson continues to execute against its strategy.
The Board also oversaw a planned succession process for the
role of Group Chief Financial Officer. I would like to thank Sally
Johnson for her significant contribution to Pearson over many
years, and to welcome Simon Robson, formerly Group Chief
Financial Officer at Sky, who will join the company in March 2026
and assume the role of Group Chief Financial Officer and
Executive Director on 8 May 2026. Simon brings deep financial
and leadership experience and the Board is delighted to have
appointed such a strong successor.
We will continue to monitor the Board’s composition to ensure
we maintain the range of skills, experience and perspectives
needed to support the company’s strategy and complement
our succession planning. More detail about the Board’s search
process and succession planning can be found in the
Nomination & Governance Committee report on pages 94-98.
The annual Board performance review in 2025 was internally
facilitated by way of a detailed, tailored questionnaire. The
review demonstrated that our Board is highly engaged, with a
good balance of relevant and recent experience, and an open
and collaborative atmosphere, which encourages constructive
challenge and collaborative decision-making.
Compliance with the UK Corporate
Governance Code
For 2025, we are reporting against the 2024 edition of the
UK Corporate Governance Code (the Code) (with the
exception of Provision 29, in respect of which – for 2025
– we continue to report in accordance with the 2018 edition
of the Code, as required). The principles set out in the Code
emphasise the value of good corporate governance to the
long-term sustainable success of listed companies. The
Pearson Board is responsible for ensuring that the Group
has in place appropriate frameworks to comply with the
Code’s requirements, or otherwise for explaining any
instances of non-compliance. This Governance report and
the Strategic report set out how Pearson has applied the
principles of the Code throughout the year.
The Board believes that during 2025 the company was in full
compliance with all applicable principles and provisions of
the Code.
A copy of the Code can be found on the Financial Reporting
Council’s (FRC) website, www.frc.org.uk.
Good progress has also been made on the recommendations
from the 2024 review. You can read more about the 2025
performance review, and how the Board implemented
recommendations from the previous performance review, on
pages 91-93.
Conclusion
I hope this report explains clearly to you how Pearson is run
and how we align governance and our Board agenda with
our strategic direction. Shareholders are always welcome to
put their questions or feedback to us, either via our website
(plc.pearson.com) or at our AGM. Once again this year,
shareholders will be able to join us and vote at our AGM
either in person or virtually. Details will be included in the
forthcoming AGM notice.
It only remains for me to thank our shareholders for their
continued support and interest in this fantastic company. I look
forward to maintaining our stakeholders’ confidence as we
seek to capture Pearson’s enormous growth potential as a
lifelong digital partner for learners everywhere.
Omid Kordestani
Chair
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 71
All Board members
have strong leadership
experience at global
businesses and institutions.
OurBoardmembers’ biographies, together
with the Board’s skills matrix on page 97,
illustrate the contribution each Director makes
to the Board by way of their individual
experience.
Key to Committees
A
Audit
NG
Nomination & Governance
RR
Reputation & Responsibility
R
Remuneration
Committee Chair
Current notable commitments reflect other
listed company directorships and full-time or
executive roles.
Omid Kordestani
NG
Chair
Age: 62
First appointed to the Board 1 March 2022
Chair since 29 April 2022
Skills and experience
Omid is an international businessman who serves on
the board of the fintech company Klarna Group plc.
He was Executive Chair of Twitter, Inc. between
October 2015 and May 2020, and a Director until
October 2022.
From August 2014 to August 2015, Omid served as
Senior Vice President and Chief Business Officer at
Google and previously as Senior Vice President of
Global Sales and Business Development.
From 1995 to 1999, Omid was Vice President of
Business Development at Netscape Communications
Corporation, and prior to that held positions in
business development, product management and
marketing at The 3DOCompany, Go Corporation and
Hewlett-Packard Company.
Drawing on over 30 years of experience in Silicon
Valley, Omid pursues his passion for technology,
science, medicine and education through active
investments in technology start-ups and advising
entrepreneurs.
Current notable commitments
Klarna Group plc (Non-Executive Director)
Omar Abbosh
Chief Executive
Age: 59
Chief Executive since 8 January 2024
Skills and experience
Omar has a career spanning more than 30 years driving
growth and transformation for leading multinational
companies. He joined Pearson with a background
steeped in technology and innovation, and with a deep
understanding of how to shape and execute
successful strategies in a world of disruption.
Most recently, Omar was the President of Microsoft
Industry Solutions with responsibility for driving sales,
service and solutions across Microsoft’s largest
customers. While there he led industry and technical
business units, including strategy, engineering,
partnering and sales teams that shaped product
roadmaps and strategic campaigns. Prior to Microsoft,
Omar spent three decades at Accenture where he
helped to orchestrate the company’s digital
transformation, and led a large and highly successful
business unit. He served in numerous senior leadership
roles at Accenture, including Chief Strategy Officer and
ultimately as Chief Executive of the global
Communications, Technology and Media business.
Omar was previously a Non-Executive Director of Zuora,
Inc., an enterprise SaaS company. He holds a degree in
electronic engineering and information sciences from
the University of Cambridge and a Master’s degree in
business administration from INSEAD.
Sally Johnson
Chief Financial Officer
Age: 52
Chief Financial Officer since 24 April 2020
Skills and experience
Sally joined Pearson in 2000 and has held various
finance and operations roles across the business,
both at a corporate level and within the business
units, including The Penguin Group. She brings to
the Board extensive commercial and strategic
finance experience, as well as expertise in
transformation, treasury, tax, risk management,
business and financial operations, investor
relations and mergers & acquisitions.
Sally is a Non-Executive Director of Rentokil Initial plc
and Chair of its Audit Committee, a member of the
Institute of Chartered Accountants in England and
Wales and trained at PricewaterhouseCoopers. She
was also a Trustee for the Pearson Pension Plan from
2012 to 2018.
Current notable commitments
Rentokil Initial plc (Non-Executive Director)
Board of Directors
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 72
Sherry Coutu, CBE
R
NG
Non-Executive Director
Age: 62
Non-Executive Director since 1 May 2019
Skills and experience
Sherry is an experienced non-executive director, having
held numerous senior leadership positions in the financial
services, technology and education sectors.
She is Non-Executive Director and Senior Independent
Director of Raspberry Pi Holdings plc, the world’s
largest single-board computer company, and she also
chairs its Remuneration Committee. She is also
Non-Executive Director of Standard Life plc, the UK's
largest long-term savings and retirement business, and
chair of its Remuneration Committee.
Sherry is a Trustee of Founders4Schools and a co-chair
of Cancer Research UK Global Campaign Leadership
Committee. Her previous directorships include the
London Stock Exchange Group plc, DCMS, Zoopla plc,
RM plc, The Scaleup Institute, Cambridge University
Press and Cambridge Assessment. She has also acted
as an adviser to LinkedIn, the National Gallery, the Royal
Society and NESTA.
Prior to her portfolio career, Sherry founded several
technology companies and invested in 70 tech
start-up companies and five venture capital firms.
Current notable commitments
Raspberry Pi Holdings plc (Non-Executive Director
and Senior Independent Director)
Standard Life plc (Non-Executive Director)
Alison Dolan
A
R
Non-Executive Director
Age: 56
Non-Executive Director since 1 June 2023
Skills and experience
Alison brings to the Board extensive commercial and
operational finance experience, specifically in digital
businesses. In January 2025, she joined the Board of
Marks and Spencer Group plc as Chief Financial
Officer. Prior to this, she was the Chief Financial
Officer of Rightmove plc between September 2020
and September 2024 and she held several senior
financial positions at Sky plc, including Group
Treasurer, Director of Finance and was the Deputy
Managing Director at Sky Business. She later moved
to News UK to serve as Chief Strategy Officer at the
forefront of the business’s digital transformation.
Alison has a master’s in Finance from University
College Dublin.
Current notable commitments
Marks and Spencer Group plc (Chief Financial Officer)
Alex Hardiman
A
RR
Non-Executive Director
Age: 44
Non-Executive Director since 1 June 2023
Skills and experience
With more than 15 years of experience in media and
technology, Alex brings to the Board deep expertise
in consumer product strategy and growth, scaling
subscription and digital advertising businesses, and
high-quality journalism and content.
Alex currently serves as Chief Product Officer at The
New York Times, where she oversees the company’s
News, Cooking, Games and Audio products that
power its digital business. She also leads its
enterprise-wide approach to generative AI. Alex
previously spent a decade at The New York Times in
several leadership roles before leaving for Facebook
in 2016 where she served as Head of News Products,
overseeing news experiences for Facebook
consumers and publishers. Alex also spent time at The
Atlantic as its Chief Business and Product Officer
where she relaunched the company’s consumer
offerings and subscription model.
Current notable commitments
The New York Times (Chief Product Officer)
Arden Hoffman
RR
R
Non-Executive Director
Age: 54
Non-Executive Director since 1 June 2025
Skills and experience
Arden is the Chief People Officer and Senior Vice
President at General Motors, a position she has held
since 2023, overseeing Human Resources, Facilities,
Security and Charitable Giving. These functions play a
critical role in fostering a culture of innovation,
ensuring the company attracts, retains and develops
top talent in a rapidly evolving industry. She brings to
the Board a strong background in human resources
and talent development in the global automotive,
technology and financial services sectors. Prior to
General Motors, Arden served as Chief People
Officer at Cruise and as Global Head of Human
Resources at Dropbox, and has held senior positions
in HR at Google and Goldman Sachs. She currently
sits on the Advisory Board of Berkeley's College of
Letters and Sciences and the Transformation CHRO
Leadership Program.
Current notable commitments
General Motors (Chief People Officer)
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 73
Graeme Pitkethly
A
NG
RR
Deputy Chair and Senior Independent
Director
Age: 59
Non-Executive Director since 1 May 2019
Skills and experience
Graeme was Chief Financial Officer and a Board
member of Unilever plc until December 2023. He
joined Unilever in 2002 and, prior to his appointment
as the CFO, was responsible for its UK and Ireland
business. He also held a number of senior financial
and commercial roles within Unilever and spent the
earlier part of his career in senior corporate finance
roles in the telecommunications industry. Graeme
served as Vice President of Financial Planning and
Vice President of Corporate Development at FLAG
Telecom and started his career at
PricewaterhouseCoopers.
Graeme is a Non-Executive Director of Sandoz Group
AG and Chair of its Audit, Risk and Compliance
Committee, and a Non-Executive Director of Verisure
plc and Chair of its Audit and Risk Committee. He is
also a Trustee of The Leverhulme Trust, a charitable
trust funding academic research in the UK, a member
of the Strathclyde University Centre for Sustainable
Development and a chartered accountant.
Current notable commitments
Sandoz Group AG (Non-Executive Director)
Verisure plc (Non-Executive Director)
Annette Thomas
RR
NG
R
Non-Executive Director
Age: 60
Non-Executive Director since 1 October 2021
Skills and experience
Annette has a 25-year track record in leading global
publishing and data analytics businesses, across
academic, educational and consumer media
verticals. Most recently, she served as CEO of
Guardian Media Group, a position she held until June
2021. Prior to that, Annette was CEO of the Web of
Science Group at Clarivate Analytics, a data, analytics
and software business focused on research and
higher education. She has also served as CEO of
Macmillan Publishers and led the digital and global
transformation of Nature Publishing Group.
She is a Non-Executive Director of Schroders plc and
currently serves as Senior Advisor to General Atlantic.
Her previous non-executive experience includes
serving as a Trustee of Yale University, Non-Executive
Director at Clarivate Analytics (2017), and as a board
member for Cambridge University Press and
Cambridge Assessment (2019–2020). She has also
previously acted as an adviser to Creative Commons
and Bain Capital.
Current notable commitments
Schroders plc (Non-Executive Director)
Esther Lee
NG
RR
R
Non-Executive Director
Age: 67
Non-Executive Director since 1 February 2022
Skills and experience
Esther brings significant experience to the Pearson
Board through her prior executive management roles in
developing customer strategies to drive growth, global
marketing and branding, driving digital transformation
and building high-performance teams.
She has a long track record of senior leadership roles,
working for global consumer and enterprise-facing
brands. Most recently, she served as Executive Vice
President – Global Chief Marketing Officer at MetLife
Inc. Previously, Esther served as Senior Vice President
– Brand Marketing, Advertising and Sponsorships for
AT&T, and she has served as CEO of North America and
President of Global Brands for Euro RSCG Worldwide.
Prior to that, she served for five years as Global Chief
Creative Officer for The Coca-Cola Company.
Esther is a Board member at The Clorox Company,
where she chairs the Nomination & Governance
Committee, and is a Non-Executive Director of
Experian plc.
Current notable commitments
The Clorox Company (Non-Executive Director)
Experian plc (Non-Executive Director)
Costis Maglaras
A
RR
Non-Executive Director
Age: 56
Non-Executive Director since 1 November 2025
Skills and experience
Costis is Dean of Columbia Business School, where
he is also the David and Lyn Silfen Professor of
Business. As a trained technologist he has a focus on
enhancing curriculum and learning to meet the
demands of the rapidly changing global business
landscape, and fostering a greater understanding of
the role of technological breakthroughs in solving
business challenges. His fields of expertise include
machine learning and AI, social networks and
quantitative finance. Costis has been with Columbia
Business School since 1998. His industry experience
over the past 15 years has been focused on different
aspects of qualitative investing and trading at
organisations including ADIA, Goldman Sachs, Bank
of America and Mismi.
Current notable commitments
Columbia Business School (Dean)
Board of Directors continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 74
Independence of Directors
All of the Non-Executive Directors who served
during 2025 were considered by the Board to be
independent for the purposes of the UK
Corporate Governance Code (the Code) and
the listing standards of the New York Stock
Exchange (NYSE). The Board reviews the
independence of each of the Non-Executive
Directors annually. This includes reviewing their
external appointments and any potential
conflicts of interest, as well as assessing their
individual circumstances in order to ensure that
there are no relationships or matters likely to
affect their judgement. In addition to this review,
each of the Non-Executive Directors is asked to
provide confirmation on an annual basis of their
independence as defined by the NYSE listing
rules and the Code.
Upon attainment of nine years’ service by any
Non-Executive Director, the Board undertakes
an assessment to satisfy itself as to the
continuing independence of that Director.
In accordance with the Code, Omid Kordestani
was considered to be independent upon his
appointment as Chair on 29 April 2022.
The Directors can obtain independent
professional advice, at the company’s
expense, in the performance of their duties. All
Directors have access to the advice and
services of the Company Secretary, whose
appointment and removal is a matter reserved
for the full Board.
Board composition
Ethnicity
1
Tenure
Gender Nationality
3
5
4
Under 3 years
3-6 years
Over 6 years
5
7
Male
Female
This data reflects Directors in office as at 31 December 2025 (including Lincoln Wallen, who
stepped down from the Board on 31 December 2025).
To learn more about Board demographics, please see page 98. For diversity data in the format
prescribed by UK Listing Rule 6.6.6R(10), please see page 53.
American
American / British (dual)
British
American/Greek (dual)
Canadian
1
Irish 1
1
1
4
4
White
Mixed / multiple ethnic group
Asian / Asian British
1
Other ethnic group
1
8
2
Simon Robson
Chief Financial Officer Designate
Age: 52
To be appointed Chief Financial Officer with
effect from 8 May 2026
Skills and Experience
Simon brings extensive financial leadership from
Sky, one of Europe’s largest media, technology
and connectivity businesses. Having joined Sky
in 1997, he has held a number of senior finance
and strategy roles, including CFO of Sky
Deutschland from 2015 to 2018, followed by
Deputy Group CFO, before being appointed
Group CFO in June 2020. A chartered certified
accountant, Simon brings a strong track record
of delivering high-impact financial strategy and
operational excellence.
Upcoming Board appointment
1. Ethnicity categories are based on the UK’s Office for National Statistics classification.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 75
Pearson Executive Management (PEM)
I
Internal
E
External
Vishaal Gupta
E
President – Enterprise Learning &Skills
Age: 53
Joined Pearson 15 April 2024
Appointed to the PEM 15 April 2024
Skills and experience
Vishaal has over 30 years of global experience in
enterprise technology. He has a proven record of
scaling digital businesses and building high-
performance teams. He joined Pearson from
Accenture, where he was Senior Managing Director
and a part of the Global Leadership Council.
Previously, he worked with Tech Mahindra, MindTree
and HCLTech.
Sharon Hague
I
President – English Language Learning
Age: 55
Joined Pearson 10 January 2000
Appointed to the PEM 3 March 2025
Skills and experience
Sharon has 25 years’ experience in courseware,
assessment and qualifications. She began her career
teaching geography in UK secondary schools for
eight years and is a resilient leader skilled in driving
growth in regulated, media-sensitive environments.
Sharon has worked extensively with governments,
schools and partners to advance learning and
assessment. An Oxford graduate (BA Geography,
PGCE), she serves on the UK Publishing Association
Council and previously chaired the Joint Council
for Qualifications.
Ali Bebo
E
Chief Human Resources Officer
Age: 57
Joined Pearson 13 December 2021
Appointed to the PEM 13 December 2021
Skills and experience
Ali is a seasoned C-suite executive with over 25 years
of experience building culture for transformative
business performance across multiple industries.
Prior to joining Pearson, she was an executive officer
and CHRO for Hologic, Inc., a global medical
technology company. Prior to Hologic, she held
various HR leadership roles with the speciality retail
company ANN INC.
Ginny Cartwright Ziegler
E
Chief Marketing Officer
Age: 58
Joined Pearson 29 July 2024
Appointed to the PEM 29 July 2024
Skills and experience
Ginny has over 30 years of experience leading
large-scale, global marketing and communications
strategies for some of the world’s biggest consumer
and technology brands such as HP, IBM, Intuit
and Xerox.
Before joining Pearson, Ginny served as Chief
Marketing & Communications Officer for Accenture
North America. Ginny earned a BA in modern
languages & literature from the University of Bristol.
Ginny is chair of strategic planning and board director
for San Francisco Opera Guild, which provides
award-winning K12 arts education programmes to
more than 64,000 Bay Area children.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 76
I
Internal
E
External
Cinthia Nespoli
I
General Counsel
Age: 45
Joined Pearson 1 February 2014
Appointed to the PEM 21 May 2020
Skills and experience
Cinthia has over 20 years of international legal and
compliance experience. Previously, she held
leadership roles in legal and compliance at
multinational companies. Cinthia was admitted to the
Brazilian bar in 2004 and earned her law degree from
Pontifícia Universidade Católica de Campinas as well
as a post-graduate degree in tax law from Pontifícia
Universidade Católica de São Paulo.
Sulaekha ‘Sue’ Kolloru Barger
E
Chief Strategy Officer
Age: 50
Joined Pearson 16 May 2022
Appointed to the PEM 16 May 2022
Skills and experience
Sue has more than 25 years of global strategy and
corporate experience. Additionally, she held
engineering roles at technology companies. Sue
holds an MBA from The Wharton School at the
University of Pennsylvania and a BSc in electrical
engineering from the University of Ottawa in Canada.
She has served on several non-profit boards and
councils focused on diversity and STEM.
Tony Prentice
E
Chief Product Officer
Age: 53
Joined Pearson 1 May 2023
Appointed to the PEM 1 May 2023
Skills and experience
Tony has more than 25 years of experience in
consumer-led product management in companies
including Sema4, American Express and Starbucks.
He brings extensive expertise in strategic product
development and consumer marketing. He holds an
MBA from Columbia Business School and a BS in
Mechanical Engineering from Cornell University.
Tom ap Simon
I
President – Higher Education and Virtual
Learning
Age: 47
Joined Pearson 1 December 2004
Appointed to the PEM 1 April 2021
Skills and experience
Tom has 20 years of international business and
finance experience. At Pearson, he has led the Virtual
Schools business, worked in finance for the emerging
markets businesses and led M&A activity in the US.
Previously, he worked in investment banking at RW
Baird. Tom holds an MA in Economics and Politics
from the University of Edinburgh.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 77
Art Valentine
I
President – Assessment &
Qualifications
Age: 61
Joined Pearson 23 January 2006
Appointed to the PEM 1 February 2022
Skills and experience
Art has more than 30 years of leadership
experience in assessments, testing and
technology. Prior to his 20 years at
Pearson serving as a senior leader of
Pearson Professional Assessments and as
Managing Director of Pearson Clinical
Assessment, Art worked at global
technology organisations including
Accenture, Perot Systems and Promissor,
which was acquired by Pearson in 2006.
Art earned his BS in Mathematical
Science/Computer Science from the
University of North Carolina Chapel Hill.
I
Internal
E
External
PEM composition
Gender
Ethnicity
1
Nationality
External/internal appointment
American
British
1
3
Italian/Brazilian (dual)
German
1
6
Asian/Asian British
Mixed / multiple ethnic groups
Other ethnic groups
1
White
2
6
2
4
7
Internal
External
6
5
Male
Female
Naseem Tuffaha
E
Chief Business Officer
Age: 54
Joined Pearson 13 January 2025
Appointed to the PEM 13 January 2025
Skills and experience
Naseem has over 30 years of experience
in executive positions, sales, international
and market development. Prior to joining
Pearson, he was Chief Growth Officer of
global advertising technology firm The
Trade Desk. He has also served in a variety
of go-to-market leadership roles during
his long career at Microsoft, most recently
as Head of Sales for the company’s
Modern Work businesses. Naseem serves
on the board of several non-profit
organisations dedicated to providing
medical relief to children in underserved
areas and holds a degree in Economics
from Harvard University.
Dave Treat
E
Chief Technology Officer
Age: 51
Joined Pearson 2 July 2024
Appointed to the PEM 2 July 2024
Skills and experience
Dave has over 25 years of experience
in technology, innovation and strategic
business transformation. He joined
Pearson from Accenture where
he served as a Senior Managing
Director. Dave helped to found and
has served on several technology and
industry boards including the Linux
Hyperledger Foundation, Linux Open
Wallet Foundation, Digital Dollar Project
and the Global Business Blockchain
Council. Dave earned a Master’s degree
in Higher Education Administration
from the University of Michigan and a
degree in Psychology from the University
of Pennsylvania.
These figures reflect the Pearson Executive Management team, excluding the Company
Secretary, as at the date of this annual report. The Chief Executive and Chief Financial
Officer have been excluded and are counted in the Board metrics on page 75. For
diversity data in the format prescribed by UKLR 6.6.6R(10), please see page 53.
1. Ethnicity categories are based on the UK’s Office for National Statistics classification.
Pearson Executive Management (PEM) continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 78
Division of responsibilities
Chair
The Chair is primarily responsible for the
leadership ofthe Board and ensuring its
effectiveness. Theyensure that the Board
upholds and promotes the highest standards of
corporate governance, setting the Board’s
agenda and encouraging open, constructive
debate of all agenda items for effective
decision-making. They regularly meet the Chief
Executive to stay informed and provide advice.
Theyalso ensure that shareholders’ views are
communicated to the Board.
Chief Executive
The Chief Executive is responsible for the
operational management of the business and for
the development andimplementation of the
company’s strategy, asagreedby the Board and
management. They are responsible for
developing operations, proposals andpolicies
for approval by the Board, they promote
Pearson’s culture and standards, and they are
one ofthe key representatives of the company
to its external stakeholders.
Standing Committee
A Standing Committee of the Board is established toapprove
certain operational and ordinary course ofbusiness items such
asbanking matters, guarantees and intra-Group transactions. It also
makes routineapprovals relating to employee share plans.
Additional authority may be delegated on an ad hocbasis, e.g. to
approve and conclude corporatetransactions.
Authorities and duties
The authorities and duties of theBoard and its Committees, as well
as the roles and responsibilities ofkey individuals on the Board, are
clearly set outin writing. These documents are reviewed and
approved by the Board on an annual basis and are available onthe
company’s website (www.pearsonplc.com).
Pearson Executive Management (PEM)
The Pearson Executive Management team consists ofthe Chief
Executive and their senior direct reports. It is the executive
management group for Pearson and is responsible for delivering
Pearson’s strategy under clearly defined accountabilities and inline
with agreed governance andprocesses.
Deputy Chair and Senior
Independent Director
The Deputy Chair and SeniorIndependent
Director supports the Chair on Board
performance and governance matters. This role
includes meeting regularly with the Chair and
Chief Executive to discussspecific issues, as
well as being available to shareholders generally,
should they have concerns that have not been
addressed through the normal channels. The
Deputy Chair and Senior Independent Director
also leads the evaluation of the Chair onbehalf
of the other Directors.
Company Secretary
The Company Secretary advises on governance
matters and compliance with Board procedures.
Theyare responsible, under the direction of the
Chair, for ensuring the Board receives accurate,
clear and high-quality information, and has
adequate time and appropriate resources to
function effectively and efficiently. Theyalso
support the Chair indelivering the corporate
governance agenda, and organise Director
induction, training programmes and the Board
evaluation process.
The Board
The Board has established four formal Committees. The Committees focus on their own areas of expertise, enabling the Board meetings to focus on strategy, performance, leadership and
people, governance and risk, and stakeholder engagement, thereby making the best use of the Board’s time together as a whole. In accordance with Provision 29 of the UK Corporate
Governance Code 2024, with effect from 1 January 2026 the Board also monitors the effectiveness of the company’s material controls. The Committee Chairs report to the full Board at each
Board meeting following their sessions, ensuring a good communication flow while retaining the ability to escalate items to the full Board’s agenda, if appropriate.
Nomination & Governance
Committee
Reviews corporate governance matters,
including Code compliance and Board
performance; considers the appointment of
new Directors and Board experience; and
reviews Board induction and succession plans.
Reputation & Responsibility
Committee
Works to assess and advance Pearson’s
reputation with stakeholders, including oversight
and scrutiny across all reputational matters, for
example areas of branding, thought leadership,
our application of AI, government relations and
safeguarding. Oversees our sustainability
framework, including progress towards our
sustainable business strategy commitments.
Audit Committee
Appraises our financial management and
reporting and assesses the integrity of our
accounting procedures and financial controls.
The Committee also oversees risk, compliance
and internal audit.
Remuneration Committee
Determines the remuneration and benefits of the
Executive Directors and oversees remuneration
arrangements for Pearson’s senior management
team, as well as monitoring remuneration
policies for the wider workforce.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 79
Board activities
The role and business of the Board
The Board is deeply engaged in developing and
measuring the company’s long-term strategy,
performance, culture and values. We believe that
Board members provide a valuable and varied set
of external perspectives and that robust, open
debate about significant business issues brings
anadditional discipline to major decisions.
The key responsibilities of the Board include:
• Overall leadership of the company and setting the
company’s values and standards, including monitoring
culture and how it has been embedded, performance
and engagement
• Reviewing and determining the company’s strategy, in
consultation with management, assessing performance
against the strategy and overseeing management’s
execution of it
• Supervising major changes to the company’s corporate,
capital, management and control structures
• Approval of all transactions or financial commitments in
excess of the authority limits delegated to the Chief
Executive and other Pearson Executive Management
• Oversight of the risk management approach and
determining the company’s risk appetite (see page 55 for
more information on risk management) and monitoring the
effectiveness of the company’s material controls
• Assessment of management performance, Board and
executive succession planning and talent pipeline
• Effective engagement with key stakeholders
Strategic planning and decision-making
The Board spends time assessing whether any proposed
action aligns with the strategy and future direction of the
business, while taking into consideration any potential impact
on our stakeholders. In addition, the Board regularly holds
strategy discussions, whether in relation to the specific
strategies of Pearson’s five business units or the vision and
execution of the wider company strategy as a whole, both of
which enhance the Board’s decision-making in shaping the
company’s strategic and financial plans.
The Board and Committees receive timely, regular and
necessary financial, management and other information to
discharge their duties. Comprehensive papers are circulated
to Board and Committee members approximately one week in
advance ofeach meeting.
The Board receives a regular performance dashboard and key
milestones report, together with updates from the Chief
Executive and Chief Financial Officer. In addition to meeting
papers, a library of current and historical corporate information
is made available to Directors to support the Board’s
decision-making process. For items that require significant
consideration and review in advance of a decision, the Board’s
discussions can take place over a number of sessions.
The Directors recognise their duties towards the company’s
shareholders and other stakeholders as set out in Section 172
of the Companies Act 2006, and a continued understanding of
the key issues affecting stakeholders is an integral part of the
Board’s decision-making process. You can read more on page
89 about how the Board engages with stakeholders and takes
their views into account when making decisions.
Portfolio changes
The Board regularly reviews updates on portfolio and
corporate finance activities throughout the year, including
regular updates on live transactions (disposals, acquisitions
and corporate joint venture activity), outputs of periodic
portfolio reviews and reviews of potential pipeline
opportunities. These updates can take the form of presenting
key summaries of information in Board packs, or oral updates
on key matters. These discussions are typically led by
management, supported by the Corporate Development
team and, where necessary, external advisers, with Board input
collated and, where necessary, the Board providing its formal
approval. Subsequently, once portfolio transactions have
closed, the Board is also kept informed of the integration or
transition progress, including post-acquisition reviews
conducted to assess transaction success and any learnings to
be taken for futureprojects. In 2025, such portfolio updates
included the acquisition of eDynamic Learning, a post-
acquisition review of PDRI, as well as a review of potential
pipeline opportunities.
Board meetings
The Board held seven scheduled meetings in 2025, with
discussions and debates focusing on the execution of the
company’s markets, customer and people strategies, as well
as other strategic drivers for the company. Major items
covered by the Board in 2025 are shown in the table on page
82. In addition to its scheduled meetings, the Board convenes
as necessary to consider matters ofatime‑sensitivenature. In
2025, an additional meeting was held to consider the
acquisition of eDynamic Learning.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 80
Board attendance and contribution
Directors are expected to attend all Board and Committee
meetings, but in certain situations, such as pre-existing
business or personal commitments or certain unforeseen
circumstances, it is recognised that Directors may be unable
to attend. In these circumstances, the Directors receive
relevant papers and, wherever possible, will communicate any
comments and observations in advance of the meeting for
raising as appropriate during the meeting. They are updated on
any developments after the meeting by the Chair ofthe Board
or Committee, as appropriate.
Individuals’ attendance at Board and Committee meetings is
considered as part of the formal review of their performance.
There was a high level of attendance by the Directors at Board
and Committee meetings in 2025, as shown in the table on
page 82 and in the Committee reports that follow.
Reflecting on the level and quality of engagement by the Board
in 2025, the Board is satisfied that each Director contributed to
Board discussions and demonstrated sufficient commitment to
be able to meet their responsibilities. In addition, the
Nomination & Governance Committee confirmed in its annual
assessment that each Director demonstrates the requisite level
of commitment and contribution in accordance with Principle H
and Provision 18 of the Code.
Directors’ commitments and conflicts
ofinterest
Under the Companies Act 2006, the Directors have a statutory
duty to avoid conflicts of interest with the company. The
company’s Articles of Association allow the Directors to
authorise conflicts of interest. The company has an established
procedure to identify actual and potential conflicts of interest,
including all directorships or other appointments to, or
relationships with, companies that are not part of the Pearson
Group and which could give rise to actual or potential conflicts
of interest.
Additionally, in response to Provision 15 of the UK Corporate
Governance Code and the FRC’s accompanying guidance,
Pearson has developed internal guidance to be taken
into account when considering changes to a Director’s
commitments, or when appointing a new Director, as well as
formalising the Board approval process for such matters.
Once notified to the company, any potential conflicts and
commitments are considered for authorisation by the Board at
its next scheduled meeting or, where necessary in the interests
of timeliness, by a committee comprising the Chair, the Deputy
Chair and Senior Independent Director, and the Company
Secretary. In particular, the Board or committee considers the
type of role, expected time commitment and any impact this
may have on the Director’s duties to Pearson, as well as any
relationships between Pearson and the external organisation.
The interested Director is not permitted to vote on, or be
counted in the quorum for, any resolution relating to their
proposed commitments, conflict or potential conflict. The
Board further reviews any authorisations previously granted on
an annual basis. When making new appointments, the Board
considers other demands on the proposed Director’s time.
The Board believes that the experience gained by Directors
through their other commitments brings valuable perspectives
to the Pearson Board. During the year, the Board approved the
following new commitments:
• On 1 March 2025, Graeme Pitkethly was appointed to the
Board of Verisure as Non-Executive Director and Chair of its
Audit Committee. When considering this new commitment,
the Board assessed any potential conflicts of interest and
the time commitment required, noting Verisure’s intention
to list its shares for trading on a public stock exchange in the
near future. Verisure plc subsequently listed on Nasdaq
Stockholm on 8 October 2025.
• On 1 May 2025, Sherry Coutu was appointed to the Board of
Standard Life plc (previously named Phoenix Group
Holdings plc) as Non-Executive Director and member of its
Remuneration Committee. She was subsequently
appointed as Chair of Standard Life’s Remuneration
Committee with effect from 1 July 2025. When considering
this new commitment, the Board assessed any potential
conflicts of interest and the time commitment required.
When considering these new commitments, the Board also
took into consideration the requirements under Provision 15 of
the UK Corporate Governance Code and the FRC’s
accompanying guidance. The Board agreed that these new
commitments would not have a negative impact on the
Directors’ roles at Pearson.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 81
Selected key actions and outcomes
• The Board considered and approved various strategic
partnership deals throughout the year, including HCLTech,
TCS and Cognizant, and developed a framework for the
Board’s continued oversight of the performance of the
strategic partnerships, including service delivery and
engagement. The Board requested that cyber risk
presentations be embedded into the business unit
strategic risk deep dives going forward, in addition to
strong existing oversight from the Audit Committee, and
that accountability maps and critical capability charts be
developed across the strategic growth initiatives for the
Board’s ongoing insight
• The Board conducted a follow-up review of PDRI following
the completion of its acquisition in 2023, and reflected on
learnings to incorporate into future M&A activity and
ongoing scrutiny by the Board during the post-close period
to monitor progress
• As part of the Board’s consideration of capital allocation, it
approved the launch of a £350m share buyback
programme during the year. You can read more about this
share buyback programme on page 153
Scheduled meetings
attended
Chair
Omid Kordestani 7/7
Executive Directors
Omar Abbosh 7/7
Sally Johnson 7/7
Non-Executive Directors
Sherry Coutu CBE 7/7
Alison Dolan 7/7
Alex Hardiman 7/7
Arden Hoffman
1
4/4
Esther Lee 7/7
Costis Maglaras
2
1/1
Graeme Pitkethly 7/7
Annette Thomas 7/7
Lincoln Wallen 7/7
1. Arden Hoffman was appointed to the Board on 1 June 2025.
2. Costis Maglaras was appointed to the Board on 1 November 2025.
• The Board held an additional meeting to consider and
approve the acquisition of eDynamic Learning, and
thoroughly considered the strategic rationale and value,
market demand, impact of AI, synergies and integration
plans to ensure these were robust, clear and achievable.
You can read more about the Board’s deliberation on this
matter and how it considered the impact to the company’s
stakeholders on page 89
• After each employee engagement session, the Board
spent time discussing and sharing employee feedback,
particularly around driving organisational simplicity and
change management, which was then reflected in the
Board’s wider discussions and agenda items
• The Board reviewed and adopted new ‘revenue view’
definitions, standardising classifications for the shape of the
company across customer segmentation, business model
and innovation, which help to accelerate the end-to-end
commercial cycles across the company, improve
transparency and organisational accountability, and track
progress against our transformational goals and outcomes.
These ‘revenue view’ definitions were then considered
across the long-range plan that the Board approved
Board meeting focus 2025
Strategy Performance Leadership and people Governance and risk Shareholder engagement
• Oversight of strategy execution,
including deep dives on specific
strategic initiatives
• Approval of eDynamic
Learning acquisition
• Consideration and approval of the
2026 annual operating plan and
updated long-range plan
• Considered the adoption of a new
‘revenue view’ framework
• M&A pipeline and post-acquisition
reviews, including PDRI
• Pearson’s brand update
• Approving 2024 preliminary results and
annual report and accounts
• Approving 2025 performance expectations
and guidance to the market
• Approving the 2025 interim results and Q1
and Q3 trading statements
• Monitoring 2025 operating
plan performance
• Regular dashboard and milestone reports
and power metric reviews
• Continuing review of forecasts
• Final and interim dividend approvals and
other capital allocation considerations,
including share buyback
• Talent review,
pipeline
development
and succession
planning process
• Culture and how it is
embedded across
the company
• Employee
engagement
sessions with Board
• Employee
engagement
survey reviews
• Reports on Committees’ activities
and considerations
• Legal, regulatory and
governance matters
• Board and Committees’
performance review
• Regular review and annual confirmation
of Directors’ commitments and/or
potential conflicts of interest
• Annual assessment and re-approval of
Committees’ terms ofreference
• Risk management report
• Board learning and development through
deepening operational understanding
• Investor relations
strategy and updates,
share price performance
and value creation
considerations
• Shareholder issues
and voting
• AGM and related
shareholder interactions
• Feedback from Board
member meetings
with shareholders
• Major shareholders and
share register analysis
Board activities continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 82
How the Board is kept informed
The application of our Board and governance
processes ensures that our Directors receive
accurate, timely and clear information from a
range ofsources. This allows the Board and
Committees to monitor and provide feedback on
matters of importance, as well as to make
informed decisions in the best interests of the
company and its stakeholders.
The Board’s oversight of AI at Pearson
As a digital-first business, Pearson is accelerating its use of AI
across the business and using it as a growth driver to improve
efficiencies and to enhance learning and assessment services.
We expect generative AI to create significant positive
opportunities for Pearson, due to our unrivalled depth of
content and data.
The rapid advances in AI will continue to be an important driver
of growth in education and the workforce over the coming
years. The rapid development of increasingly powerful AI
models will significantly change the world of work and skills
requirements. Employers will need to find new pools of talent
and continuously develop and verify the skills of their
workforces to keep pace with and benefit from technology
and AI advancements. Learners and educators place
enormous trust in us, so we have a responsibility to be
thoughtful and considered in how we use this technology,
while continuing to move at pace to enhance our products with
the customer in mind. AI plays an important role across
Pearson’s product portfolio, more information on which can be
found in the Strategic report. With AI skills becoming
increasingly important in the job market and helping humans
be more productive, the need for AI learning is growing and we
are always exploring opportunities to continue to leverage
innovative AI technology to drive further efficiencies and
cost savings.
During the past year, the Board, the Audit Committee and the
Reputation & Responsibility Committee have kept up to date
with AI developments both within Pearson, being led by the
Pearson Executive Management team, and across the wider
landscape, considering both opportunities and implications of
the technology for Pearson. Specific activities undertaken by
the Board and Committees during the year have included:
• The Board received updates on the implementation of
various AI-related strategic initiatives, including the
deployment of a shared set of AI tools to enhance content
generation, driving efficiency and innovation, and the
establishment of a data and AI Centre of Excellence to
maximise efficiency and improve end-to-end customer
service experience through AI-based solutions
• The Board received an update on the significant progress
made in our modernisation activities with AWS, including the
infusion of AI and modern architectures into our existing
product estate with English Language Learning, Enterprise
Learning & Skills, Virtual Learning and Higher Education, and
the company’s work with the AWS modernisation factory to
experiment with various agentic AI capabilities
• June’s Board meeting was dedicated to discussing
progress with implementing the company’s strategy
and included consideration of how Pearson will manage
the pace of AI, disruptors in the market, and the rate of
change required in order to become a leader in AI-first
learning experiences
• The Board was updated on the company’s new strategic
partnerships and how these would help bring AI innovation
into our products and applications
• The Board considered a new product operating model
which has helped to embed AI strategically into the product
roadmap and critically allows us to recruit the right product
and engineering talent into the organisation
Back-office
efficiencies
Risk
management
Strategy
Regulatory
landscape
Advocacy and
external policy
Product
capabilities
The Board
and AI
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 83
Talent and culture
Ensuring that we have both a talented, engaged workforce that
is focused on delivering our strategy and an organisational
culture that enables and encourages that delivery is critical to
Pearson’s success. During the past year, the Board and the
Pearson Executive Management team have continued to lead
our focus on embedding a culture and environment that is
high-performing, and in which our people can leverage their
strengths. Pearson’s purpose (set out on page 2) is key to
developing our culture to support our strategic vision,
particularly in driving a culture of performance.
The Board has a particular focus on embedding our desired
culture, with the current and future leaders of Pearson being
essential to the successful realisation of our purpose and
culture of performance. Our strategic priorities are
underpinned by our commitment to provide a vibrant work
environment, unparalleled career opportunities, open
communication and tailored feedback, exceptional leadership
and a clear definition of success for our employees.
One of our key objectives for 2025 was to energise our people
on the evolution of Pearson through strong execution of our
people‑related changes. During 2025, we have embedded
key, impactful initiatives at pace, to develop our teams and
build a high-performance culture.
During the year, the Board received updates on the progress
of these initiatives, aimed at aligning our talent strategy with
our strategic objectives. These updates covered the roll-out
of defined core essential behaviours and the Pearson Promise,
which have been embedded further into the core DNA of
Pearson during 2025. The Board was updated on the launch of
a modern career architecture framework, based on opening
up clear career pathways, simplified role criteria and globally
consistent promotion processes, and a new performance
cycle with updated evaluation criteria to continue to embed
our high-performance culture. Following on from the launch of
the ‘Leadership Uplift’ programme in 2024, we implemented
360° feedback for senior leaders and introduced talent talks,
where the Chief Executive and Chief Human Resources Officer
review the shape of the organisation, its culture, top talent and
succession pipeline with each member of the Pearson
Executive Management team. The Board has been attentive to
our talent pipeline for leadership.
• In addition, as part of the business unit strategic risk deep
dives, the Board discussed:
• In Assessment & Qualifications, an overview of risks
associated with AI and the competitive marketplace, as
well as perspectives on the use of AI in that business,
including the responsible use of AI to power test
content creation
• In Higher Education, an overview of how Pearson’s
generative AI capabilities, backed by learning science,
were driving content production efficiencies and
personalisation of learning experiences
• In Virtual Learning, an overview of the work to leverage AI
for courseware development, study tools and
assessment to improve the user experience, as well as
programming to enhance our college and career
readiness offering
• In English Language Learning, an assessment of the
potential impacts of AI on language learning and the
pace of integrating AI into product offerings, including
as regards content generation, personalisation
and assessment
• In Enterprise Learning & Skills, an overview of the work to
mitigate risks relating to the strategic partnerships, as
well as our operations as an awarding organisation
• The Audit Committee considered the risks associated with
generative AI and reviewed its status as part of the Group
risk review
• The Reputation & Responsibility Committee considered
the AI landscape from a regulatory, policy and media
perspective, including:
• An update on the current Responsible AI initiatives
at Pearson
• An update on the significant regulatory and policy focus
on this topic, including the EU AI Act, which passed in
April 2024, cementing the first comprehensive
regulatory scheme for the development and use of
AI in the world, and the US state action on passing
AI-related laws
• Noting the advocacy work conducted by the company in
this field
You can read more about how we manage AI from a risk
perspective on page 59.
During Board and Committee meetings, the Non-
Executive Directors regularly seek to understand how our
people are experiencing and responding to key initiatives,
particularly in times of significant change, and ensure that
employee perspectives are considered as we navigate
evolving priorities.
The Board also reviewed the Pearson Executive Management
team’s leadership profiles, which provide a deeper
understanding of the Pearson Executive Management team’s
strengths and potential, in order to ensure that we place the
right talent in critical roles and build a leadership pipeline
capable of driving sustainable growth, fostering innovation
and delivering on our strategic priorities.
The Board monitors culture and organisational health, together
with its Committees, and receives updates on how this is being
embedded within the business. The Board monitors other
Group-wide initiatives that underpin our culture, including
employee engagement, the Code of Ethics programme,
compliance, health and safety and talent attraction and
retention (see table on page 85 for further information).
During the year, the Board also conducted a review of the
results of Pearson’s employee engagement survey, to discuss
the key themes and indicators.
The Chief Human Resources Officer is a standing attendee at
the Remuneration and Nomination & Governance Committees.
Their attendance and contributions, together with the Board’s
own direct engagement with the workforce, ensure that our
Directors are attuned to our culture and employee-related
considerations through multiple lenses, including in strategic
decision-making, and in conducting their business more
broadly. Read more on page 89.
The Board is satisfied that the company’s desired culture is
sufficiently embedded throughout the organisation and is
aligned with our purpose, values and strategy to promote
the long-term success of the company for the benefit of
our stakeholders.
How the Board is kept informed continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 84
Cultural indicator How it is overseen Board-level responsibility
Employee engagement The Board ensures engagement through multiple channels, including the employee engagement survey, town hall sessions and in-person engagement
events, such as listening sessions with employees in Boston, Massachusetts, London and Hoboken, New Jersey. Read more on page 87.
Board
Code of Ethics and training The Audit Committee is briefed on our annual Code of Ethics programme, including development of the Code, completion rates, training and certification
methods. Certification of the Code is mandatory and we achieved a 100% employee completion rate for 2025. We also have mandatory training for all
employees on cyber security and data privacy, with targeted training on other key topics for employees in certain roles, business units or geographies.
Audit
Compliance, including
whistleblowing and
investigations
The Associate General Counsel – Employment, Ethics & Compliance reports to the Audit Committee at every meeting on new and ongoing investigations,
including matters raised through our SpeakUp process. The Audit Committee considers the programme’s effectiveness annually, including periodic peer
benchmarking. The Audit Committee Chair ensures the Board has visibility on matters of note. The Board is free to request further information to support
its oversight.
Audit
Internal audit Insights into matters driven by or impacting our culture and cultural behaviours are provided to the Audit Committee where necessary by Internal Audit as part of
the findings and recommendations in its reports.
Audit
Health and safety (H&S) The Reputation & Responsibility Committee receives an annual H&S report, so Directors can monitor the key strands of our H&S framework, including
oversight of how Pearson is enabled through awareness, competency, resources and guidance to allow for agile and effective management of H&S risk,
while also receiving comfort that we have controls for compliance and assurance purposes.
Reputation & Responsibility
Remuneration practices and
rewarding the workforce
The Remuneration Committee monitors the wider Employee Reward framework, including incentive target setting for Group plans, fair pay analysis, Chief
Executive pay ratios and alignment of Directors’ pension contributions to the workforce. This suite of activity provides insights into the roles that
remuneration and setting performance goals play in promoting the right behaviours, particularly in driving a culture of performance, and how incentives and
rewards align with culture.
Remuneration
Talent attraction and retention The Chief Human Resources Officer regularly updates the Remuneration Committee on talent considerations, including trends on recruitment, retention
and staff turnover. Talent attraction and retention plays into our ability to execute our strategy, so it is considered in strategic discussions by the Board and
Pearson Executive Management team. Recognising the importance of our people, Talent is a sub-category of our Capability principal risk. Read more about
our risk management approach starting on page 55.
Remuneration
Sustainability
Pearson has a strong governance structure through which the
Board and its Committees monitor and oversee the company’s
Learning for Impact framework, which you can read more
about on page 32. The Committees work together to support
the Board in overseeing sustainability at Pearson:
• The Reputation & Responsibility Committee leads the
Board’s oversight of sustainability matters and oversees the
sustainability strategy, including targets and public
commitments, monitoring progress towards targets linked
to the products, people and planet pillars, as well as the
sustainability regulatory landscape and the company’s
external reporting
• The Remuneration Committee considers performance
against sustainability metrics to support remuneration
decisions with certain in-flight remuneration frameworks,
where appropriate
• The Nomination & Governance Committee ensures the
requisite strength of sustainability expertise on the Board
and oversees the corporate governance elements of
sustainability
You can read more on the sustainability matters covered during
2025 throughout this Governance report, in particular in the
Reputation & Responsibility Committee’s report on pages
99‑101.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 85
Understanding our stakeholders
A strong understanding of all our stakeholders
and their perspectives is integral to our strategic
planning and operational delivery. Our Board
strategy sessions are informed by the views and
needs of our eight stakeholder groups:
shareholders, educational institutions and
educators, employers, business partners,
learners, governments and regulators,
communities and civil society, and employees.
Engagement in 2025
Throughout the year, the Board ensured that it was kept
informed of stakeholder views, concerns and commentary
through a variety of engagement methods. These included
in-person and virtual meetings, reports and presentations at
Board or Committee meetings, feedback from members of
the Pearson Executive Management team and other employee
groups, and interactions with different functions, teams and
advisers, both inside and outside Pearson.
A key factor in any decision-making is listening to and
considering the interests of stakeholders. We have set out
below examples of the key employee and shareholder
engagement activities undertaken by the Board and by
individual Directors over 2025.
Shareholders
Shareholders are a key consideration in the Board’s
decision-making. We have continued our focus on driving
shareholder engagement through in-person and virtual
meetings and events.
The Board is committed to fostering shareholder engagement
and recognises that AGMs represent an opportunity for
shareholders to interact with the Board and share their views,
concerns and feedback. We will again be holding a hybrid AGM
in 2026 and look forward to welcoming our shareholders either
in person or virtually. Further details will be shared in our notice
of the 2026 AGM.
The Board ensured a continued shareholder dialogue
throughout the year. During the year, Sherry Coutu, Chair
of the Remuneration Committee, and Omid Kordestani, Board
Chair, consulted with our largest shareholders ahead of the
renewal of the Directors’ Remuneration Policy at the 2026 AGM,
in addition to a wider engagement exercise undertaken on
such matters in early 2026. More information on this process
can be found in the Directors’ Remuneration Report starting
on page 117.
The Board also receives updates and analysis on shareholder
sentiment from Pearson’s corporate brokers, as part of a
regular investor relations update and when considering certain
corporate matters.
As required by the UK Corporate Governance Code,
the Board ensures Pearson engages effectively with,
and encourages participation from, its key stakeholders.
The Board maintains its oversight through a variety of
direct and indirect mechanisms, and the Reputation &
Responsibility Committee monitors our reputation across
the range of our stakeholders.
The Board recognises that stakeholder views are integral to
decision-making and setting the company’s strategy. More
information on Pearson’s key stakeholders, including the
outcomes of our engagement throughout 2025, is in the
Strategic report on pages 17‑21. Further information on
how the Directors discharge their duties under Section 172
of the Companies Act 2006 is on page 22.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 86
Shareholder engagement
at a glance
Over 2025, our Chief Executive, Chief Financial Officer and
Business Unit Presidents, as well as our Investor Relations
team, participated in meetings with both current and
prospective investors and sell-side analysts. We held
engagements across investor conferences, roadshows,
salesforce teach-ins and investor events across the world.
We also met with the UK Shareholders’ Association, a retail
shareholder representative body.
We held our fourth hybrid AGM in 2025 with shareholders able to
attend either in person or virtually to vote and ask questions of
the Board.
During the year our Board Chair and Remuneration Committee
Chair engaged with shareholders and shareholder
representative bodies to consult on our updated Directors’
Remuneration Policy ahead of the 2026 AGM.
218
meetings
On remuneration,
engaged with top
c.100
shareholders
with
c.200
institutions
c.85%
of share register
Employees
The Board recognises that our employees are one of our most
important assets and are integral to our business and is
committed to continuing to ensure they inform the Board’s
decision-making. Examples of how the Board engaged with
employees in 2025 to ensure that they are listened to,
supported and rewarded, are shown on this page.
Board and employee engagement
The central role of the Board is to support and oversee
Pearson’s long-term strategy. As part of that, it is vital that the
Board engages with employees, to strengthen the employee
voice in the boardroom and enable the Board to hear first-
hand the employees’ perspectives on Pearson’s strategy,
performance and culture.
During the year, the Board’s approach to employee
engagement included in-person, structured sessions, which
complemented existing executive employee engagement and
provided opportunities for direct engagement by Non-
Executive Directors. The Board held in-person sessions with
employees in London and in the US in Hoboken, New Jersey
and Boston, Massachusetts, facilitating meaningful
interactions between Board members and various groups of
employees to hear their thoughts, feedback and questions.
Board members engaged on a variety of topics, including the
importance of company culture, Pearson’s opportunities and
challenges, and the execution of our strategic priorities to
continually improve our offering to customers.
These events were received very positively by employees, and
the Board spent time after each session discussing what they
had heard from employees.
Looking ahead, the Board intends to hold similar in-person and
structured sessions in 2026 to ensure we continue to be
authentic and representative of our entire employee base. The
Board is also invited to join a number of Pearson Executive
Management sponsored events with each business unit in
2026, including Higher Education’s Digital Learning Summit
and EdTech Symposium and English Language Learning’s
Annual Franchisee meeting.
Town halls
Throughout 2025, the Chief Executive, Chief Financial Officer
and the Pearson Executive Management team held in-person
and virtual town hall meetings at significant points in the year.
Pearson employees were invited to attend and given the
opportunity to ask questions.
Surveys
During 2025, we conducted our annual Pearson employee
engagement survey. We heard from c.13,800 employees, with
an overall response rate of 87% compared with 88% in 2024.
The Board received a detailed update on the survey results,
including additional insights on opportunities to increase
engagement. Further information on the outcomes of the
Pearson employee engagement survey is on page 41.
We were able to have an open and
honest conversation with the Board
and discuss our excitement over the
pace of change required to
accelerate growth. The Board were
very engaged in how we do this
together, which made it an incredibly
stimulating discussion.”
Kim England
Lead, Internal Communications
(Attended the London engagement event)
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 87
This event was an inspiring
opportunity to engage with the Board
and hear their perspectives on our
business's ambitions to better serve
learners. Offering a direct forum like
this with employees reflects
Pearson's commitment to honest
dialogue across the organisation to
understand key priorities and how we
best achieve them.”
Brendan Reilly
Manager, Corporate Development
(Attended the Hoboken engagement event)
The Board members were very
interested in our employees’
experiences and how we are
navigating this incredibly unique time
at the intersection of AI and learning. I
appreciated their deep interest in
how we are executing Pearson’s
strategy at the ground level.”
Vicky Guo
Head of Ventures
(Attended the Boston engagement event)
The Board engagement session
offered invaluable insight into the
priorities and perspectives of those
steering the company at the highest
level. It was energising to see how
closely aligned the Board is with the
issues that matter most to us as
employees – especially around our
people and culture journey.”
James Caddy
Executive Partner, Finance
(Attended the London engagement event)
Understanding our stakeholders continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 88
Our Board’s decision-making in action
This case study should be read in conjunction with
the Directors’ duties statement on page 22.
During the year, the Board approved the acquisition of
eDynamic Learning, a leading Career and Technical Education
curriculum solutions provider. eDynamic Learning’s
comprehensive catalogue of digital courses enables students
to follow structured learning pathway programmes that
prepare them for their future careers. This acquisition aligns to
Pearson’s strategy, enabling the company to scale its position
in the fast-growing Early Careers space and quickly broaden
its capabilities in career-readiness solutions.
When considering this acquisition, the Board received
detailed reports from management setting out the strategic
rationale, anticipated synergy opportunities, due diligence
findings, valuation, stakeholder considerations and risks.
The Board paid particular attention to assessing the strategic
rationale and valuation, the potential impact of AI on eDynamic
and the associated plans to integrate the business into
Pearson, to ensure these were robust, clear and achievable.
In addition, the Board considered how the acquisition could
accelerate the company’s strategy and create value for
Pearson’s stakeholders.
This case study on the Board’s consideration of the
eDynamic Learning acquisition illustrates how the Directors
considered the various aspects of their statutory duties
when considering and approving the acquisition, and the
implications for stakeholders.
Shareholders
In considering the acquisition, the Board paid particular
attention to, among other factors, commercial and sales
synergies, the potential financial returns on investment, risks
and value creation opportunities, the structure of the
transaction, and whether the commercial terms of the
acquisition were in the interests of Pearson’s shareholders as
a whole. The Directors agreed that eDynamic Learning had an
attractive financial profile with strong margins and cash flow
conversion, and a track record of delivering growth. In the
Board’s view, eDynamic Learning’s established product
portfolio, proprietary content and customer base offers
broader strategic benefits for Pearson, and enables Pearson
an accelerated timeline to broaden and strengthen its
capabilities in career-readiness solutions, during a time of
rapid sector growth.
Communities and civil society
eDynamic Learning presents a significant opportunity to
reach more learners as they make the transition from
education to work, and to improve career-aligned education
in K‑12 and higher education in the US. Integrating eDynamic
Learning’s content into Pearson’s broader portfolio enhances
Pearson’s offering and provides opportunities to reach new
customers and expand further into professional development
and workforce training. The Board agreed that this acquisition
could significantly benefit learners both in education and in
the workforce and help bridge the gap between exiting
full-time education and entering employment.
Employers
At a moment when technology is developing faster than
human skills, employers tell us they have an urgent need for
career-ready workers. The Board noted that eDynamic
Learning’s solutions would be a strong addition to Pearson’s
offerings in the Early Careers space and help us better
support employers by equipping more learners with the skills
they need to enter the workforce.
Employees
The Board considered the integration of people and talent as
part of the acquisition, noting it was important to ensure the
retention of the skill set of eDynamic Learning’s employees
and preserve their entrepreneurial spirit. The Board noted the
intention to co-create and co-own the integration plan with
the eDynamic Learning team, which would ensure that any
strain of integration on the eDynamic team was minimised
while also ensuring that they were appropriately incentivised
for growth.
Learners
In considering the acquisition, the Board was focused on
ensuring that the learner was front of mind and that the
acquisition was aligned with our strategic objectives, our
purpose and our commitment to creating vibrant and
enriching learning experiences designed for real-life impact.
eDynamic Learning’s content development engine
strengthens key capabilities in our offerings and provides
learners with a more complete suite of solutions that spans
the learning continuum: career exploration, learning and
certification – helping to bridge the gap between education
and employment.
In the Board’s view, this acquisition provides Pearson and
learners with immediate access to high-quality, in-demand
content, broadens our capabilities to serve learners, and
allows us to quickly deliver comprehensive career-readiness
solutions and advance learning in this important area. It
positions Pearson as a leader in career-readiness education,
providing further value for learners in a high-demand area.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 89
On joining the Board, each Director completes a bespoke
induction programme that is guided by the Chair or Deputy
Chair and Senior Independent Director, supported by the
Company Secretary, and overseen by the Nomination &
Governance Committee. Every programme builds on the
particular skill set, attributes and background of the joining
Director, their interests in Board or Committee roles, and the
company’s recommendations.
In addition to background information on the company, every
induction covers a range of topics, including Board procedures,
recent operational performance and strategic direction of the
company, purpose and values, key areas of the business, as well
as directors’ duties and responsibilities. The Directors also
receive a comprehensive introduction to the activities of each of
the Board’s Committees, including their objectives and priorities,
and cover various governance-related issues and their legal
obligations, including procedures for dealing in Pearson shares.
A newly appointed Director will have met some, if not all, fellow
Board members as part of the original search and appointment
process, but additional meetings may nevertheless occur with the
same Board members as part of a rich and thorough induction.
Arden Hoffman joined the Board as Non-Executive Director on
1 June 2025 and Costis Maglaras joined the Board as Non‑
Executive Director on 1 November 2025. As part of their
onboarding arrangements, they each received comprehensive
and engaging induction programmes that included a series of
meetings with key colleagues and advisers. In addition to
sessions with the Chair, Chief Executive and Chief Financial
Officer, they met with each member of the Pearson Executive
Management team, key representatives of our corporate
functions and our brokers. The induction programmes also
included one-to-one meetings with each of their fellow
Non-Executive Directors and a comprehensive introduction to
the activities of each of the Board’s Committees, including
their objectives and priorities. They also held meetings with the
company’s legal advisers to discuss directors’ duties,
corporate governance and external reporting, among other
topics. The inductions also afforded the new Board members
the opportunity to engage in deeper dives in areas of particular
interest. In the lead-up to his appointment, Costis also
attended certain strategy-focused sessions with the Board.
Induction programme participants Meeting purpose
Chair, Deputy Chair and Senior
Independent Director
Introductory meetings to cover the company’s governance structure, the Board’s priority
areas and ways of working, meeting cadence and ongoing matters considered by the Board.
Chairs and members of the Board’s
Committees
Overview of the responsibilities and composition of the Board’s Committees, their
governance, regular attendees and advisers.
Executive Directors;
Business Unit Presidents
Overview of the strategic priorities of the company and each business unit, key performance
indicators, financial performance and projections, and competitive landscape.
Heads of corporate functions Introductions with leadership team members, covering an overview of their business
area(s), subject matter expertise, organisational structure, company culture and values.
Company Secretary;
legal advisers
Induction planning, governance framework, Board and Committee matters, duties and
responsibilities of a company director, the company’s policies and procedures, and
other legal and regulatory considerations.
Directors’ induction
Typical Board induction programme
Costis
Maglaras
Arden
Hoffman
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 90
Board performance review
The Board employs a variety of
methodologies for performance
reviews to ensure the most
effective results.
Following an externally facilitated review in 2023,
conducted by Manchester Square Partners, and an
internally facilitated review in 2024, led by the Deputy
Chair and Senior Independent Director, the 2025 review
was again internally facilitated.
Typical performance review methodologies
Methodology Last undertaken
Questionnaire, tailored to specific
needs of the business
2025
Internally facilitated interviews, led by
the Chair, Deputy Chair and Senior
Independent Director, and/or
Company Secretary as appropriate
2024
In-depth evaluation,
externally facilitated
2023
Approach and methodology
The 2025 performance review was carried out by way of a
tailored questionnaire which focused on matters that are
relevant to Pearson in particular, as well as those items laid
down in the Code and associated guidance, including:
• Articulation and implementation of purpose and strategy
• The effectiveness of the organisation and dynamics of the
Board, including composition, leadership, agendas,
meeting cadence, quality of information provided,
governance and decision-making
• Relationships between the Board and senior leaders, and
between members of the Board itself, including the remits
of and interaction among the respective Committees and
with the Board
• Succession planning and talent pipeline for Executive
Directors and other senior leaders
• Understanding of risks facing the company, including
likelihood and mitigation
• Understanding of stakeholder views, products and markets
• The Board’s monitoring of organisational culture,
behaviours and employee sentiment
The full Board reviewed the findings from the performance
review at its meeting in February 2026. In reporting back to the
Board, it was noted that the feedback was positive, with
unanimous agreement that the Board operates effectively. The
Board will develop an action plan to address areas of focus,
and the Nomination & Governance Committee will monitor
progress during the year.
Board performance
review process
The format of the review was
agreed by the Nomination &
Governance Committee
The scope of the review was finalised
by the Chair with support from the
Company Secretary
The Directors completed a tailored
questionnaire on a confidential and
unattributable basis
The output of the performance review
was captured in a report to the Board in
February 2026, with the Board then
discussing the points raised by the review
Progress on the findings of the
performance review will be monitored by
the Nomination & Governance
Committee throughout 2026
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 91
Key findings
• Directors are highly engaged, with a good balance of
relevant and recent experience. The Board further
acknowledged the open and collaborative atmosphere at
Board meetings, which encourages constructive challenge
and collaborative decision-making
• The Board acknowledged its confidence in the Chief
Executive’s execution capability and the quality of his
relationship with the Board. Directors noted the positive
alignment between the Board and management and the
effective mechanisms in place for engagement between
employees and the Board
• The Board noted the success of the Chief Executive
transition in 2023/24, supporting the development and
roll-out of the company’s strategy, together with the
Board’s continued oversight and constructive challenge on
strategic implementation and material decisions
• Directors noted the effective leadership of the Board’s
Committees which also fostered strong discussions and
outcomes at the Board
There was unanimous agreement that the Chair leads the
Board in an effective manner, fulfilling Principle F of the Code.
The Directors agreed that Mr Kordestani has a distinctive and
thoughtful style, promotes open discussion that leverages the
Board’s collective expertise and ensures the Board is focused
on the most critical and value-creating topics. The Directors
further noted their appreciation of the relationship between Mr
Kordestani and the Chief Executive. This, in turn, supports the
Non-Executive Directors in fulfilling the requirements of
Principle H of the Code in providing constructive challenge
and strategic guidance, offering specialist advice and holding
management to account.
The main areas identified by the Board for particular focus
during 2026 were:
• Continued attention to succession planning and talent
pipeline at Pearson Executive Management level
• Ongoing focus on strategic execution, capital allocation
and strategic partnerships
• Additional attention to deeper market analysis, including
competitive positioning and market trends
• Continued focus on AI developments across the entire
business and oversight of product development progress
• Ongoing oversight of risk management practices and risk
control, with particular focus on cyber risks, business
continuity planning and crisis management
• Continued attention to Board composition and
succession planning
In addition to the annual performance review exercise, the
Chair meets regularly with the Non-Executive Directors and
these sessions include reciprocal feedback on the functioning
of the Board.
Individual performance reviews
In addition to the performance review of the Board as a whole,
Executive Directors are evaluated each year on their overall
performance against goals agreed by the Board, and in
respect of strategic measures under the company’s annual
incentive plan. These goals are linked to the key financial
and strategic objectives of the company. Progress against
each of these metrics is reviewed by the Board on a regular
basis, as part of a dashboard of financial and strategic
performance measures.
The Chair engages with individual Non-Executive Directors on
their performance and contributions, and encourages open
channels of communication with Directors on an ongoing
basis. In the Board’s opinion, these ongoing lines of
communication, combined with a Group-wide culture which
allows and encourages feedback at any time, provide the most
effective means for review of performance. In assessing the
contribution of each Non-Executive Director, the Chair, with
the support of the Nomination & Governance Committee, has
confirmed that each continues to make a strong contribution
to the business and deliberations of the Board. The Non-
Executive Directors also conduct an annual review of the
Chair’s performance, with the Deputy Chair and Senior
Independent Director leading this review and providing
feedback to the Chair, and an annual review of the Deputy
Chair and Senior Independent Director’s performance, which
is led by the Chair.
Committee performance reviews
All Committees undertake a review of their performance and
effectiveness on an annual basis. For 2025, Committee
members and other key contributors to the Committees were
invited to provide their views by way of questionnaires tailored
to the specific remit of each Committee.
The findings from this process were considered by each
Committee at their December 2025 meetings. The
Committees were considered by their members to be
working well. Read more in the Committee reports on the
pages that follow.
Board performance review continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 92
Progress on findings of previous performance review
A number of actions were taken during the year in response to findings from the 2024 performance review, as set out below. The Board has confirmed that these items were addressed to its
satisfaction, with recommendations having been put into practice or a clear action plan identified for each to be taken forward in 2026.
Finding or focus area Response or action taken
Continued focus on open and honest reflections and
candid conversations at Board level, to ensure that the
Board is consistently providing constructive challenge,
airing the right issues at the right time.
Management and the Board maintained an open and transparent dialogue throughout the year, both during and outside Board
meetings, with management regularly inviting challenge and advice. The 2025 performance review confirmed that this open
dialogue has been maintained and that the Board’s decision-making process is strong and collaborative.
Ongoing focus on applying customer, product
and competitor lenses to Board discussions, and
ensuring that key themes of technology and AI are
consistently discussed.
At the Board meeting in June 2025, which focused on the company’s strategy, the Board received a number of insights from
customers and stakeholders, reflecting extensive interview research, as well as a review of Pearson’s competitive landscape and
business context. This included, and other Board discussions regularly include, insights on the impact of technology on Pearson
and the industry and how the company is responding. In support of this ongoing focus, Board members will be given further
opportunities to participate in management-led sessions on these subjects going forward.
The strategic risk deep dives presented by the business units to the Board throughout the year included the impact of technology
and AI in particular, as well as cyber security risks.
Continued development of M&A radar scanning for the
Board to ensure a clear, long-term view of inorganic
growth opportunities.
Building on the strategic review process in 2024, as part of the Board meeting focused on strategy in June 2025 management
presented to the Board on inorganic priorities and mapping to growth plans, together with a pipeline of potential targets, in
support of the company’s inorganic strategic rationale. Management and the Board will continue to give this due focus in 2026.
Continued attention to succession planning and talent
pipeline at Pearson Executive Management level.
Management emphasised their focus on succession planning and talent pipeline during 2025, reporting to the Board on the
implementation of talent talks, where the Chief Executive and Chief Human Resources Officer reviewed the shape of the
organisation, its culture, top talent and the succession pipeline with each member of the Pearson Executive Management team.
The Board was provided with an in‑depth update on this work at the December 2025 Board meeting.
When considering future Non-Executive Director
appointments, the Board should be mindful of
succession planning for the Remuneration and Audit
Committees, in preparation for the anticipated end of
Sherry Coutu and Graeme Pitkethly’s Board service
in 2028.
The Board ensured that appropriate staffing of the Remuneration and Audit Committees formed part of the Non-Executive
Director succession planning pursued in 2025, through the appointment of Arden Hoffman in June 2025, who has skills and
experience that are strongly complementary to the Remuneration and Reputation & Responsibility Committees, and the
appointment of Costis Maglaras on 1 November 2025, who has succeeded Lincoln Wallen on the Audit and Reputation &
Responsibility Committees.
The Nomination & Governance Committee will continue to give due consideration to succession planning for upcoming
Board retirements.
Monitor the refresh of the company’s strategic goals and
KPIs as a result of the strategic review process and how
these are embedded and reported by the company.
In January 2025, the Board was provided with an update on the proposed evolution of the company’s strategic KPIs, with the
proposed focus on particular ‘power metrics’ to track strategic progress more effectively, in addition to more granular KPIs and
analytics. Those power metrics were then launched publicly at the company’s Preliminary Results presentation in February 2025
and the regular performance dashboard provided to the Board was also updated to reflect the new power metrics.
The Board also receives regular updates, through a combination of a regular dashboard and deeper dives, on the ongoing
implementation of the strategic initiatives identified from the strategic review process.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 93
Nomination & Governance Committee report
Principal Committee responsibilities
Appointments
Identifying and nominating candidates for Board vacancies.
Balance
Ensuring that the Board and its Committees have the
appropriate balance of skills, experience, independence and
knowledge tooperate effectively.
Succession
Reviewing the company’s leadership needs with a view to
ensuring the continued ability of the organisation to compete
inthe marketplace.
Governance
Reviewing and overseeing Pearson’s corporate governance
framework, Board performance review and training plans,
andthe Board DiversityPolicy.
Terms of reference
The Committee has written terms of reference which clearly
set out its authority and duties. These are reviewed annually
and canbe found on our website (plc.pearson.com).
Committee members and attendance
Attendance by Directors at scheduled Nomination &
Governance Committee meetings throughout 2025:
Committee members Meetings attended
Sherry Coutu CBE 2/2
Omid Kordestani 2/2
Esther Lee
1
1/2
Graeme Pitkethly 2/2
Annette Thomas 2/2
1. Esther Lee was unable to attend the meeting held in February 2025 due
to a pre-existing commitment. She reviewed the papers and provided
her perspectives to the Committee Chair outside the meeting.
Role and composition of the Committee
The Committee monitors the composition and balance of the
Board and of its Committees, identifying and recommending to
the Board the appointment of new Directors and/or Committee
members. The Committee has oversight of the company’s
compliance with, and approach to, all applicable regulation and
guidance related to corporate governance matters.
TheCommittee is also available to support the Board as needed
in relation to talent and succession plans for senior roles.
The Committee currently has five members, including me as
Chair. The Chief Executive, Chief Financial Officer and other
senior management, including the Chief Human Resources
Officer, attend Committee meetings by invitation.
As Committee Chair, I am available to engage with any
shareholders who would like to discuss the work of the
Committee and look forward to taking any shareholder
questions at our forthcoming AGM in May 2026.
Omid Kordestani
Chair
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 94
Board succession planning, skills
andexpertise
A key element of the Committee’s remit is to lead the process
for Board appointments in line with appropriate succession
plans. The matter of Chief Executive succession is a regular
item for discussion and is reviewed by the Board on an annual
basis. Thecompany also has contingency plans in place for the
temporary absence of the Chief Executive for health or other
reasons. Succession planning for the Board as a whole
isconsidered at least annually by the full Board, and on an
ongoing basis by the Committee.
The Committee has defined a set of specific criteria for
potential new Non-Executive Directors, in particular giving
consideration to the skills, experience, knowledge and
aptitude required in any candidates. Pearson expects all
Non-Executive Directors to demonstrate the highest level of
integrity and credibility, independence of judgement, maturity,
collegiality and also a commitment to devote the necessary
time to the company’s business.
As part of the Committee’s regular succession planning
activity, all Board members are asked periodically to complete
a self-assessment of the skills and experience which they
believe they each bring to the Board. The assessment focuses
on those categories of skills and experience which are relevant
to Pearson’s strategy, business model and particular
organisational characteristics. When mapped against
expected retirement dates, the assessment helps the
Committee to identify the areas where it may need to focus
any future search activity.
The results of the most recent assessment (shown on page 97)
demonstrate that Pearson has a strong spread of skills across
all areas identified as being of particular importance.
Board search processes and appointments
The Committee has been very active over the past year in
relation to Board search activity, conducting search processes
resulting in the appointment of two new independent Non-
Executive Directors, Arden Hoffman and Costis Maglaras.
Before commencing the Non-Executive Director search
process, the Committee considered the recent and
anticipated Board retirements and the impact of these on the
overall skills and expertise on the Board. These were mapped
against the key areas of strategic importance to the business
to ensure our Board has the appropriate balance of skills and
experience to deliver our strategy, while also taking diversity
considerations into account. The Committee agreed that it
was particularly interested to identify two candidates who
would collectively bring a combination of skills and expertise in
the following areas:
• A senior executive with operating experience at scale and in a
company or sector with insight into how enterprise customers
would benefit from Pearson’s products and solutions
• An active or recently retired executive leader of a publicly
traded company and a track record of success leading a
company at scale and with a global footprint
commensurate to Pearson’s
• Proven experience developing innovative products
and/or driving digital business transformation through
the development of game-changing, customer-
centric strategies
• A strong understanding of the latest advancements in AI,
machine learning and relevant emerging technologies to
ensure the organisation remains at the forefront of innovation
Taking into account the agreed specification, the Committee
engaged Spencer Stuart to undertake a search process for
new Non-Executive Directors, who ensured that the search
process had due regard to our regulatory obligations and
Provision 23 of the UK Corporate Governance Code. As
Committee Chair, I worked closely with Spencer Stuart to
develop the candidate lists, with the Committee then
considering the candidate profiles in detail, including their
current commitments, skills and previous experience. I met
with all shortlisted candidates and provided my feedback to
the Committee. A number of other Board members met with
the preferred candidates, following which the Committee
made its recommendation to the Board.
The search processes culminated in the appointments of
Arden Hoffman and Costis Maglaras as Non-Executive
Directors with effect from 1 June 2025 and 1 November 2025
respectively. You can read about their induction on page 90.
Both Arden and Costis’s expertise will prove invaluable as
Pearson continues to execute against its strategy and will
further enhance the skill set of our Board. Both will seek
election at the 2026 AGM, being the first AGM following their
appointment.
In addition to the Non-Executive Director search process,
Spencer Stuart also undertakes broader executive search
activity for the Group and is a signatory to the Voluntary Code
of Conduct for Executive Search Firms. Spencer Stuart has no
connection with Pearson or members of the Board beyond its
expertise in board and executive search.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 95
Executive succession planning
Succession planning for key positions at Pearson Executive
Management level is primarily overseen by the full Board,
with support from the Committee. The Pearson Executive
Management team has a key role to play in our strategic planning
process, in the ongoing development of our talent pipeline and in
fostering the culture and values required to continue to deliver on
our strategy. In December 2025 the Board conducted a review of
talent and succession planning. The Board considered each
Pearson Executive Management role in some detail and
discussed the leadership performance and any development
opportunities for those in post, looking also at the immediate and
longer-term succession pipeline for each Pearson Executive
Management position.
The revised UK Corporate Governance Code
The revised UK Corporate Governance Code 2024 applied to
Pearson from the 2025 financial year, with the exception of the
revisions to Provision 29 which will apply from the 2026 financial
year. The Committee oversees the company’s compliance with
the UK Corporate Governance Code and reviews a status tracker
to enable it to consider the appropriateness and maturity of
various elements of our governance framework and to monitor
any areas of qualified or non-compliance. Learn more about
Pearson’s compliance with the 2024 Code on page 71.
The most significant changes to the Code, set out in Section 4 of
the Code, relate to audit, risk and internal control matters and
therefore the response to these elements is being overseen by
the Audit Committee – more information on this can be found on
page 110.
Other areas of focus during 2025
Other areas of focus for the Committee during the year
included: oversight of the composition of the Board’s
Committees, assessment of the independence of Lincoln
Wallen prior to making a recommendation for his re-election at
the 2025 AGM (recognising his length of service on the Board),
oversight of the approach to the Board’s annual performance
review, oversight of the induction process for our two new
Non-Executive Directors, and the annual review of the
contribution of each Director to the Board.
Committee performance review
The Committee undertakes an annual process to review its
performance and effectiveness. For 2025, feedback relating
to the Committee was sought from Directors by way of a
tailored questionnaire. Topics covered included the
effectiveness and dynamics of the Committee, oversight of
key areas within the Committee’s remit, the quality of papers
and meeting discussions, and the relationships between the
Committee and management.
The findings of the 2025 review indicated that the Committee
is considered to be working well with appropriate agendas,
papers produced to a good standard and high-quality
discussions, noting Board composition and succession
planning as a particular area of focus for the Committee.
You can read about the Board performance review on page 91.
Committee aims for 2026
The Committee’s priorities for the coming year will be to
commence a Non-Executive Director search process to
prepare for upcoming retirements from the Board and to
plan and oversee the next externally-facilitated Board
performance review.
Omid Kordestani
Chair of Nomination &GovernanceCommittee
Nomination & Governance Committee report continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 96
Nomination & Governance Committee report continued
Skills matrix
This matrix represents the Directors with skills or experience in areas that are relevant to Pearson’s strategy, business model and organisational characteristics. Directors have assessed themselves
against each theme and, for those which they bring to the Board, have identified whether they believe each to be one of their core or supplemental capabilities.
Omar
Abbosh
Sherry
Coutu CBE
Alison
Dolan
Alex
Hardiman
Arden
Hoffman
Sally
Johnson
Omid
Kordestani
Esther
Lee
Costis
Maglaras
Graeme
Pitkethly
Annette
Thomas
Operating context and future trends
Technology (cloud, infrastructure, product,
engineering, AI, cyber security)
Enterprise skilling and
workforce transformation
Education and learning
Government and policy
Challenging and supporting management in shaping strategy
Branding and marketing
Global markets, scale and complexity
Corporate strategy (value creation, M&A,
capital markets, sustainability)
Current and/or prior CEO experience
Good company governance
Accounting, finance and controls
People and remuneration
Listed company governance and regulation
Core skill – one of the strongest areas of the Director’s skill and expertise. Their knowledge or experience of this area brings considerable value to Board discussions.
Supplemental skill – an area where the Director is competent or has experience, but is not one of the primary skills or attributes they bring to the Board.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 97
A representative Board
The Board notes the UK Corporate Governance Code’s
underlying principles with regard to Board balance and its
principle of promoting diversity, inclusion and equal
opportunity. Research indicates that high-performing boards
provide an increased competitive advantage and wider
perspectives, while the needs for greater inclusion continue to
influence global trends.
We are determined that, as a Board, we must be representative
of our employee base and wider society, including the
countries in which we operate.
The Nomination & Governance Committee ensures that the
Directors of Pearson demonstrate a broad balance of skills,
background and experience, to support our strategic
development and reflect the global nature of our business. In
accordance with Principle J of the UK Corporate Governance
Code, our Board search processes always consider a wide
range of candidates, with varied skills, thought, experience and
background, all of whom are evaluated on the basis of merit. In
any Non-Executive Director search processes, the Nomination
& Governance Committee encourages the retained search
firms to place an emphasis on putting forward candidates from
a range of backgrounds and we prioritise the use of search
firms which adhere to the Voluntary Code of Conduct for
Executive Search Firms.
The Nomination & Governance Committee reviews and
monitors the company’s progress against the objectives which
underpin the Board Diversity Policy.
The objectives that support the Board Diversity Policy, and
which underpin Pearson’s commitment to creating a more
equitable and inclusive company, incorporate the
requirements under the Financial Conduct Authority’s UK
Listing Rules and include:
• at least 40% female directors
• at least two directors from an ethnic minority background
• at least one of the Chair, Chief Executive, Deputy Chair
and Senior Independent Director or Chief Financial Officer
is a woman
The Committee is pleased to confirm that all three of these
targets have been met. In accordance with UK Listing Rule
6.6.6R(9), as at 31 December 2025, 58% of Directors were
women (2024: 60%), the Board included four Directors from an
ethnic minority background and the Chief Financial Officer role
was, and is currently, held by a woman. As at 12 March 2026,
these targets continue to be met.
The Nomination & Governance Committee adopts a
principles-based approach to diversity on the Board’s
Committees. It is recognised that it is not necessarily practical
to set meaningful metrics or targets for diverse membership of
Committees due to the notably smaller membership of each of
the Committees compared to the size of the Board.
Accordingly, our principles-based approach endorses the
importance of bringing varied perspectives to all areas of the
Board and Committees’ work. As an example of this principles-
based approach in practice, as part of its regular Committee
succession planning activity, the Nomination & Governance
Committee considers the gender and ethnic balance on each
Committee when assessing its composition and future needs.
The Board will continue to adopt best practice, as appropriate,
in response to the Financial Conduct Authority requirements,
the FRC’s guidance, Parker Review and FTSE Women Leaders
Review.
Talent at executive level
As at 31 December 2025, five members of our Pearson
Executive Management team of 11, excluding the Chief
Executive and Chief Financial Officer who are counted in the
Board’s metric, were women (45%) (2024: 45%). Including the
Chief Executive and Chief Financial Officer, this ratio was 46%
(six women out of 13 members) (2024: 46%). As of 31
December 2025, the group comprising the senior
management team (as specified by the UK Corporate
Governance Code, i.e. the Pearson Executive Management
team and the Company Secretary) and the Pearson Executive
Management team’s direct reports contained 62 women,
representing 48% of that group (2024: 52%). These figures are
reported as at 31 December 2025, in accordance with Section
414C of the Companies Act 2006. For figures as at the date of
this report, please see page 78.
In response to the Parker Review’s requirement for listed
companies to set an ethnic diversity target in respect of senior
management positions, the Committee approved a target of
20% of Pearson’s senior management positions to be
occupied by ethnic minority individuals by December 2027.
As at 31 December 2025, the senior management team,
as defined above and based in the UK, contained seven
individuals who identify as minority ethnic, representing
15% of that group, who have provided the company with
ethnicity data.
Fordiversitydata in the format prescribed by UKLR 6.6.6R(10),
please see page 53.
Nomination & Governance Committee report continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 98
Reputation & Responsibility Committee report
Principal Committee responsibilities
Stakeholders
Monitoring reputational issues that could significantly
affectPearson’s reputation with stakeholders, including
shareholders, customers, employees, educational institutions
and educators, employers, governments and regulators,
communities and civil society, and business partners.
Overseeing Pearson’s approach to thought leadership in
respect of important issues, and attention to political
and cultural perspectives in the landscape in which
Pearson operates.
Sustainability
Overseeing Pearson’s sustainability strategy, guided by the
Learning for Impact framework and including: sustainability-
related risks and opportunities; approval of, and monitoring
performance towards, targets and public commitments;
regulatory landscape, reporting and ratings; and sustainability
due diligence in our supply chains and business partnerships.
Responsible AI
Overseeing Pearson’s application of AI with a focus on: the
identification of AI-related risks (e.g. biases, IP protection);
managing transparency and accountability in AI systems;
creation and implementation of Responsible AI principles
andpromotion of AI ethics across the organisation;
monitoringof AI practices; and Pearson’s response
toexternalregulatory requirements.
Communications and regulatory matters
Overseeing Pearson’s communications, strategies, policies
and plans related to reputational issues and the people,
processes and policies that are in place to manage them.
Branding
Overseeing the way in which the company’s brands are
managed and promoted to ensure that their value and the
company’s reputation are maintained and enhanced.
Risk
Monitoring Pearson’s approach to the reputation aspects
ofthe risk register and ensuring that clear roles have been
assigned for the management of these.
Terms of reference
The Committee has written terms of reference that clearly
set out its authority and duties. These are reviewed annually
and can be found in the Governance section of our website
(plc.pearson.com).
Committee members and attendance
Attendance by Directors at scheduled Reputation &
Responsibility Committee meetings throughout 2025:
Committee members Meetings attended
Alex Hardiman 3/3
Arden Hoffman
1
2/2
Esther Lee
2
1/1
Graeme Pitkethly 3/3
Annette Thomas 3/3
Lincoln Wallen
3
3/3
1. Arden Hoffman was appointed to the Committee with effect from
1 July 2025.
2. Esther Lee was appointed to the Committee with effect from
1 August 2025.
3. Lincoln Wallen stepped down from the Board and the Committee
on31December 2025.
Annette Thomas
Chair of Reputation
& Responsibility
Committee
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 99
Reputation & Responsibility Committee report continued
Reputation & Responsibility
Committee role
The Committee works to assess and advance Pearson’s
reputation across the range of its stakeholders and to
maximise the company’s positive impact on the society in
which we work and serve.
We are the main governance body for responsible and ethical
business practices at Pearson, and we assess progress
towards the company’s sustainability priorities and
commitments. As part of this work, we provide ongoing
oversight and scrutiny across all reputational matters, including
climate change considerations, brand, government relations
and safeguarding. In late 2024, we refreshed our remit to
increase and codify our focus on thought leadership and
Responsible AI, reflective of Pearson’s commitment to these
areas. These themes featured prominently in our work
throughout 2025, and you can read more about some
oftheaspects we considered below.
The Committee’s principal responsibilities are summarised
onpage 99 and you can read about our overall Board
framework forsustainability governance, including the related
work of other Committees, on page 85.
The full Board is kept abreast of the Committee’s work through
reports I make following each of our sessions. These reports
include highlighting any material discussion or decision points
or areas of concern and offering specific recommendations
for the Board’s action.
As Committee Chair, I am available at any time to engage with
any shareholders who would like to discuss the work of the
Committee and particularly look forward to taking any
shareholder questions at our forthcoming AGM in May 2026.
Committee composition and attendees
The Committee currently has six members, including me as
Chair. On behalf of the Committee, I offer my sincere thanks
toLincoln Wallen, who stepped down from the Pearson Board
inDecember 2025, for his significant contributions to the
Committee’s work during his tenure. During the year, the
Committee was pleased to welcome Arden Hoffman and
EstherLee as new members, each of whom is already making
avaluable contribution and bringing fresh perspectives to the
Committee’s work. Additionally, Costis Maglaras has joined the
Committee with effect from January 2026.
Together, Committee members bring a range of expertise
across key areas of our remit, including sustainability, product,
education, stakeholder management, AI, and policy and
government relations. Youcanread more about the Committee
members’ skills andexperience on pages 72-74.
Pearson’s Chief Executive, Omar Abbosh, is a standing
attendee at every meeting of the Committee, and we also
benefit from the regular attendance of other senior executives
whose work is central to the remit of the Committee. These
include the General Counsel, who is the executive leader
responsible for the development, monitoring and execution
ofPearson’s sustainability strategy; the Chief Marketing
Officer; and Executive Partner, Corporate Communications.
Learning for Impact framework –
activitiesin 2025
Throughout the year, the Committee paid particular attention
to our sustainability strategy, including how it aligns to our
greatest areas of opportunity and challenge as a business,
andhow to communicate its tenets to all our stakeholders
inaclear and impactful way.
As described in greater detail in our Sustainability report
starting on page 32, our Learning for Impact framework
comprises three pillars that drive value for our stakeholders
and represent the areas where we can make the biggest
positive impact:
• Driving learning for everyone
• Empowering our people to make a difference
• Leading responsibly for a better planet
These areas are strategically significant to Pearson’s long-term
success and are supported by Pearson’s robust corporate
governance, strong culture and a suite of effective policies
and practices to help us in achieving our ambitions.
The Committee receives regular updates from management
on progress against the priorities of the sustainability strategy
and initiatives that support its delivery. Over the past year, key
activities of the Committee in relation to our three Learning for
Impact framework pillars included the following:
• At each meeting, we received a report on recent incidents
and issues that could have an impact on Pearson’s
reputation, including those relating to our products and
business partners. We considered the company’s responses
to coverage on social media and in traditional media,
including paying particular attention to our protocols for
responding to questions about our content, the integrity with
which we handle such situations and any lessons learned
• We considered management’s incident response protocol,
recommending a codification of the Chief Executive’s role
in notifying the Board of any significant matters.
Wereceived an update on use of the incident
managementframework over the previous 12 months
• We endorsed Pearson’s new social media policy and noted
a new protocol to guide employees in their online activity
and digital communications. This four-pronged protocol
prioritises our customer-centric approach, while also
supporting Pearson’s growth, talent attraction and
retention, and legal compliance
• We noted the results of our latest review of content
throughout our physical textbooks and digital titles ahead
of the Fall 2025 back-to-school season. Reviews such as
this seek to ensure that our materials remain in line with our
Global Quality Standards that support our employees and
business partners to deliver accurate, trusted, evidence-
based learning experiences that meet our user-centred
anddata-led standards of excellence
• We noted how Pearson’s approach to sustainability and
social value is directly aligned to our overall goal of scaling
enterprise revenues, with skills, early careers and
accreditation – as key drivers of economic value – being
differentiators for Pearson in our commercial proposals
• We conducted two deep dive sessions into Responsible
AI(RAI), which has been a significant focus area for the
Committee and for Pearson more broadly over the past year.
We assessed Pearson’s progress in providing safe, inclusive
and legally compliant AI-enabled learning environments
through attention to Pearson’s RAI principles and strategy.
We noted the latest assessment of Pearson’s AI governance
maturity, where a comprehensive RAI framework has been
established that adheres to the standards of the NIST AI Risk
Management Framework and the EU AI Act, among others;
and we provided challenge on the balance between the
human and automated elements of the proposed control
framework. We also considered the cultural behaviours and
cross-functional collaboration that will help position RAI as
adifferentiator for Pearson, assessing the extent to which RAI
might be used to accelerate growth and enhance efficacy,
while also minimising risk
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 100
• We continued to monitor long-term climate targets, progress
against short-term decarbonisation activities, andan
increased focus on energy efficiency and renewable
electricity consumption. As part of this, we noted the ongoing
work to assess the environmental footprint of emerging
technology, particularly AI, to ensure that innovation advances,
rather than compromises, our environmental objectives
• We conducted our annual review of health and safety (H&S)
at Pearson, reviewing a report on the H&S programme’s key
principles, operating models, incident data, future
legislative developments and priorities for 2026
• We undertook our annual safeguarding and online harms
review. In particular, we considered the company’s
operational structure, policy approach and escalation
procedures, together with actions undertaken by
management to continue to enhance our safeguarding
framework. Weconsidered how Pearson utilises a ‘safety by
design’ approach in applying innovative technologies, with
our Trustand Online Safety team embedded in the product
development process. We also endorsed a programme
ofwork to further strengthen our processes around
recruitment and training of staff in the safeguarding space
Sustainability governance and policies
The Committee recognises that robust governance, a strong
culture and effective policies are essential to the successful
delivery of our sustainability framework.
During the year, we noted the announcement of the EU’s
‘Omnibus’ package which seeks to drive comprehensive
deregulation activity in sustainability reporting. The changes
resulting from Omnibus include the delayed implementation
for Pearson of certain reporting and assurance requirements,
as well as reductions in scope and the level of detail required in
a variety of regulatory provisions. Accordingly, Pearson has
adopted a revised approach to its implementation of reporting
changes, prioritising activities required under new or existing
UK standards and legislation. As a result, the Committee’s
activity in this area included:
• Reviewing Pearson’s climate risk analysis, which outlines the
risks and opportunities that may impact the company’s
operations and resilience across various climate scenarios and
time periods. You can read more about this starting on page 45
• Endorsing continual improvement in quantitative data
accuracy in preparation for the increased data reporting
and assurance requirements in future years
In addition to our oversight of regulatory change and
preparedness, we:
• Noted management’s assessment of the latest analyst
rankings and ratings of Pearson’s sustainability
performance and credentials. Read more on page 34
• Reviewed the annual Modern Slavery Act statement with
management prior to recommending that the Board
approve the statement for publication. Read the statement
here: https://www.pearson.com/legal-information/
our-policies/modern-day-slavery.html
Other key areas of focus during 2025
In addition to the work relating to the three pillars of our
Learning for Impact framework, we spent time considering
abroader range of matters relating to Pearson’s reputation
and key stakeholders, including the following:
• With input from our government relations leads, we
reviewed the key areas of focus for the UK and US
governments relating to learning, education and skills.
Wediscussed broader governmental policy priorities, the
business implications of these and Pearson’s response,
both tactically and strategically. We also considered the
range of approaches through which Pearson engages with
governments and policymakers, emphasising Pearson’s
focus on enterprise, skilling, AI and innovation in education,
and improving learner outcomes
• Following the launch of Pearson’s new brand identity in April
2025, we received an update on employee and customer
engagement and response to the new brand. We also
discussed the way in which Pearson could highlight the impact
of its products and services through the use of real learner
success stories to demonstrate how learning can change lives
• Alongside our new brand, we considered how Pearson
isseeking to shape and activate its thought leadership
agenda by establishing company points of view on
significant topics, balanced with insights from enterprise
orresearch partners. These points of view are brought
tolifethrough marketing, policy engagement, product,
technology and innovation
Committee performance review
The Committee undertakes an annual evaluation to review
itsperformance and effectiveness. For our review in 2025,
Committee members and other key contributors to the
Committee were invited to provide their views on an
anonymous basis by way of a tailored questionnaire.
Topics covered in the review process included the effectiveness
and dynamics of the Committee, oversight of key areas within the
Committee’s remit, the quality of papers and meeting discussions,
and the relationships between the Committee and management.
Following the recent addition of Responsible AI to the Committee’s
remit, the review also sought participants’ deeper views on the
Committee’s role and key areas of focus in relation to this topic.
The Committee considered the findings from the review process
atits December 2025 meeting and concluded that:
• The Committee is functioning well with appropriate agendas,
papers produced to a good standard, a collaborative culture
and high-quality discussions
• The Committee responds proactively to emerging risks and has
benefited from a sharpened remit following the work to refocus its
terms of reference in 2024
• There is clear consensus that AI should remain a regular topic in
the Committee’s work plan, with members felt by management
to have already provided valuable input to Pearson’s ongoing
work in this area
Committee aims for 2026
Our priorities for the coming year include:
• Continued attention to Pearson’s effective integration of
Responsible AI practices, including through oversight of: the
embedding of practices into engineering and product
workflows; enhancing AI literacy across our employee base;
andestablishing robust, data-driven capabilities to underpin
confidence, trust and innovation
• Reviewing proposals to refresh Pearson’s brand architecture and
consideration of our thought leadership agenda for the coming year
• Remaining attuned to government policies relating to education
and skills and other public policy matters affecting Pearson,
andensuring that the company remains well placed to support
abreadth of learners and customers
• Continuing our close attention to sustainability matters,
including making progress towards our climate commitments,
while maintaining a sharp focus on the social impact of our
products and services
• Overseeing the effectiveness of material controls within our
remit, following the implementation of the new Provision 29 of
the UK Corporate Governance Code. You can read more about
Pearson’s preparations for the new Provision 29 in the Audit
Committee’s report on page 110
Annette Thomas
Chair of Reputation &Responsibility Committee
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 101
Audit Committee report
Principal Committee responsibilities
Financial reporting
The quality and integrity of Pearson’s financial reporting
andstatements and related disclosures, including significant
reporting judgements.
Policy
Group financial policies, including accounting and treasury
policies and practices.
External audit
External audit, including the appointment, qualification,
independence and effectiveness of the external auditors.
Internal audit, risk and internal control
Risk management and internal control framework,
includingoversight of the work and effectiveness
oftheInternal Audit function.
Compliance and governance
Legal and regulatory requirements in relation to financial
reporting and accounting matters, and oversight
ofcompliance programmes and investigations.
Terms of reference
The Committee has written terms of reference which clearly
set out its authority and duties. These are reviewed annually
and can be found in the Governance section of our website
(plc.pearson.com).
Committee members and attendance
Attendance by Directors at scheduled Audit Committee
meetings throughout 2025:
Committee members Meetings attended
Alison Dolan 4/4
Alex Hardiman 4/4
Graeme Pitkethly 4/4
Lincoln Wallen
1
4/4
1. Lincoln Wallen stepped down from the Board and the Committee
with effect from31December 2025.
Graeme Pitkethly
Chair of Audit Committee
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 102
Other prominent themes in the Committee’s work throughout
2025 included:
• Following publication of the revised UK Corporate
Governance Code (the Code) in 2024, we continued to
oversee preparations for the new requirements of Provision
29 relating to Pearson’s risk management and internal
control framework, with a particular focus on effectiveness
of our material controls (read more on page 110)
• Continued attention to the application of Pearson’s
accounting policies, key judgements and key areas of
estimation as described in the financial statements
• Oversight of management’s approach towards risk
identification and monitoring, including through periodic
reviews of Group-wide risk trends and mitigation
(readmoreon pages 55-69)
• Review of important areas such as data privacy, cyber
security and technology resilience. In addition to their
importance at a macro level, these are key factors in the
success of Pearson’s strategy and in ensuring we maintain
trusted relationships with stakeholders
The Committee also receives technical updates at each
meeting, including on matters such as accounting standards
and the audit, governance and external reporting landscape,
and members are able to request specific or personal training
as appropriate.
You can view the key activities of the Committee and read
more about our work in these areas on the pages that follow.
The Committee’s focus areas for 2026 will include:
• In the first year of applicability of expanded Code
requirements relating to risk management and internal
control, we will work closely with the Board and other
Committees to oversee the effectiveness of our material
controls through a detailed work plan
• With the external audit for 2026 being the fifth to be led
bythe current external audit partner, and accordingly
thefinal one permitted under independence requirements,
wewill focus on the external audit firm’s plans for lead
partner rotation
Audit Committee role and composition
The Committee has been established by the Board primarily
for the purpose of overseeing the accounting, financial
reporting, internal control and risk management processes
ofthe company and the external audit of the Group’s financial
statements. As a Committee, we are responsible for assisting
the Board’s oversight of the quality and integrity of the
company’s external financial reporting and statements, and
the company’s accounting policies and practices, and we
work to create a culture – both within the Committee’s work
and Pearson more broadly – which recognises the work of,
andencourages challenge by, the external auditors.
On behalf of the Committee, I offer my sincere thanks to
Lincoln Wallen, who stepped down from the Pearson Board
atthe end of 2025, for his significant contributions to the
Committee’s work during his tenure. With effect from 1 January
2026, we have welcomed Costis Maglaras as a new Committee
member, and we look forward to considering his perspectives
across many areas of the Committee’s remit.
Pearson’s Executive Partner, Internal Audit, Controls,
Compliance and Risk has a dual reporting line to the Chief
Financial Officer and to me, and both she and the external
auditors have direct access to the Committee to raise any
matters of concern and to report on the results of work
directed by the Committee. As Audit Committee Chair,
I ensure that the full Board is kept abreast of the business of
the Committee in a timely manner, including highlighting any
areas of concern or specific recommendations. I also work
closely with the Chief Financial Officer and senior financial,
risk, legal and internal audit personnel outside the formal
meeting schedule to ensure robust oversight and challenge
in relation to financial control, compliance, investigations and
risk management.
As Committee Chair, I am available to engage with any
shareholders who would like to discuss the work of the
Committee, including the scope or effectiveness of the
external audit. There were no requests from shareholders
during the year for any specific matters to be covered in the
audit. I look forward to taking any shareholder questions at our
forthcoming AGM in May 2026.
Audit Committee meetings and activities
At every meeting, the Committee considers reports on the
activities of the Internal Audit and Compliance functions,
including the results of internal audits, project assurance
reviews and fraud and whistleblowing reports. We also monitor
the company’s financial reporting and risk management
procedures, discuss the Group’s control environment, review
the work undertaken by the external auditors and consider any
significant legal claims and regulatory issues in the context of
their impact on financial reporting, each on a regular basis.
Members
As at the date of this report, the Committee comprises
four independent Non-Executive Directors, all of whom
have financial and/or related business experience due
tothe senior positions they hold or have held in other
listed or publicly traded companies and/or large
organisations. The Committee possesses a good
balance of skills and knowledge with competence and
experience covering all aspects of the sectors in which
Pearson operates and the company’s key markets.
Eachmember is ‘financially literate’ for the purposes
ofthe NYSE listing standards.
Graeme Pitkethly, Chair of the Committee since August
2022, is the Committee’s designated financial expert within
the meaning of the applicable rules and regulations of the
SEC, having recent and relevant financial experience as
required by the Code, and as a Chartered Accountant.
From2015 to 2023, Graeme was Chief Financial Officer
ofUnilever plc and is now a Non-Executive Director
ofSandoz Group AG and Chair of its Audit, Risk and
Compliance Committee and a Non-Executive Director
ofVerisure plc and Chair of its Audit and Risk Committee.
Graeme’s full biography is shown on page 74.
The qualifications and relevant experience of the other
Committee members are detailed on pages72-74. You
can read more on page 75 about the process through
which the Board assesses the independence ofNon-
Executive Directors.
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Audit Committee report continued
Additional meeting attendees
The Chief Executive, Chief Financial Officer, General Counsel,
Chief Technology Officer, other executives and senior managers
from across the business attended meetings during the year,
either as regular invitees of the Committee or to discuss particular
items of business.
This direct contact with key leadership augments the
Committee’s understanding of the issues facing the business as
well as helping to develop Pearson’s talent pipeline through
facilitation of Board-level engagement opportunities for those
leaders and managers below executive level. We also meet
regularly in private with the external auditors and with the
Executive Partner, Internal Audit, Controls, Compliance and Risk.
In addition to the Committee’s formal meeting schedule,
Imeet regularly with the external auditors, Chief Financial
Officer, General Counsel, and senior internal audit, controls,
legal and risk personnel in order to keep abreast of all relevant
matters within the Committee’s remit.
As Chair of the Committee, I am consulted as part of the
performance review and objective-setting processes for the
Executive Partner, Internal Audit, Controls, Compliance and
Risk, and I make recommendations on her remuneration to the
Remuneration Committee. This additional oversight is in line
with the Institute of Internal Auditors' Internal Audit Code of
Practice.
Committee performance review
The Committee undertakes an annual evaluation to review
itsperformance and effectiveness. For our review in 2025,
theCommittee evaluation process was conducted by way
ofatailored questionnaire. The process sought views on
ananonymous basis from Committee members and the Chief
Executive together with other key contributors
totheCommittee, including the lead external audit partner,
theChief Financial Officer, the Chief Technology Officer,
theExecutive Partner, Internal Audit, Controls, Compliance and
Risk, and the Executive Partner, Financial Reporting.
Topics covered in the review process included the
effectiveness and dynamics of the Committee, the
Committee’s oversight of key areas within its remit, the quality
of papers and meeting discussions, and the relationships
between the Committee and management.
Reflecting the requirements of the FRC’s Minimum Standard as
incorporated into the Code, the review also sought views on
the Committee’s role in overseeing the external auditors,
includingthe Committee’s role in assessing the quality
andeffectiveness of the external audit and creating
aculturewhich encourages challenge.
The Committee considered the findings from the review
process atits December 2025 meeting, including the following
keypoints:
• The Committee is considered by Directors and other
contributors to be performing effectively with appropriate
agendas, papers produced to a good standard, and open,
candid discussions at the meetings
• The composition of the Committee is appropriate and
includes the necessary skills. Roles and responsibilities
areclear and the Committee is considered to have
acollaborative culture
• A high quality of debate and challenge is demonstrated
bythe Committee, including in respect of complex
accounting matters or judgements, and the Committee
iseffective at reviewing the quality and integrity of the
Group’s financial reporting and at holding management
toaccount in this area
• The Committee provides effective oversight of the quality
and effectiveness of the external audit process and of the
external auditors themselves, and creates a culture which
recognises the work of and encourages challenge by the
external auditors
• The Committee has a significant remit and it is important to
continue to allocate appropriate time across key risk areas
including technology, data privacy and cyber security
• Partnership with the Reputation & Responsibility Committee
continues to be key in covering complex topics such as AI,
sustainability assurance and non-financial reporting, and
business resilience
You can read more about the review of audit quality and
effectiveness and the FRC Minimum Standard on pages
111-112.
Fair, balanced and understandable reporting
In response to the Code’s Principle N, the Committee
considered whether the 2025 annual report is fair,
balancedandunderstandable. In making this assessment,
weconsidered the following areas:
• The process for preparing the report, including the
contributors, the internal review process and how feedback
is addressed throughout the process
• The business review narratives presented for each
business area
• The discussion of reported and underlying results
throughoutthe report
The Committee was satisfied that, taken as a whole, the annual
report is fair, balanced and understandable. We reported this
conclusion to the Board.
Learn more about fair, balanced and understandable
reportingon page156.
Financial reporting and policies
In February 2026, the Committee considered the 2025
preliminary results announcement and annual report and
accounts, including the financial statements, Strategic report
and Directors’ report. The significant issues considered
bytheCommittee relating to the 2025 financial statements
areset outon pages 114-116.
Correspondence with the Financial
ReportingCouncil
In October 2025, Pearson received a letter from the Financial
Reporting Council (FRC) confirming that it had completed
areview of the company’s 2024 annual report and accounts.
There were no questions or queries to which the FRC required
aformal written response. A number of matters were raised
regarding possible improvements to our existing disclosures.
These have been addressed in the 2025 annual report where
material and relevant.
The FRC’s role is to consider compliance with reporting standards
and not to verify the information provided. Therefore, given the
scope and inherent limitations of their review, which does not
benefit from any detailed knowledge ofthe Group, it would not
be appropriate to infer any assurance from their review.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 104
Audit Committee meeting focus during 2025
Area of Committee remit
Financial and non-financial reporting Policy and finance operations External audit Internal audit, risk and internal control Compliance and governance
Matters
considered
• Significant issues reporting(p114)
• Fair, balanced and
understandable reporting(p156)
• Going concern and viability
statements including supporting
analysis (p69and p153)
• Impact of legal claims
andregulatory issues on
financial reporting
• Annual report and accounts;
preliminary announcement and
financial statements
• Review of interim results
• Form 20-F and related
disclosures, including annual
Sarbanes-Oxley Act Section 404
attestation of financial reporting
internal controls
• Accounting and technical updates
• Sustainability assurance planning
• Accounting matters and
Group accounting policies
• Treasury Policy and reporting
• Tax update
• Report on half-year
review procedures
• 2025 external audit plan
• Review of the effectiveness
of external auditors (p111)
• Receipt of UK and US
auditors’ reports
• EY findings on internal
controls over financial
reporting (ICFR)
• Confirmation of auditors’
independence
• Provision of non-audit
services by external auditors
– approval of policy and
regular reporting (p113)
• Re-appointment of
external auditors
• Remuneration and
engagement letter of
external auditors
• Internal audit activity reports
andreview of key findings (p108)
• 2025 and 2026 internal audit plans
including resourcing
• Assessment of the effectiveness
ofInternal Audit function (p109)
• Assessment of the effectiveness
ofinternal control and risk
management framework (p109)
• Preparation for new 2024 Code
Provision29 material controls
requirements (p110)
• Risk management including
Group’s principal and emerging
risks and risk framework (p107)
• Group-wide risk deep dives on:
cyber security; technology
resilience; data privacy; and
treasury and insurance (p107)
• Controls Centre of Excellence
updates, including on ICFR
and2025 work plan (p109)
• Fraud, whistleblowing
reports and ethics and
compliance investigations
(p108)
• Anti-bribery and
corruption and sanctions
programmes (p108)
• Compliance with
accounting and
audit-related aspects of
the UK Corporate
Governance Code
• Audit Committee and
Internal Audit function
terms of reference
• Oversight of Group’s
schedule of delegated
financial authority
• Regulatory and
technical briefings
• Review of minutes of
the Verification
Committee’s meetings
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 105
Audit Committee report continued
Audit Committee meeting focus during 2025 continued
Area of Committee remit
Financial and non-financial reporting Policy and finance operations External audit Internal audit, risk and internal control Compliance and governance
Selected
key actions
and
outcomes
• The Committee reviewed the
annual report and Form 20-F, and
the company’s annual and interim
financial statements, and
received reports from both
management and the external
auditors on the significant
financial reporting judgements
relating to each
• The Committee reviewed
thegoing concern analysis and
the viability statement for
recommendation totheBoard
• The Committee reviewed
quarterly reports of all material
litigation and disputes provided
by theGeneral Counsel
• In early 2025, the Committee
received an update on
preparations for mandatory
sustainability disclosure
requirements, noting the
anticipated implementation of
the EU’s ‘Omnibus’ simplification
package. Formore detail on
Board-level oversight
ofsustainability reporting, see
the Reputation & Responsibility
Committee report on page 99
• The Committee considered
the application of
Pearson’s accounting
policies and practices in
reviewing the financial
statements and significant
accounting matters
• The Committee reviewed
Pearson’s tax strategy,
receiving updates on
anticipated effective tax
rate and developments
in the global tax
regulatory landscape
• The Committee reviewed
quarterly treasury
compliance reports and
approved the updated
Group treasury policy
• The Committee considered
the audit strategy for the 2025
audit, including the audit
approach, significant risks and
areas of audit focus, scope
and level of materiality
• The Committee received
reports from EY on the results
of(i) their review of the interim
financial statements, and (ii)
their audit of the annual
financial statements and ICFR.
The Committee reviewed the
respective letters of
representation and
recommended them for
approval by the Board
• The Committee considered
formal communications by the
external auditors, including
disclosures relating to their
independence as required by
the FRC, SEC and PCAOB
• The Committee reviewed the
effectiveness of the external
auditors to ensure the
independence, objectivity,
quality, rigour and challenge
ofthe audit process were
maintained. The Committee
concluded that the external
auditors and the audit
process were effective
• The Committee considered
Pearson’s relationships with
other external audit firms and
agreed an approach to
managing independence to
preserve choice in any future
audit tender process
• The Committee reviewed and
approved the Internal Audit budget
for the coming year at its first
meeting of 2025
• The Committee considered the
conclusions and themes emerging
from Internal Audit reviews conducted
during the year and approved the
internal audit plan for2026
• The Committee discussed the
outcome of Internal Audit
investigations, including the most
significant issues raised in Internal
Audit reports, and received
updates on the status of resolution
of issues raised
• The Committee received regular
updates on the status of Pearson’s
internal controls programme,
including controls related to
financial reporting, business and IT,
and considered reports from both
management and the external
auditors. This included discussion of
design and operating effectiveness
and any identified deficiencies
• The Committee considered the
Group risks and actions to enhance
their assessment, monitoring and
mitigation, including recommending
to the Board the approval of the
principal and emerging risks
disclosed in the annual report. This
oversight was supported by deep
dives into selected risk areas
• The Committee provided scrutiny of,
and input into, proposals relating to
material controls effectiveness in
response to new Code Provision 29
• The Committee reviewed
regular reports on fraud,
whistleblowing and
compliance matters, led by
the Associate General
Counsel – Employment,
Ethics & Compliance,
considering investigations,
metrics, controls
and initiatives
• The Committee considered
an in-depth analysis of
compliance with the FRC’s
Minimum Standard
• The Committee approved
changes to the Group’s
schedule of delegated
financial authority,
including in response
tothe new career
architecture levels.
Allchanges were below
the threshold requiring
fullBoard approval
• The Committee undertook
the annual review of its own
effectiveness and that of
the Internal Audit function
• The Committee Chair met
with the Non-Executive
members of the PDRI
Board to further enhance
his understanding of PDRI’s
independent governance
arrangements in respect of
PDRI’s US federal
contracts, respecting the
arm’s-length nature of
those arrangements
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 106
The Board uses these deep-dive sessions to understand the
rigour of management’s risk scanning and to challenge
judgements being made in response to risks. The Committee
and Board consider that Pearson’s enterprise risk management
approach is robust and proportionate and facilitates a culture
ofaccountability and ownership among business leaders.
Thebusiness unit risk deep dives provide astrategic and
increasingly data-driven lens to the risk management process
that is valued by the Board and management alike.
For more detail, please refer to the dedicated Risk
management section on pages 55-69.
Data privacy, cyber security and
technology resilience
Prudent management of data privacy, cyber security
andourtechnology estate are central to protecting Pearson’s
customers, supporting the business strategy, and maintaining
trust with stakeholders. The Committee oversees these matters
on behalf of the Board from a risk and assurance perspective
and monitors the maturity of Pearson’s associated governance
frameworks. It does this through regular deep dives and
oversight of the risk-based internal audit programme.
TheCommittee takes an integrated approach tothese topics,
bringing together leaders from each area toprovide holistic
insights and to ensure that risks and dependencies are
considered collectively. Some examples ofthe Committee’s
activity and focus areas on these topics are set out below.
Strategic oversight of technology transformation andculture
A significant area of focus for the Committee during the year
was the continued evolution of Pearson’s technology
operating model and the cultural shift required to support it.
Following the appointment of Pearson’s new Chief Technology
Officer, the Committee reviewed his early assessment of the
digital and technology environment, including the strategic
ambition to shift the Technology function to a product- and
customer-led model. Principles such as ‘freedom in a box’
were discussed, aiming to balance innovation with common
standards, as well as a focus on data and AI governance.
TheCommittee emphasised the importance of clear
accountability, engineering discipline and cultural
alignmenttosuccessfully support this strategic vision
fortheTechnology function.
Modernisation, resiliency and strategic risk management
The Committee monitored management’s progress in
updating, and enhancing resilience in, Pearson’s technology
estate. This included ongoing cloud migration, reduction of
technical debt and the continued shift towards more unified,
standardised ways of working across engineering teams.
TheCommittee scrutinised the risks associated with legacy
platforms and was attentive to the need for robust
governancearound change management. Committee
members also reinforced the importance of disciplined
processes, understanding of critical customer journeys
andclear visibility of operational risks associated with
technology estate enhancements.
The Committee reinforced the need for transparent
reportingthat reflects customer impact and technical metrics,
supporting a clear view of business risk and helping to ensure
that technology decisions are aligned to customer experience
and strategic objectives.
Cyber security governance and privacy maturity
The Committee reviewed updates on Pearson’s cyber posture,
receiving assurance on the identification and protection
ofhigh-value assets and progress against key security
frameworks, including the NIST Cybersecurity and Privacy
Frameworks. TheCommittee also considered assessments
aligned to the CISA Zero Trust Maturity Model, receiving
briefings on the key actions required to embed Zero
Trustprinciples across identity, devices, networks, applications
anddata.
The Committee noted technical and cultural improvements
that continued to strengthen organisational maturity in these
areas, while reinforcing the importance of clear prioritisation,
enhanced accountability and a strong security culture across
Pearson’s staff, contractors and partners.
Assurance and oversight
Through its oversight of Pearson’s risk-based internal audit
programme, the Committee reviewed findings of both
formalaudits and advisory reviews across a range
oftechnology, cyber security and privacy themes,
consideredrecommendations in respect of any areas
forimprovement, and tracked management’s progress
inclosing agreed actions.
You can read more about Pearson’s approach to data privacy
and cyber security on page 39.
Risk assessment, assurance and integrity
A key role of the Committee is to provide oversight and
support to the Board with regard to the integrity of the
company’s procedures for the identification, assessment,
management and reporting of risk. In fulfilling its remit,
theCommittee remains mindful that effective risk
management isessential to executing Pearson’s strategy,
achieving sustainable shareholder value, protecting
thebrandandensuring good governance.
During 2025, the Committee had oversight of management’s
approach towards risk identification and monitoring. Pearson’s
enterprise risk management programme aligns with the
structure of the business, which is managed through five global
business units supported by Group-wide corporate functions.
At least twice a year, the Committee considers a Group-wide
risk management report which highlights risk trends and
themes that exist or are emerging across the business.
Thereport provides visibility into key drivers of risk ratings,
gives insights into Pearson’s mitigation maturity for each
principal risk, and identifies priority focus areas from an
enterprise risk perspective. In addition to this regular reporting,
the Committee conducts a number of deep dives with
selected Group functions including data privacy, cyber
security, technology resilience, tax, treasury, and anti-bribery
and corruption. You can read more on some ofthese themes
later in this Audit Committee report.
On an annual basis, the Committee reviews the enterprise risk
framework and approves its continued use. This framework
comprises Pearson’s principles, processes and methodology
for risk management and aims to consistently embed such
activity and practice within the organisation.
In addition to the Committee’s own work on enterprise risk,
through a series of strategic and business-focused risk deep
dives, the President of each business unit provides an overview
of its risk register to the Board at least annually and leads
asession on the key risks facing their particular business.
Theprocess is supported by central Risk team experts as
required, providing the Board with a clear and consistent
framework within which to evaluate the strategic and business
risks to the company, based upon the principal, emerging
andsignificant near-term risk categories described
onpages58-68.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 107
Audit Committee report continued
Internal audit
The Internal Audit function is responsible for providing
independent assurance to management and the Committee on
the design and effectiveness of internal controls to mitigate
strategic, financial, operational and compliance risks. The
Executive Partner, Internal Audit, Controls, Compliance and Risk
reports jointly to the Chair of the Committee and the Chief
Financial Officer and is responsible for the day-to-day
operations of Internal Audit and execution of the annual internal
audit plan. The internal audit mandate is approved annually by
the Committee.
Internal audit plan and activity
The internal audit plan and any changes thereto are reviewed
and approved by the Committee throughout the year, and the
Committee is attentive to the resourcing of the Internal Audit
function. The internal audit plan is aligned to Pearson’s greatest
areas of risk, as identified by the enterprise risk management
process (see graphic below), and the Committee considers
issues and risks arising from internal audits.
Management action plans to improve internal controls
andtomitigate risks are agreed with the business area after
each audit. Internal Audit has a robust process in place for the
implementation of audit actions, which also includes review
and testing of evidence to corroborate action implementation.
Progress of management action plans is reported to the
Committee at each meeting. Internal Audit has a formal
collaboration process in place with the external auditors
toensure efficient sharing of insights and outcomes. Regular
reports on the findings and emerging themes identified
through internal audits and advisory reviews are provided to
the Pearson Executive Management team and,via the
Committee, to the Board.
Compliance, ethics, fraud
and whistleblowing
The Associate General Counsel (AGC) – Employment, Ethics &
Compliance oversees compliance with our Code of Ethics and
works with senior legal, HR and other relevant personnel to
investigate any reported incidents, including ethical,
corruption and fraud allegations. The Committee receives an
update at each meeting on all significant investigations and
employee relations matters, as well as reviewing data
regarding matters raised through our whistleblowing reporting
system. If applicable, any findings of the external auditors with
respect to a particular matter are also considered as part of
these discussions. The Committee may also meet in private if
required with the AGC – Employment, Ethics & Compliance. On
behalf of the Board, the Committee considers an annual review
of the effectiveness of the whistleblowing system including
through benchmarking against peers and by monitoring
progress against previous years’ findings. TheCommittee
Chair’s regular reports to the Board include areview of
investigations or whistleblowing matters of note.
The Pearson anti-bribery and corruption (ABC) and sanctions
compliance programmes provide the framework to support
our compliance with various regulations such as the UK Bribery
Act 2010 and the US Foreign Corrupt Practices Act. The
Committee uses this framework to monitor our ABC and
sanctions compliance programmes on an ongoing basis.
Pearson and the Committee remain attentive to opportunities
to continue to enhance the company’s practices and
protocols in this space.
In 2025, in addition to our regular review of ethics,
complianceand employee relations investigations,
wenotedarange of enhancements made to the
complianceprogramme, including:
• Launch of a fully refreshed Code of Ethics and associated
training, with the theme of ‘Learning with Integrity’,
replacing our previous Code of Conduct
• Roll-out of updated and targeted employee training on
sanctions and ABC, alongside dedicated training on these
topics for the Pearson Executive Management team
Governance and compliance
Technology and data
Transformation / change
Customer / consumer
People
9
7
2
2
1
Theme
Section size
reflects number
of audits mapped
by audit theme
Reputation and responsibility
Capability
Customer expectations
AI, content and channel
Competitive marketplace
Portfolio change
Accreditation
16
13
9
7
6
6
2
Section size
reflects number
of audits mapped
by principal risk
Principal risk
2025 internal audit activity – coverage of principal risks and audit themes
1
:
Board training on compliance
In addition to the Audit Committee’s ethics and
compliance updates at every meeting, the full Board
participated in a dedicated compliance training session
during the year, led by an external specialist.
Topics covered included:
• The UK and US landscapes for anti-bribery
andcorruption, the reach of applicable legislation
and potential offences
• Recent investigations into other large companies
andlessons learned
• Priorities of UK and US regulators such as the UK
Serious Fraud Office, US Department of Justice
andUS Securities and Exchange Commission
• How Pearson is responding to recent and upcoming
legislative changes, including the new ‘failure to
prevent fraud’ offence, under the UK’s Economic
Crime and Corporate Transparency Act 2023
• Benchmarking of Pearson’s practices across the
compliance space, including: risk assessments;
investigations and response; policies, procedures
and controls; training and awareness; and monitoring,
auditing and reporting
• Improvements to our fraud prevention regime, including
responding to the requirements of the new UK ‘failure to
prevent fraud’ legislation and embedding the key principles
in the new Code of Ethics, and supporting the planned
roll-out of the new employee expenses system, which
utilises technology to better identify discrepancies and
validate adherence to company policies
1. Each audit may cover multiple principal risks but will have only one theme
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 108
In 2025, Internal Audit carried out engagements across
Pearson’s business units and corporate functions, as well
asGroup-wide thematic audits, covering all principal risks.
Theaudit plan changes throughout the year based on changes
in Pearson’s risk profile. Key themes in 2025 related to
compliance with laws and regulations, information security and
data privacy, organisational transformation, business continuity
and IT resilience, and operational delivery. Additionally,
theInternal Audit team contributed to our preparations for
compliance with the 2024 Code Provision 29 material control
requirements and will play a key part in Pearson’s assurance
framework in this regard moving forward. You can read more
about our preparations for Provision 29 on page 110.
Internal audit evaluation
At its December 2025 meeting, the Committee considered
thefindings of the review of the performance, effectiveness and
independence of Pearson’s Internal Audit function, aprocess
which is undertaken annually. The 2025 review wasconducted
by distributing a questionnaire to the key stakeholders of
theInternal Audit function – including Committee members, the
lead external audit partner, members of the Pearson Executive
Management team, and senior financial, legal, technology
andoperational management.
The evaluation process sought views on an anonymised
basison the Internal Audit function’s work programme,
planning, resource levels, skills and expertise,
communicationand ways of working.
Based on the findings of the 2025 review, the Committee
isofthe opinion that the quality, experience and expertise
ofthe Internal Audit function are appropriate for the business.
The Committee further believes that the Internal Audit function
operates with an appropriate degree of independence and
has the ability to raise matters with the Committee without
management present.
The Committee recognised the findings of the review, which
noted that the Internal Audit function demonstrates a robust
andeffective team, recognised for its independence and
professionalism. The team is perceived as consistently delivering
high-quality challenge and adding value to the business, with a
clear, risk-based approach to its work. Stakeholders appreciate
the clear communication of audit plans and the transparency
around the risks being addressed, contributing to a shared
understanding of the audit programme’s scope and objectives.
The Committee will remain attentive to ensuring the Internal
Auditfunction has access to the necessary resourcing, skills,
capabilities and knowledge to conduct specialist audits,
supplementing its own resource where necessary.
The Committee will ensure that an external quality assessment
– i.e. an independent third-party assessment of the
effectiveness and processes of the Internal Audit function
– isconducted at least once every five years, in line with the
requirements of the Institute of Internal Auditors’ Global
Internal Audit Standards. The most recent such assessment
was undertaken in 2024 and it is therefore expected that the
next such assessment will be undertaken during 2029.
Internal control and risk management
The Board has overall responsibility for Pearson’s internal
control and risk management framework, which is designed
tomanage, and where possible mitigate, in line with the
Board’s risk appetite, the risks facing Pearson, as well as to
safeguard assets and provide reasonable, but not absolute,
assurance against material financial misstatement or loss.
TheBoard agrees risk management requirements and,
inassessing the effectiveness of the risk management
effort,reviews a range of inputs as described elsewhere
inthisreport. The Board can and does challenge the reporting
it receives and will request further information as needed
tomake its assessment.
The Committee plays a lead role on behalf of the Board in
monitoring the effectiveness of the company’s risk management
and internal control framework. In addition to Pearson’s listing on
the London Stock Exchange, Pearson is listed on the New York
Stock Exchange, where the company’s shares trade in the form of
ADSs. Pearson is accordingly required to comply with the
requirement under Section 404 of the US Sarbanes-Oxley Act of
2002 (SOX) to conclude annually ontheoperation of its internal
controls over financial reporting. Management’s assessment is
included on page 259 as part oftheAdditional information for US
listing purposes section which is on pages 241-261.
The Committee oversees a risk-based internal audit
programme which provides assurance over Pearson’s
management of risk. In addition to this assurance work, the
Committee monitors the effectiveness of the organisation’s
broader risk and internal control framework through three main
inputs: (i) reports from Internal Audit, which offer evidence-
based assurance over key risks via the audit programme;
(ii)riskdeep dives, which provide comprehensive insights into
specific risk areas and are led by functions or business units,
together with overarching enterprise-level risk reporting; and
(iii) regular reports on the effectiveness of internal controls over
financial reporting. In 2025, Internal Audit provided assurance
over key principal risk areas, as described on page 108.
Each business area maintains internal controls and procedures
appropriate to its structure, business environment and risk
profile, while complying with company-wide policies,
standards and guidelines. Key internal controls over financial
reporting are tested by the Group-wide Controls Centre of
Excellence and are subject to testing as part ofboth the
internal and external audit processes.
The Controls Centre of Excellence teams took a number
ofsteps in 2025 to further enhance Pearson’s control
environment. This included building internal technical
SOXknowledge, growing testing capacity in Manila and
improving technology usage.
The Committee, acting on behalf of the Board, confirms that
ithas reviewed, and continues throughout the year to review,
theeffectiveness of Pearson’s risk management and internal
control framework in accordance with Provision 29 of the 2018
Code and the associated guidance (as in effect during the year).
In making its assessment as to the effectiveness of the
framework for 2025, the Committee had regard to an assurance
opinion from the Internal Audit function. Factors considered in
this process included:
• the outcomes of internal audits completed during the year
• significant changes in Pearson’s strategy, processes
and systems
• the wider Pearson risk management and assurance
framework, which includes other assurance activities by
first and second line of defence teams, including enterprise
risk management, the Controls Centre of Excellence,
business unit and technology assurance teams
• work conducted by the external auditors
• the organisation’s response to internal audit actions
• whether any fundamental or significant actions have not
been accepted by management and the consequent risk
• whether any limitations have been placed on the scope
ofInternalAudit’s work or remit
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 109
Audit Committee report continued
The Committee reviewed the detail underpinning these factors
as part of the 2025 year-end process. The Committee also
reviewed all internal financial control deficiencies identified
during the year and noted that the majority were remediated
during 2025. The impact of any unremediated deficiencies on
the financial statements was considered. Following these
reviews, the Committee confirmed that Pearson’s risk
management and internal control framework operated
satisfactorily throughout the year.
The Board is ultimately accountable for effective risk
management in Pearson and determines our strategic
approach to risk. It confirms our enterprise risk management
framework as well as our risk appetite targets. The involvement
of the Board and Committee in the design, implementation,
identification, monitoring and review of risks (including setting
risk appetite and reviewing how risk is being embedded in our
culture) is outlined in more detail in the Risk management
section on page 56.
Preparing for revised Code Provision 29
Following the publication of the revised UK Corporate
Governance Code in January 2024, and throughout 2025,
theCommittee has closely overseen management’s response
to the new requirements of Code Provision 29. This provision
will require the Board to make an explicit declaration on the
effectiveness of material controls as at the balance sheet date,
beginning with the 2026 financial year.
The Committee has been attentive to Pearson’s proposals to
address the new Code requirements, with specific focus on:
(i)the identification of ‘material controls’ including financial,
operational, reporting and compliance controls; and (ii) the
assurance that is in place to provide sufficient comfort to the
Board in making the required declaration.
As part of this work, we have challenged ourselves to
concentrate on the controls that truly impact Pearson’s
success or failure, in line with the FRC’s guidance.
A management working group including representatives from
Internal Audit, Risk Management and Company Secretariat,
and sponsored by the Chief Financial Officer, has led
Pearson’s preparations for the revised Provision 29. The
Committee – which has led the oversight of Provision 29
readiness on the Board’s behalf – has regularly reviewed
management’s proposals, provided input, challenged
assumptions, and ensured that management’s proposed
approach aligns withthe aims of the new Code.
In late 2025, the Committee reviewed the final proposals from
management in respect of material controls and the assurance
framework and recommended to the Board that the proposals
be endorsed for use throughout 2026. The Board confirmed its
endorsement of the approach. You can read more detail in the
sections below on our agreed approach.
In 2026, the Committee’s attention will shift to the review and
oversight of the identified material controls, consideration of
any areas of ineffectiveness or potential improvement, and
preparation for future external reporting requirements.
Identification of material controls
A key responsibility under Provision 29 is for the Board to
determine which internal controls it considers ‘material’ to
Pearson – that is, those controls most critical to the long-term
sustainability of the company. In order to identify the material
controls, Pearson undertook a risk-based control mapping
exercise. This process included:
• Mapping Pearson’s principal risks and corresponding mitigating
actions to their related control and governance activities
• Formally documenting existing activities as controls
andconfirming control owners
• Linking controls to the established SOX framework
whererelevant
• Incorporating feedback from external advisers
andpeerdiscussions to benchmark our approach
• Refining the controls based on an assessment of materiality
The resulting material controls span our seven principal risk
categories, business units and Group-wide functions and take
account of the examples provided in the FRC’s guidance.
You can read more about our principal risks and mitigating
actions starting on page 57.
Assurance framework and pilot programme
A robust assurance framework has been established to support
the Board’s future declaration of controls effectiveness.
The assurance approach includes:
• Cyclical testing by Internal Audit to ensure 100% coverage
of material controls over a two-year cycle, with annual
testing prioritised for higher-risk controls, those with lower
existing levels of first or second line assurance, or those
where Pearson has a lower risk tolerance
• Annual management self-assessments and attestations,
reviewed by Internal Audit, to ensure completeness andrigour
• Reliance on SOX testing and existing external assurance
where appropriate, to avoid duplication
• Regular updates on control status and operation to the
Board and its Committees through a range of risk deep-
dive sessions, which will ensure Board-level attention
onevery material control at least annually
• Interim and final assurance reports to the Board and Audit
Committee each year on material controls status
The Committee has concluded that this framework is
appropriate as it balances risk, independence and efficiency,
and will ensure that the Board receives reliable assurance over
the controls most vital to Pearson’s success. The Committee
recommended the framework to the Board, which accepted
this recommendation.
In the second half of 2025, the Internal Audit team commenced
a pilot assurance programme to test the design and
effectiveness of 80% of the material controls. This pilot
programme enabled:
• Control owners to be familiarised with the requirements
ofthe new framework, including control walkthroughs
withInternal Audit
• Evaluation of controls to ensure they met internal
materiality criteria
• Identification of any areas for improvement in existing
control activity ahead of implementation
• Opportunity to design, implement and calibrate the
assurance and testing approach, reporting and tools
• Assessment of resourcing impact for employees involved
inthe process
In February 2026, alongside its consideration of the Provision
29 assessment for the 2025 financial year, the Board and
Committee reviewed the results of the pilot assurance
programme including the effectiveness status of the selected
pilot controls.
Internal training and readiness
To prepare for the new requirements, comprehensive
communications and training were rolled out to all control
owners and Pearson Executive Management sponsors, led by
the Internal Audit team.
Internal Audit are providing ongoing support and guidance
tocontrol owners as we move into the first full year of
compliance with the revised Provision 29.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 110
Audit Committee report continued
External audit
The Committee is responsible for overseeing and assessing
Pearson’s external audit and its auditors. Ernst & Young LLP
(EY)were first appointed as Pearson’s external auditors by
shareholders at the AGM in April 2022 following a tender
process. Pearson’s 2025 audit was the fourth undertaken by
both EY and Ben Marles as lead audit partner. As required by
regulation, Pearson will put the external audit contract out to
tender at least every ten years, with the next tender being in
respect of the 2032 financial year at the latest. The decision to
undertake such a process will be a matter for the Committee.
Pearson confirms that it was in compliance with the provisions
of the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014
during the financial year ended 31 December 2025.
Appointment of external auditors
The Committee reviews and makes recommendations to the
Board in respect of the appointment and compensation of the
external auditors. These recommendations are typically made
by the Committee after considering the external auditors’
performance during the year, reviewing external auditor fees,
conducting an effectiveness review, considering the annual
report on audit quality of the external audit firm and confirming
the independence, objectivity, qualifications and experience
of the external auditors.
Audit quality and effectiveness
In conducting our 2025 review of the effectiveness
oftheexternal auditors and making our recommendation
tore-appoint EY for 2026, the Committee had regard to
factors such as those set out in the FRC Minimum Standard
(see also page 112).
We considered our own observations and interactions with
theexternal auditors, the quality of the audit, the auditors’
independence, the programme of work conducted by the
auditors and their reports on that work. To support our
assessment, we utilise a bespoke questionnaire to gather
views from Pearson colleagues most familiar with the external
audit process which seeks feedback on all factors described
in the FRC Minimum Standard. We also consider a range of
other inputs in making our assessment. A key additional input
Inputs to the external audit effectiveness review
• EY’s annual audit quality report including discussion of issues raised by the FRC
• Audit quality indicators
• Risks to audit quality identified by the external auditors and how these were addressed
• Observations and interactions between the Committee and external auditors
• Review of mandatory communications by the external auditors, including relating to their independence
• Bespoke survey of Pearson colleagues
Results and conclusion
• Results of the anonymous survey were
analysed by the Committee Secretary
and presented to the Committee and EY
• The responses to the survey indicated
that the external auditors operate with
independence and objectivity,
demonstrate open lines of
communication with the Committee,
exhibit professional scepticism and
appropriate levels of challenge,
possess the requisite technical
expertise and apply it appropriately
to the business and any issues
and judgements
• In conclusion, and following its review of
the relevant inputs, including the
responses to the survey, the Committee
confirmed that the audit process was
effective and that it was satisfied with
the quality of the audit
Who we surveyed to inform our assessment of effectiveness
• Members of the Committee
• Chief Financial Officer
• Chief Technology Officer
• Senior corporate financial management
• Finance business partners for business units
• Senior internal audit and controls management
• Senior technology and operations leaders
Themes covered in the external audit effectiveness survey
• Professional scepticism, integrity and willingness to
challenge management
• Commitment to audit quality, including mindset and culture
• Independence and objectivity
• Partners and the audit team – resourcing, qualifications, skills,
knowledge and experience
• Management and organisation of the audit process
• Planning and scoping of the audit
• Delivery and execution of the agreed audit plan
• Communication with and reporting to the Committee
and management – transparency, timeliness, clarity,
conciseness, relevance
• Commentary on systems of internal control and other
recommendations
• Technical specialism and use of experts
• Use of technology and data analytics
How we assess external audit effectiveness
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 111
Audit Committee report continued
Review of the external audit
During the year, the Committee discussed the planning,
conduct and conclusions of the external audit as it proceeded.
At its July 2025 meeting, the Committee discussed and
approved the external audit plan and reviewed EY’s
assessment of risks of material misstatement of Pearson’s
financial statements.
The external auditors provided an update to the risk
assessment at the December 2025 Committee meeting,
confirming to the Committee the addition of a new significant
audit risk relating to the valuation of acquired intangible
assetsfollowing the completion of Pearson’s acquisition
ofeDynamic Learning.
The table on pages 114-116 sets out the significant issues
considered by the Committee together with details of how
these items have been addressed and the ways in which the
external auditors challenged management’s assumptions.
TheCommittee discussed these issues with the auditors
throughout the 2025 audit process.
In December 2025, the Committee discussed with the
auditorsthe status of their work, focusing in particular
oninternal controls and Sarbanes-Oxley testing.
As the auditors concluded their audit, they explained
totheCommittee:
• The work they had conducted over revenue and in
particularthe specific risk of fraud in revenue recognition.
This included work over contracts in certain of the Group’s
businesses in the US and UK that span the year end, where
revenue is recognised using an estimated percentage of
completion based on costs and work over manual
adjustments to revenue. In addition, they explained their
use of data analytics to cover entire populations of data
with procedures such as correlating revenue with
receivable and cash entries
• Their procedures performed to audit the material
acquisition in the year and specifically their work
overthevaluation of the acquired intangible assets.
Theirworkfocused on the valuations of certain specific
acquired intangibles and their procedures included
theuseof EY valuation specialists
FRC Minimum Standard
In May 2023, the FRC introduced the ‘Audit Committees
and the External Audit: Minimum Standard’ (the ‘FRC
Minimum Standard’ or ‘Standard’). From January 2025,
the Standard has been incorporated into the UK
Corporate Governance Code and operates on a ‘comply
or explain’ basis.
Having reviewed an analysis of Pearson’s approach
tothe FRC Minimum Standard, the Committee confirms
that it was in full compliance with all provisions for the
financial year ended 31 December 2025.
isa suite of audit quality indicators (at both a firm-wide
andengagement-specific level) against which the external
auditors report to the Committee on a regular basis.
The diagram on page 111 illustrates the main inputs to our
assessment, the colleagues from whom we sought views, the
themes covered in our survey and the outcomes of our work.
As previously described to shareholders, during 2023 and
2024, the Committee oversaw an agreed set of initiatives
designed to bring incremental enhancements to both the
delivery of the external audit and Pearson’s internal control
processes, focusing on audit quality, efficiency, effectiveness
and the use of technology. Following the successful
completion of those initiatives and embedding of the resulting
enhancements into routine practices over the past two years,
the Committee was pleased to note that feedback provided in
the 2025 effectiveness survey was positive and constructive in
tone, reflecting clear progress in key areas, and with a strong
emphasis on continuous improvement and collaboration.
The Committee monitors the independence and objectivity
ofthe external auditors on an ongoing basis and will continue
to formally evaluate their overall performance and
effectiveness and the quality of the external audit on an
annualbasis, taking account of all appropriate guidelines.
• Their work over retirement benefit obligations including
procedures undertaken over assumptions used in
determining the defined benefit obligations and their
workover the valuation of the related pension assets
• Their work in evaluating management’s goodwill impairment
exercise, on a value-in-use basis, including assessing
assumptions around operating cash flow forecasts,
perpetuity growth rates and discount rates, and their views
on the sensitivity of CGU headroom to downside scenarios
• Their work in assessing management’s judgements and
assumptions regarding the recoverability of certain
long-lived assets including right-of-use assets (in relation
to leased properties) and product development assets.
Theirwork focused on assets with identified triggers
whichresulted in impairments, and the reversal of
historicalimpairments, being recorded
• The work performed over the nature and presentation
ofadjusting items, focusing on subjective judgements
andthe transparency and prominence with which related
adjusted measures are presented
• Their work in assessing management’s judgements
andassumptions regarding provisions for uncertain
taxpositions
• Their work in assessing management’s judgements and
assumptions regarding the reversal of certain historical
impairments against investments in subsidiaries in the
parentcompany
• The results of their controls testing for Sarbanes-Oxley Act
Section 404 (SOX 404) reporting purposes and in particular
their findings in relation to information provided by the
entity (IPE), controls over key IT systems and other relevant
internal control over financial reporting (ICFR) matters
• Their work to address the specific pervasive risk of
management override of controls, including their view on
the potential sources or indicators of bias and override of
controls and their response to those indicators, including
procedures such as review of Board and Committee
minutes, journal entry testing, review of non-routine
transactions and the use of data analytics
• The results of their work over the company’s going concern
assessment and viability statement
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 112
• Their work in relation to other matters which are not
classified as key audit matters, but which are considered
important financial reporting matters, key areas of
judgement or estimation, or which may give rise to
additional disclosure requirements
The auditors also reported to the Committee the unadjusted
misstatements that they had found in the course of their work,
which were immaterial, and the Committee confirmed that
there were no material items remaining unadjusted in these
financial statements.
Auditors’ independence
In line with best practice, our relationship with EY is governed
by our policy on external auditors, which is typically reviewed
annually to ensure it remains effective and appropriate
andisapproved by the Committee. The policy establishes
procedures to ensure that the auditors’ independence is not
compromised, as well as defining those non-audit services
that external auditors may or may not provide to Pearson.
Scope of the policy on external auditors
• The policy applies to all Pearson businesses globally,
including associate companies
• Any identified threats to independence arising from
services provided by the external auditors to a company
that is then acquired by Pearson must be addressed within
three months of the acquisition date
• The policy applies to all audit firms used by Pearson
including those undertaking statutory audits only
• In the event of a change in the Group auditor, it also applies
to the outgoing firm until they have discharged their Group
audit responsibilities and for any periods in which they are
required to be independent in order to undertake any
specific audit responsibilities
Governance of audit and non-audit services
• The Committee approves all audit and non-audit services
provided by the external auditors
• Any allowable services are in accordance with relevant UK
and US legislation and auditor standards
• Our policy on the use of the external auditors for non-audit
services complies with the FRC’s Ethical Standard
published in January 2024 and which took effect from
December 2024. The policy also complies with all relevant
SEC independence rules
• The FRC’s Ethical Standard applies restrictions on certain
non-audit services and applies a cap on the level of
permitted non-audit services fees which can be billed in any
year. More particularly, our policy provides that only
non-audit services which are required to be carried out by
the external auditors or where the work is closely linked to
the audit work are permitted, and only if also permitted by
the FRC and SEC
• The policy reflects the restriction on the use of pre-
approval in the FRC’s Ethical Standard and, accordingly,
allnon-audit services, except those considered to be
‘trivial’, are required to be approved by the Committee
• We review non-audit services on a case-by-case basis.
Non-audit services engagements below a value of £25,000
are defined as‘trivial’ from a materiality perspective and can
be pre-approved and authorised by the Group Finance
team from categories of allowable services in accordance
with the Group's non-audit services policy. Any such
pre-approved services are presented for noting by
theCommittee at its next meeting
• We expressly prohibit the provision of certain tax,
HRandother services by the external auditors
• Total non-audit fees will be limited to no more than
70% of the average audit fee paid in the last three
consecutive years
The Committee receives regular reports summarising the
amount of fees paid to the auditors. During 2025, Pearson
spent a similar amount on non-audit fees when compared with
2024. For 2025, non-audit fees (excluding fees related to SOX
404 attestation) represented 2% of external audit fees (3% in
2024). Non-audit fees including those related to SOX 404
attestation represent 11% of audit fees (12% in 2024).
For all non-audit work in 2025, EY was selected only after
consideration that it was best able to provide the services we
required at a reasonable fee and within the terms of our policy
on external auditors. Where EY is selected to provide audit-
related services, we take into account its existing knowledge
and experience of Pearson. Where appropriate, services are
tendered prior to a decision being made as to whether to
award work to the auditors.
Significant non-audit work performed by EY during
2025 included:
• half-year review of interim financial statements
• bond proceeds limited assurance
• SOX 404 attestation of financial reporting controls
A full statement of the fees for audit and non-audit services is
provided in note 4 to the financial statements on page190.
Graeme Pitkethly
Chair of Audit Committee
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 113
Audit Committee report continued
Significant issues considered by the Audit Committee
Issue Action taken by Audit Committee Outcome
Going concern and viability
• The assessment of the Group’s viability
and the appropriateness of the going
concern assumption
• The Committee reviewed future budgets and cash flow forecasts to understand the
Group’s available liquidity and ability to continue as a going concern. The Committee
reviewed and challenged the risks to the forecasts identified. The Committee reviewed
the outcome of the severe but plausible scenario modelling and stress testing
• EY challenge:
EY challenged the appropriateness of the assumptions used to calculate the cash
forecasts under base and severe but plausible downside case scenarios, including
whether the downside scenarios were sufficiently severe. EY compared the scenario
to the Group’s principal risks and performed a search for contrary evidence. EY also
performed independent incremental sensitivities in respect of the going concern
assessment, considering worst-case outcomes for the Group’s uncertain tax positions
as well as increasing all principal risks to high risk with the resultant increased financial
impact, and liquidity still remains. EY challenged whether the share buyback
announced in January 2026 had been included in the cash flow forecasts
• The Committee is satisfied with the modelling process
and the risks identified. In addition, the Committee is
satisfied with the stress testing performed and the
severe but plausible scenario modelling. The
Committee noted that in all scenarios the Group had a
high level of liquidity headroom and sufficient
headroom against covenant requirements
• The Committee is satisfied with the adequacy of the
Group’s viability and is satisfied that the Group is a
going concern
• The Committee is satisfied with the disclosures related
to going concern and viability
Revenue recognition
• Pearson has a number of revenue
streams with different revenue
recognition models. For some
revenue streams, judgements and
estimates are required in order to
determine the amount and timing of
revenue recognition
• The Committee regularly reviews and challenges revenue recognition practices and
the underlying assumptions and estimates. In 2025, the Committee reviewed
revenue recognition practices in relation to the ‘Hyperscaler’ contracts, focusing in
particular on the impact of overarching master service agreements on the
recognition of revenue as well as the specific IFRS 15 guidance around
‘consideration payable to a customer’. In addition, the Committee has visibility of the
internal control framework over revenue and the results of the monitoring and
certification work performed by the Controls Centre of Excellence over those
controls. The Committee also has visibility of internal audit findings relating to
revenue recognition controls and processes. The Committee routinely monitors the
views of the external auditor on revenue recognition issues. This includes review of
their data analytics testing of revenue in Higher Education and understanding any
exceptions that do not follow the expected process path as well as testing of
one-off or judgemental items
• EY challenge:
EY specifically challenged areas where there is manual intervention in the revenue
recognition process, in particular where revenue is recognised over time and
assumptions are used to determine the timing of recognition. EY challenged
management’s consideration on revenue recognition of the ‘Hyperscaler’ contracts
• The Committee is satisfied that revenue is being
recognised appropriately
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 114
Issue Action taken by Audit Committee Outcome
Recoverability of long-lived assets
• Pearson (the Group) holds significant
long-lived assets including: right-of-use
assets (in relation to leased properties);
property, plant and equipment; product
development assets; goodwill and
intangible assets
• Pearson plc (the company) holds
significant investments in subsidiaries,
some of which were impaired
inpreviousyears. During 2025,
historicalimpairments of £0.5bn
havebeen reversed
• There are significant estimates
andassumptions used in the
impairmentreviews
• The Committee monitored the Group’s property strategy during the year
todetermine if there were triggers for impairment or impairment reversal.
TheCommittee considered the results of the Group’s property impairment
reviewswithspecific focus on the 80 Strand property. Updates to key
assumptionswere reviewed and challenged. The Committee considered the
impairment reversals recorded and the adequacy of related disclosures
• The Committee specifically considered the results of the Group’s goodwill
impairment reviews which were undertaken in December and refreshed post year
end. Key assumptions – including cash flows derived from strategic and operating
plans, long-term growth rates and the weighted average cost of capital – were
reviewed and challenged. The Committee considered the sensitivities to changes
inassumptions and the adequacy of disclosures required by IAS 36 ‘Impairment
ofAssets’
• The Committee considered the results of the impairment exercise undertaken
related to a specific CGU for which an impairment trigger was identified, following
which, certain product development assets were impaired. Key assumptions were
reviewed and challenged as well as the adequacy of disclosures required by IAS 36
‘Impairment of Assets’
• The Committee considered the valuation of the investments in subsidiaries held in
Pearson plc, the company. The Committee specifically considered the application
ofthe Group goodwill impairment model to the investments and also the existence
of indicators of impairment reversal
• EY challenge:
EY challenged the judgement in respect of the identification of the impairment
reversal trigger in parent company investments including the method of allocation of
the Group’s value-in-use (“VIU”) to the investments and the estimation of the
forecast cash flows in the VIU model. EY also challenged the assumptions included in
the prospective financial information used for the Group’s VIU calculation. EY also
challenged the basis for the impairment of product developmentassets
• The Committee is satisfied with the results
oftheproperty impairment reviews and the
subsequent impairment reversals recognised
intheincome statement
• The Committee is satisfied with the results
oftheannualgoodwill impairment review
• The Committee is satisfied with the disclosures relating
to non-current asset impairments and concurs with
management’s view that the recoverability of goodwill
is not a key area of estimation
• The Committee is satisfied with the results of the
specific CGU impairment exercise and the resulting
impairment of product development assets
• The Committee is satisfied that there is an appropriate
trigger for reversing impairments on subsidiaries in the
parent company and an appropriate measurement
basis has been used. The Committee is satisfied with
the disclosures related to the impairment reversal
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 115
Issue Action taken by Audit Committee Outcome
Tax
• Pearson holds provisions in relation
touncertain tax positions
• Changes to, and the application of,
taxlegislation continues to be a complex
and judgemental area
• The Committee considered various developments during the year,
includinglegaldevelopments, ongoing tax audits and the appropriateness
oftheassociated provisions
• The Committee also continued to monitor the impact of changes in tax legislation,
including ‘Pillar 2’ of BEPS 2.0 which was effective for Pearson from 1 January 2024,
with the first Pillar 2 filings taking place in 2025
• EY challenge:
EY specifically challenged the inputs and assumptions used in the calculation
ofprovisions for uncertain tax positions and the disclosure of the Brazilian
tax contingency
• The Committee is satisfied with the appropriateness
ofprovisions held in relation to other uncertain
tax positions
• The Committee is satisfied with Pearson’s approach
tomanaging the impact of tax legislation changes
• The Committee is satisfied with the disclosures relating
to the impact of Pillar 2
Retirement benefits
• Pearson holds a significant obligation
in relation to the Group’s defined benefit
pension schemes. The UK Group Pension
Plan is in a significant net surplus
position after the recognition of the
related assets
• Defined benefit plans in the US and
Canada were terminated during 2025
• The Committee considered the assumptions used to determine the defined benefit
obligation as well as developments related to the triennial valuation of the UK Group
Pension Plan and the impacts on the IAS 19 accounting. The Committee considered
the impact of the termination of the US and Canadian defined benefit schemes,
including the IAS 19 accounting and the adequacy of disclosure
• EY challenge:
EY specifically challenged the assumptions used in determining the defined benefit
obligations, taking into account both market practice as well as the specifics of the
Pearson pension schemes. EY also challenged the valuation of harder to value Level 3
pension assets
• The Committee is satisfied with the IAS 19 accounting,
and related disclosures, for the Group’s pension
obligations and assets
Acquisitions
• In 2025, Pearson acquired 100%
ofeDynamic Holdings LP (eDL)
• The Committee reviewed the accounting for the eDL acquisition with specific focus
on consideration, net assets acquired including the valuation of intangibles and the
recognition of goodwill. The Committee noted the use of third-party valuation
experts to value the acquired intangible assets and the controls performed over
allaspects of the acquisition accounting, including, but not limited to, the review
ofassumptions used by the third–party valuation experts
• EY challenge:
EY specifically challenged the assumptions used in valuing the intangible assets,
engaging EY valuation specialists to assist with the audit procedures. In particular,
EYchallenged the prospective financial information used in the valuation
calculation with a focus on specific assumptions around revenue growth, EBIT % and
discount rates
• The Committee determined that the acquisition
accounting for eDL had been undertaken
appropriatelybut notes that it remains provisional
asat31 December 2025
Audit Committee report continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 116
Directors’ Remuneration Report
Key messages from the
Remuneration Committee
• During the year, the Committee undertook a
comprehensive review of the Directors’ Remuneration
Policy (“Policy”), which is due for its triennial renewal at the
2026 AGM. Following extensive consultation with
shareholders which shaped the final proposals in a number
of areas, we have proposed changes to the Policy to ensure
Pearson can continue to secure the calibre of executive
talent required to deliver the strategy and drive long-term
value for all our stakeholders.
• The key changes are to reduce the CEO’s fixed pay,
increase the LTIP award (with increased stretch to the
targets), and increase the shareholding guideline.
• The Committee considered performance outcomes for
2025. The formulaic annual incentive outcome for Executive
Directors is 59.8% of maximum. However, informed by the
CEO’s approach to the wider management team, the
Committee considered it appropriate to make a
discretionary downward adjustment to reduce the final
outcome to 50% of maximum. For the 2023 LTIP, the award
will vest at 52% of maximum based on performance over
the period.
• For 2026, we have updated the strategic performance
metrics within the Annual Incentive Plan (‘AIP’) plan to
include a strategic metric based on new business growth in
Assessments & Verification. In the 2026 Long-Term
Incentive Plan (‘LTIP’), the metrics will be based on Adjusted
Earnings, TSR and ROC, and we will no longer include any
strategic metrics. To reflect the changes in the 2026
Directors’ Remuneration Policy, the level of stretch on
targets has also been materially increased.
• For 2026, there will be no increase to the Chief Executive’s
base salary to support a rebalancing towards variable pay.
• Remuneration arrangements in respect of the
CFO transition in 2026 are in accordance with our
Remuneration Policy.
• The Committee remains focused on ensuring that
remuneration policies and practice for all Pearson’s
colleagues are consistent with our need to attract and
retain extraordinary talent to drive Pearson’s forward-
looking strategy, aligned with our purpose, and values
Terms of reference
The Committee’s terms of reference are in line with the UK
Corporate Governance Code and are available on the
Governance page of the Company website at pearsonplc.
com. A summary of the Committee’s responsibilities is on
page 142.
Board Committee attendance
There were six scheduled meetings of the Remuneration
Committee in 2025. Attendance by Directors was as follows:
Committee members Meetings attended
Sherry Coutu CBE 6/6
Alison Dolan 6/6
Arden Hoffman
1
3/3
Esther Lee
2
4/6
Annette Thomas 6/6
1. Arden joined the Committee on 1 July 2025.
2. Esther Lee was unable to attend one standard meeting and one ad hoc
additional committee meeting due to pre-existing commitments.
Sherry Coutu CBE
Chair of
Remuneration
Committee
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 117
Directors’ Remuneration Committee report continued
Dear Shareholder
On behalf of the Board, I am pleased to present Pearson’s
2025 Directors’ Remuneration Report.
Pearson has had another successful year, delivering despite
significant external change and uncertainty. Pearson has
delivered sales and earnings growth in line with our
expectations, with underlying sales growth of 4% and adjusted
operating profit of £614m, up 6% on an underlying basis
compared to 2024. Free cash flow performance was strong at
£527m, up 8% on a headline basis with a free cash flow
conversion rate of 125%. These results reflect the continued
momentum and execution of our strategy.
Reflecting the Board’s continued confidence in the outlook
for the business, we announced a further £350m buyback in
January 2026 and are recommending a 5% increase in the final
dividend, for a full-year dividend of 25.2p per share. Our strong
balance sheet and cash flows also enable investment in
opportunities to drive growth to create further value for
our stakeholders.
The Board remains confident of the strategy execution and the
ability to maintain momentum for sustained growth that will
continue to produce attractive returns for shareholders in 2026
and beyond.
Incentive outcomes for 2025
2025 AIP
2025 was a year of robust financial and strategic progress,
resulting in a formulaic AIP outcome for Executive Directors of
59.8% of maximum, with achievement between target and
maximum for sales, adjusted operating profit and free cash
flow, and achievement at target for the two new strategic
measures. However, informed by the CEO’s approach to the
wider management team, the Committee considered it
appropriate to make a discretionary downward adjustment to
reduce the final outcome to 50% of maximum.
2023 LTIP
The LTIP granted in 2023 will vest in 2026 with a formulaic
outcome of 52% of maximum, principally reflecting strong
underlying performance in earnings per share (‘EPS’) and ROC,
and achievement around threshold for Relative TSR vs. S&P500
and ESG measure over the three-year performance period.
However, Omar Abbosh was not a participant in the 2023 LTIP.
Further details of the performance outcome for both incentive
awards are set out on page 136.
Exit Arrangements for Sally Johnson
As disclosed on 27 February 2026, Sally Johnson will step down
from the Board and leave Pearson during 2026. Her exit
arrangements have been determined in accordance with the
Remuneration Policy. She will not be eligible for AIP in respect
of 2025 or 2026 and all unvested LTIP awards will lapse.
Directors’ Remuneration Policy review
In line with the normal three-year cycle in the UK, Pearson’s
Policy will be subject to a shareholder vote at the 2026 AGM.
Throughout the year, the Committee spent significant time
rigorously reviewing the Policy to ensure it continues to
support Pearson’s vision and strategy to deliver for
our shareholders.
An important aspect of this review was to evolve our approach
to benchmarking by developing the Talent Peer Group, to
ensure our executive packages can remain sufficiently
competitive in the markets in which Pearson increasingly
competes for key talent.
Having considered the context of Pearson’s operating
environment and the delivery of our strategic priorities, we are
proposing a number of changes for the 2026 Directors’
Remuneration Policy. The key change is to re-balance the
CEO's package by reducing fixed pay and increasing the LTIP
award (from 450% to 850% of salary) to better compete in our
talent markets. We will also be increasing the stretch on LTIP
targets and the CEO’s shareholding guidelines to align with
new LTIP award levels.
In the section following this letter, we have provided extensive
detail on the proposed Policy changes and the rationale for
them is provided in the 2026 Directors’ Remuneration Policy
review section on page 120.
Shareholder engagement
The Committee values a constructive and positive relationship
with all its shareholders and their advisers and remains
committed to maintaining open and transparent dialogue.
In 2025, shareholder engagement primarily focused on the
new Directors’ Remuneration Policy. During the process of
developing the new Directors’ Remuneration Policy, we
undertook extensive engagement with our shareholders, and
their feedback shaped the final proposals in a number of areas.
Detail of our engagement process and the impact it had is
explained on page 125.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 118
Looking forward to 2026
Remuneration for incoming Chief
Financial Officer
The remuneration arrangements for the incoming Chief
Financial Officer, Simon Robson, will be disclosed in the 2026
Directors’ Remuneration Report, but are in line with the
proposed 2026 Policy.
Salaries for 2026
The Executive Directors will not receive a salary increase. For
the CEO, this is consistent with the re-balancing of the
package, a core principle underpinning our proposed Policy
changes (see page 129 for further detail). In the wider UK
business, the average salary increase for 2026 will be 2%.
Performance framework
Each year, the Committee carefully reviews the performance
measure framework to ensure it optimally aligns with key
priorities from the forward-looking strategy which will drive
long-term shareholder value. Having undertaken this review for
2026, including taking on board the input from investors during
consultation, the Committee is proposing to update the
strategic metrics within the AIP to directly align with our
Strategic Framework outlined in detail on page 12. In particular,
the strategic metrics focus on growing value in our core
business (Assessment & Verification) and delivering on our
strategic growth vectors.
In the AIP, we will update the strategic component to carry a
20% weighting (up from 10% in 2025) including 10% based on
renewal rates and 5% based on new business growth within
Assessments & Verification, and 5% based on growth in our
enterprise customer base. These are core annual priorities for
the Group as we execute on the strategic framework. In part to
reflect the feedback we received in consultation, we have
adjusted the LTIP performance metrics so that it will be based
fully on financial and shareholder return metrics only, with 40%
based on Adjusted Earnings (replacing Adjusted EPS as a more
consistent and transparent method to evaluate performance
both internally and externally), 40% based on Relative TSR and
20% based on Return on Capital (‘ROC’).
Overall, we believe that the performance framework, including
re-prioritising the strategic metrics from the LTIP to the AIP
provides the right balance and reflects the views of our
shareholders. We will continue to keep the metrics and
weightings under regular annual review. No other changes will
be made to the AIP or LTIP metrics, which remain closely
aligned to financial performance and shareholder value.
Award opportunities for the AIP and LTIP will be in line with the
proposed 2026 Policy.
Target-setting for 2026
One of Pearson’s key remuneration principles, which applies
across the whole organisation, centres on pay for
performance, and this is actively considered by the
Committee when determining targets.
For 2026, in line with established practice, a robust target-
setting process has been followed, considering Pearson’s
strategic plan as well as other relevant factors, such as
analyst consensus and shareholder input, to reflect
market expectations.
The Committee has a very strong focus on paying only when
performance is delivered and setting truly stretching
performance targets. This year is no different. In order to
reflect the proposed uplift to the CEO’s LTIP award level and
the feedback from our shareholders, the stretch of the 2026
LTIP awards have been materially increased. Adjusted earnings
growth required for maximum vesting requires annualised
growth of c.14%, a material uplift over c.11% for the earnings
metric in previous LTIP awards. It is significantly above current
market estimates and aligned to upper quartile practice in
the FTSE 100. The stretch on the Relative TSR metric is first
increased by incorporating the Talent Peer Group as one
of the benchmarks, and will now also require upper quintile
performance for maximum vesting (from upper quartile
previously). ROC stretch has also been increased for the
third consecutive year, and has been materially uplifted to
12.3% for Threshold vesting and 16% for Maximum vesting
(vs. 11.3% in 2025).
Remuneration across Pearson
Pearson’s remuneration principles are consistent across the
organisation and designed to support our culture and to
attract and retain talent to execute our strategy. Many of the
features of our Directors’ Remuneration Policy apply more
broadly; for example, over half of all Pearson employees
(c.10,000 employees) participated in the AIP during 2025,
which was funded based on similar performance measures as
those used for Executive Directors. The Committee receives
regular updates on talent matters and wider workforce
considerations and rigorously considers the approach to
reward throughout the organisation when determining
executive remuneration.
Pearson is committed to a transparent and positive
relationship with all its stakeholders and will continue to
engage widely, as appropriate, going forward. I would like to
thank shareholders for their continued support at the 2026
AGM in relation to our 2026 Directors’ Remuneration Report
and Directors’ Remuneration Policy.
Sherry Coutu CBE
Chair of Remuneration Committee
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 119
Directors’ Remuneration Committee report continued
2026 Directors’ Remuneration Policy review
Market and Talent Context
To understand the decisions to make changes to our Directors’ Remuneration Policy, it is
important to consider the context for remuneration at Pearson and trends in which Pearson
operates and the talent markets in which we compete for talent.
Over the last five years, Pearson has transformed in terms of global breadth, scope, scale and
performance. This has led to Pearson’s transformation:
• From a holding company into an operating company.
• From analogue to digital.
• From a content publisher to a learning & assessment company.
• From legacy to a modern, high-performance culture.
Our approach to executive reward is shaped by the characteristics of our business and the talent
markets in which we operate. As the world’s lifelong learning company, we are committed to
delivering on our mission of helping individuals realise the life they imagine through learning.
Pearson is a global company with over two-thirds of our revenue coming from the US, which
continues to be a key growth market. This gives us greater US exposure than almost all other
UK-listed companies. Additionally, half of Pearson’s employees and over 60% of the Pearson
Executive Management team (PEM) are based in the US. A relatively small proportion of our
employees and executive team are based in the UK (just 23% of the PEM as of 31 December
2025, down from over half six years prior to that).
Additionally, we are seeing seismic shifts in the education and work landscape, driving demand
for Pearson’s trusted lifelong learning software and services powered by learning science and
technology. We have an opportunity to capitalise on these trends and accelerate long-term
shareholder value through executing a simple but powerful strategy built on three
interconnected pillars: (i) driving performance in our core business, (ii) unlocking execution
synergies, and (iii) capitalising on medium-term growth vectors. We have made strong progress
to date on our strategic journey and have great conviction in our ability to continue delivering
success and driving financial performance and shareholder value. However, to do so, it is critical
that we secure the right executive talent.
To ensure we capitalise on this shifting landscape and opportunity, the necessary skills and
experience of our leadership talent continues to evolve. It is critical that Pearson secures
executive talent who can lead wholesale AI and digital transformation at pace, and acquires
expertise and talent found in large technology companies that are particularly at the forefront of
AI adoption. Therefore, we must compete for the globally scarce expertise and talent required to
implement our strategy, which is predominantly found in large US-based technology companies.
Our ability to recruit and retain this talent from this North American market is therefore a critical
ingredient if we are to continue to successfully deliver our strategy.
Since 2020, we have refreshed and strengthened our senior management team, with almost all of
the senior hires in that period coming from US companies or global companies that offer ‘US
style’ packages. For example, in this period we have recruited PEM talent from companies such
as Accenture, Hologic Inc, SEMA4, The Trade Desk and Warner Media. Our Chief Executive Omar
Abbosh was recruited from Microsoft, one of the world’s largest multinational technology
companies. Our previous Chief Executive had led the transformation of Walt Disney’s
international business into a digital-first business, and was based in the US.
In addition to talent market considerations, the composition of our shareholder base continued
to evolve in 2025, with further growth in North American investors on our share register during the
year, who now represent approximately 30% of ownership.
Pearson employee location (data as of 31 December 2025)
All Employees
Senior Management
Management
United States United Kingdom Rest of world
Pearson
Executive
50% 20% 30%
59% 29% 12%
62% 23% 15%
Proportion of Revenue from US geographic segment (FTSE 100)*
60%
50%
40%
30%
20%
70%
80%
90%
10%
0
Pearson
* Based on the publicly disclosed geographic revenue segment which covers the US or Americas as a proportion of disclosed Group revenue. Data for Pearson is based on the year ending 31 December 2025. Data is shown for
the FTSE 100 excluding investment trusts, and has been sourced from Datastream and published annual reports as at January 2026.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 120
Pearson’s Talent Peer Group
The development of our proposed changes to the current Remuneration Policy was informed by
the recognition of the talent and expertise we require. We therefore identified and constructed a
Talent Peer Group, which we believe accurately reflects the market where Pearson needs to
successfully compete for executive talent.
The Talent Peer Group comprises companies that are closely aligned with our key talent markets
and strategic ambitions, and with which we must compete successfully for executive talent as our
business and the external landscape continue to evolve. These are predominantly US-based
technology companies at the forefront of AI adoption, as well as B2B services companies.
A summary of the current positioning of the Pearson CEO’s remuneration against this group
is set out below. Based on this, the Committee proposes to re-balance the package as
described on the following page. It should be noted that we have purposely presented Target
Total Remuneration as it more closely and consistently aligns with the Talent Peer Group’s
practice, where awards of Restricted Shares are a prevalent practice.
Pearson CEO 2025 remuneration positioning compared against the Talent Peer Group
The following charts show the positioning of each element of remuneration, based on our previous Policy, against the Talent Peer Group. This data illustrates the challenge the Committee was facing,
and which we are seeking to address through a re-balancing of the package described on the following page.
Fixed pay (salary + pension + benefits)
is positioned above typical practice
The AIP opportunity is positioned close
to the median of a relatively narrow
market range
Against a very wide range of market
practice, LTIP awards are unsustainably
below lower quartile
When combined, this positions Target
Total Compensation around lower quartile
of the group
Median to Upper Quartile
Lower Quartile to Median
Pearson (2025 compensation)
The group comprises the following companies
Accenture*, ADP*, Alphabet Inc*, Amazon.com Inc*, Capgemini SE, Cognizant Technology
Solutions Corp, EPAM Systems Inc, FactSet Research Systems Inc, Gartner Inc, IBM Corp*,
Informa plc, Meta Platforms Inc*, Microsoft Corp*, Moody’s Corp*, Oracle Corp*, RELX plc,
S&P Global Inc*, Salesforce Inc*, SAP SE*, Thomson Reuters Corp*, and Wolters Kluwer N.V.
We recognise that a number of these companies are significantly larger than Pearson and
have therefore adopted a sensible and robust methodology when assessing Pearson’s
CEO remuneration positioning against this Talent Peer Group. For larger companies in the
group (those denoted with * above), we have compared Pearson’s CEO to senior
executives reporting into the company’s CEO (and not the CEO role itself). Although this
methodology addresses the size differential, it does risk underplaying the complexity of
the Pearson Group CEO role (compared to divisional heads).
£1,200K
£1,000K
£800K
£600K
£400K
£0
£1,400K
£200K
£1,223K
0%
300%
300%
250%
200%
150%
100%
400%
50%
350%
4.5x
35X
30X
20X
15X
10X
X
40X
5X
£5.1m
£12m
£10m
£8m
£6m
£4m
£0
£14m
£2m
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 121
Directors’ Remuneration Committee report continued
Rebalancing the Chief Executive’s total
remuneration towards LTIP
Fixed Pay
As shown in the chart to the right, the CEO’s fixed pay is
currently positioned towards the upper end of the Talent Peer
Group, therefore we have proposed that we more closely align
with the Talent Peer Group by reducing the pension element.
The legacy UK approach (16% of salary) will be replaced with a
pension entitlement of c.2% of salary (£18,000) allowance
which more closely mirrors the quantum of 401k provisions in
the Talent Peer Group.
This c.90% reduction in the pension will reduce overall fixed
pay by 12% and move the package positioning closer to
typical practice in our Talent Peer Group. It also represents a
reduction of >30% from the proportion relating to total fixed
pay for the previous incumbent in his last year as CEO (FY23).
Consistent with the principle of re-balancing, there will also be
no increase to the CEO's base salary for 2026.
AIP
Practice in the Talent Peer Group showed a relatively narrow
range of market practice, with almost all companies setting
maximum bonus between 200% and 400% of salary (see chart
on previous page). In this context, we are comfortable with our
current positioning (300% of salary) and therefore no changes
to AIP opportunity have been proposed.
LTIP
As clearly illustrated in the chart on the right, there is a very wide
range of practice within the Talent Peer Group. Around half the
market tend to grant awards of around 4-12x salary. In the
upper half of the Talent Peer Group practice, award levels are
significantly higher (c.20x to >40x salary).
Pearson’s current award level is positioned close to the lowest
in the Talent Peer Group, which we believe is an unsustainable
position when seeking to credibly compete for globally scarce
talent in this market. We have therefore proposed an increase
to the CEO’s maximum opportunity level from 450% to 850%,
making our position and award level more competitive.
It should be emphasised that we are not seeking to match
levels seen in the upper half of the Talent Peer Group, but to
establish a more credible and sustainable position in the lower
half of group practice.
Target Total Compensation
The CEO’s total compensation package is currently positioned
towards the lower end of the Talent Peer Group. Note that total
compensation is shown at target (not maximum) in order to
allow a consistent comparison with practice in the Talent Peer
Group where restricted share awards are prevalent practice.
The combination of changes to fixed pay and LTIP will position
Pearson more competitively in the Talent Peer Group. This
creates a more credible and sustainable position as we seek to
effectively compete in this talent market.
Proposal reflects our ongoing commitment to
performance alignment
• Increased weighting of package towards performance.
This will align more closely with the Talent Peer Group and would
be the package with the highest weighting of performance-
related pay in the FTSE 100, creating clear alignment between
reward outcomes and performance for shareholders (this is
illustrated in the charts on the following page).
• Increases via LTIP (not AIP). Being long-term, share-based
and performance-linked, delivering increases via the LTIP
maximises alignment with shareholders.
• LTIP remaining fully performance-related. Unlike
many companies in the Talent Group and a number in the
FTSE 100, we are not moving to Restricted Share awards
or a ‘hybrid’.
• Continue to align AIP and LTIP metrics to strategy / KPIs.
This includes some minor changes for 2026 to ensure
optimal ongoing alignment. This is illustrated on page 128.
• Commitment to stretching performance targets. We have
a track record of setting stretching performance targets,
requiring significant outperformance for maximum pay-out.
Our pay-outs (as % of maximum) have rarely exceeded
median practice across the FTSE 100, even during periods
of strong performance. This is further reinforced for 2026
with the following stretch in targets demonstrated:
• The earnings growth required for maximum vesting
(14% p.a.) and threshold vesting (5% p.a.) is respectively
over 300bps and 200bps higher than the growth in the
earnings metric implied by the maximum and threshold
target for the 2025 LTIP award.
• Compared to the market, a maximum earnings growth
of 14% p.a. will position Pearson in the upper quartile
for LTIP target ranges in both the FTSE 100 and the Talent
Peer Group.
Talent peer group – total fixed pay (CEO)
Talent peer group – LTIP award level
(CEO, multiple of salary)
Talent peer group – target total
compensation CEO
Salary Benefits Pension
£1,200k
£1,000k
£800k
£600k
£400k
£0k
£1,400k
£1,600K
£1,800k
£200k
12% reduction in Pearson
fixed pay as a result of
change in pension
Shift in Pearson
market positioning
30X
25X
20X
15X
10X
0X
35X
40X
5X
In excess o f 40X
Increase from 450% to 850% to bring
Pearson closer to the median of
the market range, but remaining
around the lower end
4.5X
8.5X
£25m
£15m
£0m
£30m
£5m
£20m
£10m
Target total compensation would be
positioned closer to market median
£5.1m
£7.0m
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 122
• Earnings growth of 14% p.a. is also materially in excess of
market expectations for long-term growth implied by
current consensus estimates.
• The stretch of the TSR metric is first increased by
incorporating the Talent Peer Group as one of the
benchmarks – a group which comprises largely global
technology companies at the forefront of AI adoption
with a strong track record of performance. Pearson’s
outperformance of this group would represent an
exceptional level of delivery for our shareholders.
• In addition, by requiring upper quintile performance for
maximum vesting (from upper quartile previously), the
stretch of the TSR calibration is further enhanced. It is
also noted that our approach to TSR is already more
stretching than most of our peers in the Talent Peer
Group as a result of not allowing any vesting below
median – an important performance principle which we
remain committed to.
• Finally, the stretch of the Return on Capital target range is
being increased for the third consecutive year, and
requires a material uplift from current ROC levels (ROC
was 11.3% in FY25).
Evolution of CEO Pay Mix
The revisions to the Policy will address the Committee’s
desire to reinforce Pearson’s pay-for-performance
philosophy, by rebalancing the package to favour ‘at risk’
performance based pay.
The Committee considers this to create better alignment with
the interests of Pearson’s shareholders:
• The CEO’s fixed pay reduced from 14% to 8% of the overall
pay mix. This represents the low end of FTSE100 as
presented to the right.
• Variable pay increased from 86% to 92% of the overall pay
mix and is earned only for delivering against stretching
performance targets. This represents the highest proportion
of variable pay in the FTSE100 as presented to the right.
• 68% of the package is delivered through share based pay,
with a five year time horizon (three year performance period
and two year holding period).
Excludes Co-Investment Award granted to Andy Bird in 2020
FTSE 100 (excluding financial services) – mix of package (CEO, at maximum)
The table below outlines the pay mix percentage between fixed pay and variable pay (annual bonus and equity) for FTSE100 CEOs.
Fixed pay % AIP% Equity
Notes:
Target performance assumes 50% payout for AIP and LTIP under both
the 2023 and 2026 Policies.
No share price growth assumptions are included in any scenarios.
5-year evolution of maximum CEO pay mix at Pearson
FY22 (Andy Bird)
FY23 (Andy Bird)
FY24 (Omar Abbosh)
FY25 (Omar Abbosh)
FY26 (Omar Abbosh)
22%
14%
17%
14%
8%
28% 50%
34% 52%
33% 50%
34% 52%
24% 68%
30% 40% 50% 60% 80%10% 20%0% 70%
Pearson proposed
Pearson current
90% 100%
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 123
Directors’ Remuneration Committee report continued
Q&A with Committee Chair
During our extensive consultation, our shareholders actively
engaged and provided important input. Set out below are
some of the key questions we received, along with answers
from the Committee Chair.
Q. Some of the companies in the Talent Peer Group are
significantly larger than Pearson. How can it be right to
benchmark the CEO’s pay against these companies?
During this Policy review, the Committee carefully constructed
the Talent Peer Group in order to most accurately represent the
market in which we compete for executive talent. As with any
benchmarking exercise, a degree of judgment is required but we
firmly believe that these companies, being predominantly
US-based technology companies at the forefront of AI adoption,
as well as B2B services companies, most accurately reflect the
market in which Pearson must be able to compete for the skills
and experience we need to successfully deliver the strategy. It is
consistent with the market we have hired senior executive talent
from, including Omar.
Although the companies in the Talent Peer Group optimally
represent our talent market, we fully acknowledge that some are
substantially larger than Pearson and we have directly addressed
this in our methodology. For the majority of companies in the
group, we benchmark our CEO against a senior executive
reporting into the CEO (which we call a “CEO-1” role) and not
against the CEO role itself. The resulting CEO role ‘matches’
genuinely reflect the roles where we might seek to recruit from (or
may lose our talent to). One downside of this CEO-1
methodology is that it risks undervaluing the Pearson Group CEO
role which is likely to be more complex than some CEO-1 roles in
larger companies. However, overall, the methodology allows us
to most effectively benchmark against the specific companies
which we know best reflect our talent market, whilst accounting
for size differences in a responsible and robust way.
As a final observation, the Committee did consider a more
‘conventional’ approach of looking at CEO data in US-listed
technology/digital companies of much closer financial size to
Pearson, but which unlike the Talent Peer Group did not
specifically include the companies which we see as our direct
talent peers. The data for this group showed that in order to align
with market median, we would need to increase the CEO’s target
total compensation to a higher amount (e.g. c.£10m).
This exercise gave the Committee additional assurance of the
integrity of our Talent Peer Group approach: We are not simply
seeking to ‘match US practice’ but have thought carefully
about how best to ensure our package is competitive in
Pearson’s specific talent environment.
Q. How does an LTIP award of 850% compare against other
FTSE 100 companies?
We recognise that the CEO’s LTIP award of 850% of salary will sit
towards the upper end of practice in the FTSE. This is simply a
consequence of the commercial reality of positioning the
package to be competitive in our talent market. Although
Pearson is a UK-listed company within the FTSE 100, a significant
portion of our business and our senior executive team is based in
the US (see page 120). Our talent market is represented by
companies in the Talent Peer Group, and not by companies in
the FTSE 100. Provided that we position the CEO’s package
responsibly against that Talent Peer Group, the Committee is
comfortable with the relativity to the FTSE data.
There are two other ways in which to compare our package with
the FTSE 100. First, as shown on page 123, the new Policy will
result in a higher weighting towards performance than any other
company in the market. In addition, various changes to increase
the stretch in targets described on page 122 means we will have
some of the most challenging LTIP targets across the FTSE 100.
Q. Should an increase in LTIP quantum be accompanied by an
increase in stretch of targets?
This was an issue which the Committee carefully considered
during the review. From one perspective, given that the reason
for the increase in quantum is to ensure the package is
sufficiently market competitive, if targets are stretched too far
and become unfeasible, this objective will not be met. It is also
the case that the Committee has a strong track record in
setting highly stretching LTIP targets at Pearson.
On the other hand, given the uplift to the CEO’s LTIP award level,
the Committee determined that it would be appropriate to also
increase the stretch of the targets, and we have done so in a
number of ways. For example, we have materially increased the
growth rate implied by our earnings target to levels aligned to
upper quartile practice in the FTSE 100. Introducing the Talent
Peer Group and requiring upper quintile performance for
maximum vesting has increased the stretch on TSR. Our ROC
range has increased for the third consecutive year and would
drive material value creation above our cost of capital.
Q. How will the Remuneration Committee guard against
incentive outcomes that are misaligned with shareholder
experience, in view of significant quantum at stake?
The Committee maintains a robust discretion framework that is
considered before any payout outcomes for Executive Directors'
are determined. Specifically, the framework ensures the
Committee is satisfied and agree that the incentive outcomes are
appropriate and truly reflective of company performance and
among other factors, are consistent with the wider stakeholder
experience. Further information on our Discretion framework is
provided on page 132.
Q. Why did you not propose a ‘hybrid’ long-term structure,
given that these are common in your US peers and
increasingly seen in the UK market?
As you would expect, during the Policy review we carefully
considered a range of options for how the LTIP is structured. It is
correct that hybrids are common practice in the US-based
contingent of the Talent Peer Group. Ultimately, however, we
concluded that at this stage it was appropriate for our incentives
to remain fully performance-related, consistent with the Board’s
ambitions for growth and in recognition of the increase to award
levels. It is an issue that the Committee will keep under review
and a hybrid could become an option for Pearson in the future.
Q. How did the shareholder feedback you received influence
the final proposals?
For this Policy review, we have continued our long-standing
commitment to an ongoing and constructive dialogue with
shareholders. As explained on page 125, we conducted a
comprehensive multi-phased consultation programme, which
ultimately covered our largest 100 shareholders (c.85% of the
register) as well as the main proxy voting agencies. Initial feedback
from the first phase with our largest holders was positive, with
changes to the proposed LTIP metrics being the key response to
feedback. As the consultation broadened, the main focus was on
the stretch of the LTIP targets, which directly influenced the range
of changes we have made to increase stretch in the final proposals.
As would be expected, we continue to face into a wide range of
different perspectives in our shareholder base. Despite
widespread recognition of the issues we face and how we are
seeking to address them, including the changes we have made to
reflect shareholder input, we acknowledge that a minority of those
who engaged in the consultation are unlikely to be able to support
the proposed Policy. I would like to thank all those who participated
in the engagement process, and to re-affirm our commitment to
an ongoing dialogue in the future.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 124
Shareholder engagement
We have a well-established commitment to ongoing dialogue with our shareholders on executive compensation. The following table summarises the extensive engagement we undertook in support of
the development of our 2026 Directors’ Remuneration Policy:
Pre-2026 Remuneration Policy consultation
October 2025
Initial soundings taken from top six
shareholders (c.50% of share register) to
inform thinking and refine Policy proposals.
November 2025 – January 2026
Wider consultation with remaining top 15
shareholders (c.14% of share register) and
outreach to major proxy agencies (ISS, IA,
Glass Lewis).
January 2026
Engagement with the remaining top 100
shareholders (c.21% of share register) to provide
detail on our 2026 Directors’ Remuneration Policy
and context for the changes.
February 2026
Re-engaged the Top 15 shareholders to
provide more in-depth detail on our target
setting principles and approach
Impact on Policy development
The extensive feedback from shareholders
directly impacted a number of key aspects of
the final Policy. The following were changes
we made throughout the process to directly
reflect feedback received.
• Removed the strategic metrics from the
LTIP. The strategic metric that was removed
from LTIP was introduced to the AIP.
• Increased the percentage of the LTIP
based on financial metrics.
• Introduced a third Relative TSR peer group
in the LTIP against the Talent Peer Group.
• Increased maximum vesting for TSR from
upper quartile to upper quintile ranking.
• No base salary increases for 2026 to
support the rebalancing of remuneration in
favour of variable pay.
• Increased the stretch of the Earnings metric
in the LTIP, with maximum vesting requiring
c.14% p.a. growth, compared to c.10.9%
average in previous awards, and consistent
with upper quartile FTSE 100 practice.
• Increased the stretch of the ROC range for
the third consecutive year.
• For all LTIP metrics, increases to stretch
were made during both the January and
February engagement phases.
Key themes from engagement
• In total, approximately 30 separate meetings or online discussions were conducted on the proposals. Overall, we engaged with or received
feedback from approximately 85% of the share register.
• As shown above, we have continued to broaden our engagement in each subsequent outreach to help ensure we can capture as much
feedback as possible, while also extending the opportunity for shareholders to provide any new or further feedback on Pearson’s approach.
• There remains a diverse range of views in our shareholder base. However, of those we have had engagement with, the general sentiment,
including almost all of our largest shareholders, has been supportive of our overall approach and changes to the Policy.
• In the initial phase of the shareholder engagement, we had the opportunity to discuss our changes and feedback was broadly positive. Those
we engaged with recognised and acknowledged Pearson’s talent markets and the rationale for pay mix and quantum, expressed support for
our incentives remaining fully performance-related and were supportive of the proportional increase to shareholder guidelines reflecting the
increase in quantum. There was however, concern around the strategic metrics in the LTIP and the proportionately greater payout on this
metric given the quantum increase. In response to these concerns the Committee determined it was appropriate to remove strategic metrics
from the LTIP, with payout determined solely on financial performance.
• The revised Policy proposal was shared with shareholders and proxy agencies in the second phase of shareholder engagement. There were a
range of views, some shareholders were uncomfortable in principle with the material increase to quantum, whilst acknowledging the logic
behind the proposals and the level of compensation in our identified talent market. Others were highly supportive, with some even
encouraging Pearson to consider adopting a hybrid incentive with a material restricted stock component at the same overall quantum (i.e.
without applying a discount), citing the typical compensation mix in the talent set we are competing with.
• We also acknowledge that some shareholders queried how discretion would apply and specifically, how the Committee would guard against
payouts that do not feel reflective of the shareholder experience. We maintain a strong and robust discretion framework that is considered
when determining any payouts to Executive Directors. One key element of this framework is whether the payout would be consistent with the
wider stakeholder experience. In cases where we determine this is not the case, we have the ability to apply discretion and adjust payouts and
outcomes to ensure Executive Directors outcomes are appropriate. Further information on our discretion framework is provided on page 132.
• During the most recent round of engagement on the proposed level of stretch on LTIP targets, the proposals were recognised as being
appropriately stretching by the majority of those that responded, particularly with regard to the maximum targets. However, following
feedback, the Committee also made further increases in the level of stretch for the threshold targets.
• The Committee also considered that it would be appropriate to freeze the CEO’s base salary for 2026 as part of the overall rebalancing of
remuneration in favour of variable pay.
The Committee would like to thank all those shareholders that have engaged with us during this period. We are committed to an open and ongoing dialogue.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 125
Revenue Adj. operating
profit
Free cash flow Adjusted EPS Return on capital Dividend
per share
3 year Total
shareholder return
£3,577m
4% underlying growth
on prior year
£614m
6% underlying growth
on prior year
£527m
8% headline growth on
prior year
64.5p
4% headline growth on
prior year
11.3%
+8% on prior year
25.2p
5% increase
on prior year
+18.9%
-85% on a 3m average
basis to 31 Dec 2025
Strategic highlights
• Improved Group adjusted operating profit margin to 17.2%.
• Strong cash performance, with free cash flow of £527m, completed a £350m share buyback and announcement of new £350m share buyback.
• Continued to lead with the application of innovative technologies, deepening and scaling AI across our offering.
• Continued enterprise momentum through strategic partnerships to help employees and organisations prepare for the future of work.
Weighting
Adjusted operating profit
AIP outcome
Threshold Target Max % of total
£585m
Sales
40% £594m £683m 24.5%
30%
20%
5%
£3,541m £3,566m £3,757m 15.9%
£477m £487m £578m 14.4%
94% 96% 100% 2.5%
Fresh cash flow
Assessments &
Verification – rates of
renewal
59.8%
-9.8%
50.0%
5%
100%
46 49 55 2.5%
Enterprise Skilling –
number of key enterprise
customers
Formulaic outcome
Committee discretionary adjustment
Final Outcome
LTIP outcome
* The Adjusted EPS target range was adjusted to reflect the impact on the vesting
outcome of share buybacks over the performance period.
Annual Report on Remuneration – ‘At A Glance’
£614m
£3,577m
£527m
96%
49
Weighting
Adjusted EPS*
Threshold Stretch Max
% of total
award
55.0p
ROC
30% 65.4p 70.6p 18.3%
30%
15%
15%
8.5% 10% 11.5% 28.5%
Median 0%
Median 3.2%
Relative TSR vs. FTSE 100
Relative TSR vs. S&P500
52.0%
10%
100%
Improve gender
representation at
leadership levels
overall vs 2022 (VP
and above)
Achieve gender
parity at leadership
levels in aggregate
(VP and above)
Achieve gender
parity at all
leadership levels
(VP and above)
2.0%
ESG
Final outcome
64.5p
11.3%
147 out of 295
36 out of 56
Upper Quartile
Upper Quartile
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 126
Looking ahead
Chief Executive’s remuneration for 2026
Fixed remuneration Annual Bonus Long-term Incentives
Base Salary: £1,022,000
Benefits and Allowances
Pension: £18,000
Max: 300% of Salary
Target: 150% of Salary
Deferral: 1/3 for 2 years if shareholding guidelines have not been met
Max: 850% of Salary
Performance Period: 3-years
Holding period: 2-years
Executive Director shareholding as at 31 December 2025
CEO fixed vs performance pay
8% 24% 68%
Basic Salary, Pensions and benefits AIP LTIP
Fixed Performance pay 92%
Omar Abbosh
Sally Johnson
2025 shareholding guideline
Shareholding Guideline
2025 shareholding guideline 2026 shareholding guideline
0% 200% 400% 600% 800% 1000% 1200%
Current Shareholdings
Increase in stretch of 2026 LTIP targets
The 2026 LTIP will increase the stretch of targets in a number of ways, directly reflecting the
feedback form our shareholders in consultation:
Earnings
(40%)
TSR
(40%)
ROC
(20%)
• Maximum requires c.14% p.a. growth*, aligned to FTSE 100 upper
quartile, materially exceeding consensus, and above c.11% in 2025 award
• Threshold requires c.5% p.a. growth, above c.2% in 2025 award
• Introduction of Talent Peer Group increases stretch of TSR benchmarks
• Maximum vesting now also requires upper quintile performance (vs. upper
quartile previously)
• Target range 12.3% - 16.0% (vs. 11.3% in 2025)
• Range increased for third consecutive year
* Note – targets are expressed in £m as shown on page 131 and are converted here into annualised
growth rates to allow comparison
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 127
Directors’ Remuneration Committee report continued
Adjusted operating profit
Free cash flow conversion
Return on capital
Sales
Sustainable profitable growth
Alignment of performance framework to Pearson’s strategy
Financial objectives Strategic objectives
Assessments & Verification: Driving performance in the
core business
Enterprise Skilling: targeted market expansion and
medium-term growth vectors
Adjusted Earnings
Group Adjusted Operating Profit
Free cash flow
Return on capital
Group Sales
Total shareholder return (TSR)
Businesses rate of renewal
and new business growth
Number of key
enterprise customers
1
5
6
1
2
2
2026 AIP 2026 LTIP
40%
30%
30%
4
3
20%
20%
40%
15%
5%
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 128
Summary of our Directors’ Remuneration Policy
The 2026 Directors’ Remuneration Policy will be subject to shareholder approval at the AGM to be held on 1 May 2026. The table below outlines key features of the 2026 Directors’ Remuneration Policy
following the Remuneration Committee’s extensive review over the last year. The 2026 Directors’ Remuneration Policy is set out in full on pages 144-152.
Key features of the 2026 Directors’ Remuneration Policy Outline of proposed changes for 2026
Base salary • Base salaries reflect level, role, skills, experience, the competitive market and individual contribution.
• Base salaries are normally reviewed annually, consistent with the framework used to take into account
performance and market relativity for salary reviews in the wider business, with any increases normally
in line with typical increases awarded to other Group employees.
No changes to policy.
Allowances and
benefits
• Reflects the local competitive market and may include travel-related, health-related and risk-related
benefits as well as any other benefits provided to the majority of employees.
• The Committee may introduce other benefits if it is considered appropriate to do so.
No changes to policy.
Retirement benefits • Employees in the UK, including Executive Directors, are eligible to join the Money Purchase 2003
Section of the Pearson Pension Plan.
• The Committee has discretion to put in place retirement benefit arrangements in line with local
market practice.
• Executive Directors, who opt out of the pension, can receive a cash allowance of up to 16% of base
salary, in line with the maximum company contribution as a percentage of salary that UK employees of
a similar age are eligible to receive.
Reduction in Chief Executive pension amount from 16% of
salary to align with US 401k pension contributions and
limits set by the IRS. For 2026, the pension value will be
£18,000 (c.2% of salary).
No changes for the Chief Financial Officer.
Annual incentive plan • Maximum opportunity of 300% of salary.
• Based on the achievement of annual business goals and strategic objectives, with financial metrics
accounting for at least 75% of total opportunity.
• Payout of 25% of maximum for threshold performance with 50% payable for on-target performance.
• Discretion to adjust formulaic outcome where this does not reflect underlying performance.
• Awards paid fully in cash except where shareholding guidelines have not been met where a bonus
deferral applies.
• Malus and clawback provisions apply.
No changes to policy.
Long-term
incentive plan
• Policy maximum opportunity of 850% of base salary.
• Based on the achievement of financial targets (e.g. adjusted earnings and a return measure),
shareholder returns (e.g. relative total shareholder return).
• Payout of 20% of maximum for threshold performance.
• Discretion to adjust formulaic outcome where this does not reflect underlying performance.
• Awards are subject to a post-vesting holding period of two years.
• Malus and clawback provisions apply.
Increase in Chief Executive maximum opportunity to
850%, in line with the maximum policy opportunity.
For the 2026 LTIP the maximum opportunities are:
• 850% of base salary for the Chief Executive
• 300% for the Chief Financial Officer
1
Removed the performance metrics based on strategic
metrics. For 2026, the LTIP metrics will be Relative
TSR (40%), Adjusted Earnings (40%), and Return on
Capital (20%).
1. As outlined on page 118, Sally Johnson will not be eligible for the 2026 LTIP.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 129
Directors’ Remuneration Committee report continued
Key features of the 2026 Directors’ Remuneration Policy Outline of proposed changes for 2026
Shareholding
guidelines
• Shareholding guidelines will be aligned with the prevailing level of LTIP award for the relevant
Executive Director.
• For 2026, the shareholding in-employment guidelines are:
• 850% for the Chief Executive
• 300% for the Chief Financial Officer
• Post-employment shareholding guidelines apply.
Increase in current in-employment guidelines for the Chief
Executive (850% from 450%). No change for the Chief
Financial Officer (300%).
Introduce shareholding guidelines that will be aligned with
the prevailing level of LTIP award for the relevant
Executive Director.
Chair and NED fees • To attract and retain high-calibre individuals, with appropriate or industry-relevant skills, by offering
market-competitive fee levels.
• The Chair and Deputy Chair are paid a single fee for all responsibilities.
• The Non-Executive Directors are paid a basic fee, with Committee Chairs, members of the main Board
Committees, and, if relevant, the Senior Independent Director paid an additional fee to reflect their
extra responsibilities.
• The Chair, Deputy Chair and Non-Executive Directors receive no other pay or benefits, except for
reimbursement of expenses, and do not participate in incentive plans.
No longer require a minimum of 25% of the Chair,
Deputy Chair and Non-Executive Directors’ basic fee
to be paid in shares.
NED shareholding
guidelines
• Non-Executive Directors are encouraged to build and retain Pearson shares equivalent to 100% of
their basic fee (i.e., single fee for the Chair and Deputy Chair) and to reach the guideline within five
years from the later of the date this policy is effective or the date of their appointment,
Introduced a shareholding guideline of 100% of the
non-executive directors’ basic fee which they are given
five years (from the later the date of this policy is effective
or the date of their appointment).
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 130
Implementation in 2026
Base salary
Salaries with effect from 1 April 2026:
• Omar Abbosh – £1,022,000 (no increase)
• Sally Johnson – £620,000 (no increase)
Benefits
Travel, health and risk-related benefits in line with Policy
Pension:
• Omar Abbosh –receives a payment in lieu of pension in line with US 401k pension contributions
and limits set by the IRS (£18,000 for 2026)
• Sally Johnson – receives a payment in lieu of pension at 16% of base salary
Annual Incentive Plan
Maximum opportunities of:
• 300% of base salary for the Chief Executive
• 200% of base salary for the Chief Financial Officer
1
For 2026, the following balanced mix of financial and strategic measures will be used to
determine any payout. As in previous years, we will apply a financial underpin to the strategic
measures. The performance targets are considered commercially sensitive and will be disclosed
in full retrospectively in next year’s report.
Adjusted operating profit Sales Free cash flow Strategic measures*
30% 30% 20% 20%
* Split 10% on ‘Assessments & Verification – rates of renewal’, 5% on ‘Assessments & Verification – new
business growth’ and 5% on ‘Enterprise Skilling – number of key enterprise customers’.
In line with the Policy, a third of any bonus paid will be deferred into shares for two years if an
Executive Director has not met their shareholding guideline.
Long-term incentive Plan
Awards will be made as follows:
• 850% of base salary for the Chief Executive
• 300% of base salary for the Chief Financial Officer
1
Performance will be measured over the three-year period to 31 December 2028, with any shares
vesting subject to an additional two-year holding period. Performance measures and targets for
the 2026 award are as follows:
% of total
Threshold
(20% payout)
Stretch
(75% payout)
Maximum
(100% payout)
Adjusted Earnings (in FY28) 40% £485m £537m £623m
Relative TSR 40% Median –
Upper
Quintile
Return on Capital (in FY28) 20% 12.3% 14.2% 16.0%
Note 1: For Adjusted Earnings and Return on Capital, vesting is on a straight-line basis between Threshold to
Stretch and between Stretch and Maximum. For Relative TSR, vesting is on a straight line basis between
Threshold and Maximum.
Note 2: 2026 LTIP targets have been set at a USD:GBP exchange rate of 1.35.
Note 3: Relative TSR will be assessed one third against the Talent Peer Group (further information provided on
page 121), a third against the FTSE 100 and a third against the S&P 500. Companies within financial services,
energy, basic materials, utilities and healthcare sectors will be excluded from the TSR groups.
Chair and NED fees
Fees remain relatively unchanged with the only increase in fees related to the Reputation &
Responsibility Committee where the Committee Chair and member fee was increased to
£20,000 (from £15,000) and £10,000 (from £8,000), respectively. The 2026 fees are as follows:
• £500,000 for the Chair
• £175,000 for the Deputy Chair and Senior Independent Director
• £70,000 as the base fee for Non-Executive Directors
Audit
Committee
Remuneration
Committee
Nomination &
Governance
Committee
Reputation &
Responsibility
Committee
Committee Chair £27,500 £27,500 £15,000 £20,000
Committee member £15,000 £10,000 £8,000 £10,000
1. As outlined on p118, Sally Johnson will not be eligible for the 2026 AIP and 2026 LTIP award.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 131
1 32 4 5 6
Directors’ Remuneration Committee report continued
Discretion framework
When determining performance outcomes, the Remuneration Committee has the ability to adjust payments up or down if it believes that the outcome does not reflect underlying financial or
non-financial performance or if such other exceptional factors warrant doing so. In making this determination the Remuneration Committee applies the following framework:
What is the formulaic
outcome considering
performance versus
existing targets
and underpins
Is this consistent
with overall
company performance?
Is this consistent
with the wider
stakeholder experience?
Are there any significant
culture, ESG or operational
issues to be considered?
Are there any one-off or
exceptional events to be
taken into consideration?
Are outcomes appropriate
or should an adjustment
be considered?
Pearson’s remuneration principles govern pay for the whole organisation. We have developed remuneration arrangements for our Executive Directors with these principles in mind.
Aligned to longer-
term strategy
Reward is linked to achieving
Pearson’s longer-term
strategy, growth and
sustainability
Pay for performance
Remuneration framework
and outcomes are aligned
with performance
Market competitive
Pay levels are market
competitive, based on role,
grade and contribution,
and ensure individuals are
fairly rewarded in line with
the market
Targeted
differentiation
We operate targeted
differentiation of reward
across our employees,
linked to talent and
performance management
Tailored
Our approach to reward
is tailored in certain
circumstances to address
a specific market/business
need, and is consistent
with our underlying
reward philosophy
One part of the
employee value
proposition
Remuneration is one part
of our broader employee
value proposition – and is
not the only reason to work
for Pearson
Our Directors’ Remuneration Policy and its implementation supports our company purpose of ‘helping people realise the life they imagine through learning’, our strategy and ultimately the delivery of
long-term sustainable value for all stakeholders, including our shareholders.
Remuneration principles
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 132
Workforce remuneration at Pearson
The Committee takes seriously its responsibilities concerning the oversight of remuneration policies and practices for the wider organisation. Our remuneration principles as set out on page 132 are
consistent for all our colleagues, and applied depending on business need, level and geography.
The key difference in our executive remuneration, compared to the approach to remuneration across our workforce, is that remuneration for our Executive Directors is more heavily weighted towards
variable pay and linked to delivering strategic objectives.
Approach to remuneration across Pearson
Base salary Set considering economic factors, competitive market rates, roles, skills, experience and individual performance.
Allowances and benefits Reflect the local labour market in which colleagues are based and may include healthcare and well-being benefits.
Retirement benefits Reflect local market practice.
Pearson colleagues in the UK may participate in the same underlying pension arrangements as the Executive Directors, subject to certain age bands and legacy
arrangements. The main contribution plan (Money Purchase 2003) allows employees to pay in between 3% and 8% of their basic salary, depending on their age.
Pearson then contributes double that amount, paying in between 6% and 16% of salary.
Annual incentives Over half of all Pearson employees, around 10,000 colleagues, participate in an Annual Incentive Plan, which is funded based on similar performance measures to the
Executive Directors. Several other colleagues (c. 1,500) participate in alternative cash-based annual bonuses, such as sales incentive and commission plans, based
on performance targets and profit-shares where required for legislative reasons.
Share incentives We believe in the importance of aligning the interests of management and our shareholders by delivering a significant proportion of total remuneration in the form of
share incentives.
Approximately 600 colleagues (4% of all employees) participate in the annual Long-Term Incentive Plan grant, selected based on their role, performance and
potential; with other awards being made from time to time on an ad hoc basis to certain roles based on market need.
Awards for our Executive Directors are made solely in the form of performance shares. However, our Managing Directors and Executive Management team have an
equal mix of both performance shares (subject to broadly the same performance conditions as the Executive Directors) and restricted shares, recognising prevailing
practice in the markets in which we compete for talent. At other levels, awards are typically made in restricted shares only.
Executive Directors
Pearson Executive
Management
Managing Directors
Senior Management
100% performance shares
100% restricted shares
50% performance shares 50% restricted shares
50% performance shares 50% restricted shares
In addition to our Long-Term Incentive Plan, all colleagues have the opportunity to become shareholders and owners of the Company and share in the value they help
to create through participation in savings-related share acquisition programmes. Under our ‘Save For Shares’ plan and ‘Employee Stock Purchase Plan’, employees
can buy Pearson shares at a discount (20% discount for ‘Save For Shares’ and a 15% discount for the ‘Employee Stock Purchase Plan’, in line with the maximum
discounts permitted by HMRC and the IRS respectively). Around a quarter of eligible employees currently save to purchase Pearson shares via our employee share
plans, contributing to a strong culture of share ownership.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 133
During the year, the Committee received reports from the
Chief Executive and Chief Human Resources Officer on pay
and conditions across Pearson, and on the recruitment and
retention experience. We took these into account when
determining executive remuneration. We have established
channels in place to inform our colleagues and help them
understand how executive remuneration and wider pay
policies are aligned. Views and sentiment expressed by
colleagues around matters relating to reward and culture are
taken into consideration by the Remuneration Committee
when determining pay for senior management. During the year,
the Board’s approach to employee engagement included
in-person, structured sessions, which complemented existing
executive employee engagement and provided opportunities
for direct engagement by Non-Executive Directors. The Board
held three in-person sessions with employees in London and in
the US in Hoboken, New Jersey and Boston, Massachusetts,
facilitating meaningful interactions between Board members
and various groups of employees to hear their thoughts,
feedback and questions.
Board members engaged on a variety of topics, including
the strategic review process and the clarity of our
strategic priorities, the plans for execution and the
pace of transformation required, and the importance
of company culture. See pages 84 for more on how the
Board engages with employees.
The Committee also considers Pearson’s gender pay gap and
ethnicity pay gap in Great Britain in light of our reporting
requirements, as well as Pearson’s CEO pay ratio. Pearson
continues to review and update its policies and practices
relating to the hiring, retention, and development of women, in
line with market practices and applicable UK rules.
Sharing in success
Pearson’s remuneration principles are consistent across the
organisation and are designed to support our culture, and to
make Pearson an employer of choice, able to attract and retain
talent to execute our digital-first strategy. Many of the features
of our Directors’ Remuneration Policy apply more broadly, and
we believe that all our people should have the opportunity to
benefit when the Company does well. In particular:
• 2025 was another year of solid performance for the
business and this was reflected in the level of funding under
the AIP. As noted on page 133, over half of all Pearson
employees (c.10,000 employees) benefitted from
participating in an AIP during 2025.
• Similarly, all eligible colleagues, including Executive
Directors, can participate in savings-related share
acquisition programmes that are not subject to any
performance conditions. Around a quarter of eligible
employees save to purchase discounted Pearson shares via
our employee share plans. At the most recent maturity of
our ‘Save For Shares’ plan in 2025, the average gain for a
participant was c.£7,300 – allowing those who participated
to benefit from the shareholder value they have helped to
create over the previous three years.
Directors’ Remuneration Committee report continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 134
Remuneration Report for 2025
Certain parts of this report have been audited, as required by
the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 as amended. The
tables subject to audit are marked with an asterisk.
Executive Director ‘single-figure’ remuneration*
The remuneration received by Executive Directors for the
financial years ended 31 December 2025 and 31 December
2024 is set out below. The Committee considers that the
Directors’ Remuneration Policy operated as intended
during 2025.
Omar Abbosh
1
£000s
Sally Johnson
£000s
2025 2024 2025 2024
Base salary 1,017 982 609 570
Allowances and benefits 86 77 24 16
Retirement benefits 163 157 97 91
Total fixed pay 1,265 1,216 730 677
Annual incentives 1,533 1,878 – 735
Long-term incentives – – – 1,576
Buy-out award
2
– 13,276 – –
Total variable pay 1,533 15,154 – 2,311
Total remuneration 2,798 16,370 730 2,988
1. Omar Abbosh was appointed Chief Executive on 8 January 2024.
2. The full value of Omar Abbosh’s buy-out award is included in the
single-figure of remuneration for 2024 as required by the disclosure
regulations. However, it comprises elements that would not be
received until 2025 and 2026. The full details of this were disclosed in
the previous year’s report.
3. As explained on page 118 and 137, Sally Johnson’s exit arrangements
have been determined in accordance with the Remuneration Policy
and therefore she is not eligible for the 2025 AIP and vesting under
the 2023 LTIP award.
Notes to single-figure table*
Allowances and benefits
Travel benefits comprise car allowance and reimbursements of
a taxable nature resulting from business travel and
engagements. Health benefits comprise healthcare, health
assessment and dental care. Risk-related benefits comprise
life and other insurance policies. In addition to these
allowances and benefits, Executive Directors may also
participate in company benefit or policy arrangements that
have no taxable value and/or are available to all other
colleagues in the same location. Sally Johnson’s life cover is
arranged under an excepted policy on a similar basis to other
employees who were affected by the lifetime allowance and
have opted out of the Pearson Pension Plan. 2024 for Omar
Abbosh has been restated to include tax paid by the company.
Retirement benefits and entitlements*
Omar Abbosh received a payment in lieu of pension at 16% of
their base salary, in line with the pension provision for UK
employees of a similar age.
From 1 October 2022, Sally Johnson began receiving
payments in lieu of pension at 16% of her base salary, in line
with the pension provision for UK employees of a similar age.
Prior to October 2022, Sally Johnson was a member of the
Final Pay section of the Pearson Pension Plan, where the
pension accrual rate was 1/60
th
of pensionable salary per
annum, restricted to the Plan’s earnings cap. No further
accrual will apply.
Details of the Executive Directors’ pension-related benefits in
2025 are as follows:
Omar Abbosh
£000s
Sally Johnson
£000s
Other allowances in lieu of pension 163 97
Accrued pension at
31 December 2025 – 71
Note 1: Other allowances in lieu of pension represent the cash
allowances paid.
Note 2: The accrued pension at 31 December 2025 is the deferred
pension at 30 September 2022 (date the accrual for the pension
ceased) revalued to 31 December 2025 in line with the Plan rules.
It relates to the pension payable from the UK Plan. Normal retirement
age is 62.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 135
Directors’ Remuneration Committee report continued
Annual Incentive Plan (AIP) – outcome for 2025*
The 2025 AIP was based on a mix of financial (90% weighting) and strategic measures (10% weighting). The following table summarises the performance targets (presented on a consistent basis to the
actual results, considering portfolio and currency movements) and performance against these targets, which results in a formulaic outcome of 59.8% of maximum payout.
Performance range Payout
% of total
Threshold
(25%)
Target
(50%)
Maximum
(100%)
Actual
results
% of max bonus
opportunity
Adjusted operating profit 40% £585m £594m £683m £614m 24.5%
Sales 30% £3,541m £3,566m £3,757m £3,577m 15.9%
Free cash flow 20% £477m £487m £578m £527m 14.4%
Assessments & Verification – rates of renewal
1
5% 94% 96% 100% 96% 2.5%
Enterprise Skilling – number of key enterprise customers
1
5% 46 49 55 49 2.5%
100% Formulaic outcome 59.8%
Adjustment -9.8%
Final outcome 50.0%
Note 1: Internal Audit provided an independent assessment of the result for the Committee.
Informed by the CEO’s approach to the wider management team, the Committee considered it appropriate to make a discretionary downward adjustment to reduce the final outcome to 50% of
maximum. No malus or clawback provisions were used in relation to the 2025 AIP. In accordance with the Policy, Omar Abbosh has satisfied his minimum shareholding requirement and therefore no
deferral is required.
Long-term Incentive Plan (LTIP) – vesting outcome for 2025*
The 2023 LTIP award was subject to performance conditions assessed to 31 December 2025. Performance targets were partially met, resulting in the award vesting at 52% of maximum. Vested shares
are subject to an additional two-year holding period. In accordance with Sally Johnson’s exit arrangements (as outlined on page 118), her 2025 LTIP award will lapse due to cessation of employment.
The targets and performance against these targets are as follows:
Performance range Vesting
% of total
Threshold
Stretch
Maximum
Payout at
threshold
Payout at
stretch
Payout at
maximum
Actual
% achieved
% of total
award
Adjusted EPS 30% 55.0p 65.4p 70.6p 20% 65% 100% 64.5p 61.1% 18.3%
ROC 30% 8.5% 10% 11.5% 20% 65% 100% 11.3% 95.1% 28.5%
Relative TSR vs FTSE100
(excl. certain sectors 15% Median – Upper quartile 20% – 100% Ranked 36 out of 56 0.0% 0.0%
Relative TSR vs S&P 500
(excl. certain sectors) 15% Median – Upper quartile 20% – 100% Ranked 147 out of 295 21.1% 3.2%
ESG 10%
Improve gender
representation at
leadership levels
overall vs 2022
(VP and above)
Achieve gender parity
at leadership levels
in aggregate
(VP and above)
Achieve gender parity
at all leadership levels
(VP and above) 20% 65% 100%
Improve gender
representation at
leadership levels overall
vs 2022 (VP and above) 20.0% 2.0%
100% Total 52.0%
The Adjusted EPS target range was adjusted to reflect the impact on the vesting outcome of share buybacks over the performance period. Relative TSR was measured against the constituents of the
FTSE 100 and the S&P500 at the start of the performance period.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 136
Omar Abbosh did not participate in the 2023 LTIP and Sally Johnson’s 2023 LTIP award will lapse
due to her cessation of employment.
The value of the 2022 LTIP reported in last year’s report for Sally Johnson (£1,565k) was an
estimate based on the three-month average share price to 31 December 2024 (1166.0p).
The actual values of the 2022 LTIP on the 1 May 2025 vesting date was £1,576k based on a
closing share price of 1174.5p.
Long-term incentives awarded in 2025*
The following LTIP awards were granted during the year:
Director
Date
of award
Vesting
date
Number
of shares
Face
value
Face value
(% of base
salary)
Value for
threshold
performance
(% of maximum)1
Performance
period
Omar
Abbosh
1 May
2025
1 May
2028 394,155 £4,599,001 450% 20%
1 Jan 25 –
31 Dec 27
Sally
Johnson
1 May
2025
1 May
2028 159,411 £1,860,008 300% 20%
1 Jan 25 –
31 Dec 27
The face value was determined using a share price of 1166.8p, representing the five-day
average up to and including 30 April 2025, which is the same as the approach used for the wider
employee population. In accordance with Sally Johnson’s exit arrangements (as outlined on page
118), her 2025 LTIP award will lapse on cessation of employment.
The performance measures and targets for this award are as follows:
% of total
Threshold
(20% vesting)
Maximum
(100% vesting)
Adjusted EPS (in FY27) 30% 67.0p 85.0p
Return on Capital (in FY27) 30% 10.5% 14.0%
Relative TSR 30% Median Upper quartile
Strategic Measure – Assessment & Verification:
New Business Growth 10% £90m £105m
Note 1: Vesting is on a straight-line basis between Threshold and Maximum.
Note 2: 2025 LTIP targets have been set at an USD:GBP exchange rate of 1.25.
Note 3: Relative TSR will be assessed half against the FTSE 100 and half against the S&P 500. Companies within
financial services, energy, basic materials, utilities and healthcare sectors will be excluded from both TSR groups.
The Committee reserves the right to adjust pay-outs up or down before they are released, if it
believes the vesting outcome does not reflect underlying financial or non-financial performance,
or for other exceptional factors. In making any adjustments, the Committee are guided by the
principle of aligning shareholder and management interests.
Any shares vesting based on performance to 31 December 2027 will be subject to an additional
two-year holding period.
Directors’ interests in shares and value of shareholdings*
Shareholding guidelines
Executive Directors are expected to build up a substantial shareholding in Pearson, in line with our
policy of encouraging widespread employee share ownership, and to align the interests of
Executive Directors and shareholders.
Under the 2023 Directors’ Remuneration Policy, the shareholding guideline is 450% of base salary
for the Chief Executive and 300% of base salary for the Chief Financial Officer. Under the
proposed 2026 Policy, the shareholding guideline will be set in line with the prevailing level of LTIP
award. For 2026, these will be 850% of salary for the Chief Executive and 300% of base salary for
the Chief Financial Officer.
Shares that count towards these guidelines include any shares held unencumbered by an
Executive Director, their spouse and/or dependent children, plus any shares vested but held
pending release under a share plan, and any shares unvested but not subject to future
performance conditions (on a net of tax basis). Executive Directors have five years from their date
of appointment to the Board to reach the guideline. Once the guideline is met, it is not re-tested,
other than when shares are sold.
As part of the year-end process, the Committee assessed the level of shareholding against the
guideline in accordance with our shareholding policy and confirmed that the guideline was met
for both Omar Abbosh and Sally Johnson.
Executive Directors are expected to retain their current shareholding guideline (or actual
shareholding if lower) for two years following stepping down as an Executive Director. This
guideline does not apply to shares purchased by the Executive Director.
In 2025, shareholding guidelines did not apply to the Chair, Deputy Chair and Senior Independent
Director and Non-Executive Directors. However, a minimum of 25% of the Chair, Deputy Chair
and Senior Independent Director and Non-Executive Directors’ basic fee was paid in Pearson
shares, which the Chair, Deputy Chair and Senior Independent Director and Non-Executive
Directors have committed to retain for the period of their directorships. For 2026, under the
proposed 2026 Policy, a shareholding guideline of 100% of the non-executive directors’ basic
fee will apply.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 137
Directors’ Remuneration Committee report continued
Directors’ interests
The share interests of the Directors and their connected persons are:
Director
Current
shareholding
(ordinary
shares
2
)
Conditional
shares subject
to
performance
3
Conditional
shares subject
to
employment
only
4
Total number
of ordinary
and
conditional
shares
Shareholding
as %
of salary
5
Shareholding
requirement
met?
Executive Directors
Omar Abbosh 805,779 865,911 472,952 2,144,642 1,077% Yes
Sally Johnson 250,602 544,858 - 795,460 421% Yes
Non-Executive Directors
Omid Kordestani 98,603 – – – – n/a
Sherry Coutu
CBE 20,672 – – – – n/a
Alison Dolan 3,879 – – – – n/a
Alex Hardiman 3,434 – – – – n/a
Arden Hoffman 875 – – – – n/a
Esther Lee 6,763 – – – – n/a
Costis Maglaras 0 – – – – n/a
Graeme Pitkethly 21,368 – – – – n/a
Annette Thomas 6,614 – – – – n/a
Lincoln Wallen 22,740 – – – – n/a
Note 1: Share interests are shown as at 31 December 2025 or where marked with an asterisk at the date of
stepping down from the Board.
Note 2: Ordinary shares include both ordinary shares listed on the London Stock Exchange and American
Depositary Receipts (ADRs) listed on the New York Stock Exchange.
Note 3: Conditional shares subject to performance means unvested shares, which are subject to performance
conditions and continuing employment for a pre-defined period. This includes the LTIP awards granted in 2023,
2024 and 2025. In accordance with Sally Johnson’s exit arrangements, her conditional shares subject to
performance will lapse on cessation of employment .
Note 4: Conditional shares subject to employment only means unvested shares, which are subject to a holding
period and / or continued employment only.
Note 5: Shareholding as a % of salary is based on current shareholding and conditional shares subject to
employment only. It has been calculated using a three-month average share price to 31 December 2025
of 1041.6p.
Note 6: There have been no other changes in the interests of any Director between 31 December 2025 and
7 March 2026, being the latest practicable date prior to the publication of this report.
Chair, Deputy Chair and Senior Independent Director and Non-Executive
Director remuneration in 2025*
The remuneration paid to the Chair, Deputy Chair and Senior Independent Director and Non-
Executive Directors for the financial years ended 31 December 2025 and 31 December 2024 is
set out below.
2025 2024
Director
£000s
Total
fees
Taxable
benefits
Total
Total
Fees
Taxable
benefits
Total
Omid Kordestani 500 17 517 500 45 545
Sherry Coutu CBE 106 14 119 106 17 123
Alison Dolan 95 1 96 92 2 94
Alex Hardiman 94 54 148 93 18 111
Arden Hoffman 50 10 61 – – –
Esther Lee 92 20 112 88 15 103
Costis Maglaras 12 0 12 – – –
Graeme Pitkethly 175 23 198 152 12 165
Annette Thomas 105 23 127 103 12 115
Lincoln Wallen 94 27 121 93 13 106
Note 1: In 2025, a minimum of 25% of the Chair, Deputy Chair and Senior Independent Director and Non-
Executive Directors’ basic fee was paid in shares. For 2026, under the proposed 2026 Policy, a shareholding
guideline of 100% of the non-executive directors’ basic fee will apply.
Note 2: Taxable benefits refer to travel, accommodation and subsistence expenses incurred while attending
Board meetings during the period that were paid or reimbursed by the company, and which HMRC deems
taxable in the UK. 2024 has been restated to include tax paid by the company.
Note 3: Arden Hoffman and Costis Maglaras joined the Board on 1 June 2025 and 1 November 2025 respectively.
Payments to former Directors*
There were no other payments to former Directors in 2025, other than those disclosed in previous
Directors’ Remuneration Report.
Payments for loss of office*
There were no payments for loss of office made to or agreed for Directors in 2025.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 138
Service contracts
Terms and conditions of our Directors’ appointments are
available for inspection at our registered office during normal
business hours and at the AGM. So that appropriate
arrangements can be made for shareholders wishing to
inspect documents, we request that shareholders contact
the Company Secretary by email at companysecretary@
pearson.com in advance of any visit to ensure that access
can be arranged.
The Executive Directors have notice periods in their service
contracts of 12 months from the company and six months from
the Executives.
The Deputy Chair and Senior Independent Director and
Non-Executive Directors serve Pearson under letters of
appointment, which are renewed annually and do not have
service contracts. The Deputy Chair and Senior Independent
Director and Non-Executive Directors’ letters of appointment
do not contain provision for notice periods or for
compensation if their appointments are terminated. The
Chair’s appointment may be terminated on 12 months’ notice.
Executive Directors’
Non-Executive directorships
Our current Executive Directors hold the following external
commitments: Sally Johnson is a Non-Executive Director of
Rentokil Initial plc and Chair of its Audit Committee.
Historical performance and remuneration
Total shareholder return performance
Set out on the right is Pearson’s total shareholder return (TSR)
performance, relative to the FTSE All-Share index, on an annual
basis over the 10-year period 1 January 2016 to 31 December
2025. We chose this comparison because the FTSE All-Share
represents the broad market index within which Pearson shares
are traded. TSR is a measure of returns a company provides for
shareholders, reflecting share price movements and assuming
reinvestment of dividends. Opposite this is a summary of the
single figure of total remuneration, and variable pay outcomes,
for the Chief Executive over the same 10-year period.
* Source: Eikon from Refinitiv. This graph shows the value, by 31 December 2025, of £100 invested in Pearson on 31 December 2015, compared with
the value of £100 invested in the FTSE All-Share on the same date
John Fallon Andy Bird Omar Abbosh
2016 2017 2018 2019 2020 2020 2021 2022 2023 2024 2024 2025
Total remuneration
(single figure, £000s) 1,518 1,758 3,094 1,616 855 334 5,167 6,856 11,419 2,588 16,370 2,798
Annual incentive (% of maximum) 24% 44% 45% Nil Nil N/A 63% 76% 85% 64% 64% 50%
Long-term incentive
(% of maximum) Nil Nil 42% 33% Nil N/A N/A N/A 85% 75% N/A N/A
Note 1: Total remuneration is as reflected in the single-total figure of remuneration table.
Note 2: Annual incentive is the actual annual incentive received by the incumbent as a percentage of maximum opportunity.
Note 3: Long-term incentive is the payout of performance-related share awards where the year shown is the final year of the performance period for
the purposes of calculating the single total figure of remuneration.
Note 4: The single-figure remuneration for Andy Bird has been converted using the average USD:GBP exchange rate for the relevant period.
Dilution and use of equity
Awards under Pearson’s various share plans can be satisfied using existing shares bought in the market, treasury shares or newly
issued shares. For restricted stock awards under the LTIP, we would expect to use market-purchased shares. There are limits on the
amount of new-issue equity that can be used: In any rolling 10-year period, no more than 10% of Pearson equity will be issued, or be
capable of being issued, under all Pearson’s share plans, and no more than 5% of Pearson equity will be issued, or be capable of
being issued, under executive or discretionary plans.
The current dilution from all Pearson plans, executive or discretionary, and shares held in trust is as follows:
Dilution 2025
All Pearson plans 2.5%
Executive or discretionary plans 0.4%
Shares held in trust 0.1%
Total Shareholder Return since 2016*
250
200
150
100
0
250
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Pearson TSR FTSE All-Share TSR
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 139
Directors’ Remuneration Committee report continued
Comparative information
The following information provides additional context regarding Directors’ total remuneration.
Relative percentage change in remuneration of Directors and employees
The following table sets out the year-on-year percentage change in base salary/fees, allowances and benefits and annual incentives in respect of all Directors during the year, compared to the average
percentage change for all employees of Pearson. The figures for all Directors are calculated based on remuneration received in the relevant year as set out in the table on page135.
While the Committee reviews base pay for the Executive Directors relative to Pearson’s broader employee population, local practices drive our approach to benefits, and we determine eligibility
depending on level and individual circumstances, which do not lend themselves to comparison.
2025 2024 2023 2022 2021
Base
salary/fees
Allowances
and benefits
Annual
Incentives
Base
salary/fees
Allowances
and benefits
Annual
Incentives
Base
salary/fees
Allowances
and benefits
Annual
Incentives
Base
salary/fees
Allowances
and benefits
Annual
Incentives
Base
salary/fees
Allowances
and benefits
Annual
Incentives
Average employee
1
3% 4% 8% 5% 12% -5% 2% 6% 22% 4% 8% 16% 4% 17% 38%
Executive Directors
Omar Abbosh
2
4% 11% -18% – – – – – – – – – – – –
Sally Johnson 7% 48% -100% 3% 0% -22% 4% 1% 37% 2.5% 0% 24% 1% – –
Chair and Non-Executive Directors
3
Omid Kordestani 0% -62% – 0% -35% – 0% 78% – – – – – – –
Sherry Coutu CBE 0% -20% – 0% -24% – 6% 119% – 9% – – 5% – –
Alison Dolan 3% -63% – 14% – – – – – – – – – – –
Alex Hardiman 1% 199% – 19% -39% – – – – – – – – – –
Arden Hoffman – – – – – – – – – – – – – – –
Esther Lee 5% 30% – 0% -52% – 3% 122% – – – – – – –
Costis Maglaras – – – – – – – – – – – – – – –
Graeme Pitkethly 15% 84% – 44% 22% – 8% 23% – 5% – – 1% – –
Annette Thomas 2% 85% – 2% -51% – 12% 102% – 7% – – – – –
Lincoln Wallen 1% 115% – 0% -60% – 0% 154% – 0% – – 1% – –
Note 1: The average employee pay figure is impacted by changes in headcount year-on-year. Actual merit increase budgets for 2025 were 2% in the UK and 2% in the US.
Note 2: Omar Abbosh’s base salary change compares his 2024 part-year base salary with his full year 2025 base salary.
Note 3: Changes in Non-Executive Director fees during the year are a result of changes in Committee Chairs and membership. Allowances and benefits for the Chair and Non-Executive Directors refer to travel, accommodation
and subsistence expenses incurred while attending Board meetings that were paid or reimbursed by the company, and which HMRC deems taxable in the UK. In 2021, the impact of the coronavirus pandemic meant that there were
very few in-person Board meetings, and as such the benefits figures for these years were negligible. This also meant that for 2022 there is no comparative percentage, as the value in the prior year was zero.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 140
Chief Executive to employee pay ratio
The table below illustrates the ratio of Chief Executive to employee pay for 2025. We use the
single total figure of remuneration, compared to the full-time equivalent total reward of
employees whose pay is ranked at the 25
th
, 50
th
and 75
th
percentiles (as identified by the gender
pay gap methodology) in Great Britain’s (GB) workforce.
Chief Executive pay ratio
Year Method 25
th
percentile 50
th
percentile 75
th
percentile
2025 B: Gender pay gap methodology 70.3 51.6 36.2
2024 B: Gender pay gap methodology 534.3 354.9 228.4
2024
B. Gender pay gap methodology
(Omar Abbosh 2024 remuneration) 289.0 192.0 123.5
2023 B: Gender pay gap methodology 304.0 209.9 148.5
2022 B: Gender pay gap methodology 214.3 181.3 117.2
2021 B: Gender pay gap methodology 150.1 145.0 88.4
2020 B: Gender pay gap methodology 42.5 31.9 19.5
2019 B: Gender pay gap methodology 65.9 47.2 36.0
• We used GB gender pay gap data from April 2025 to identify employees at the 25
th
, 50
th
and
75
th
percentiles, and analysed data for employees around each quartile figure to ensure there
were no anomalies.
• Using the gender pay gap data to identify the employees at each pay quartile gives a general
representation of the relevant employee population at the year end, and is the most
practicable methodology given the timing of the disclosure and determination of
remuneration outcomes for the wider workforce.
• For the employees at each pay quartile, we calculated total remuneration on a similar basis to
the Chief Executive’s single figure. We based base salary, pension and benefits on full-year
figures taken from payroll. Annual bonus figures are based on the relevant manager
recommendations and relate to performance in 2024. None of the employees at the 25
th
, 50
th
or 75
th
percentile had share awards vesting in 2025.
• Total remuneration figures for the 25
th
, 50
th
and 75
th
percentile employees are: £39,820,
£54,182 and £77,820. The respective base salaries are: £36,500, £44,457 and £63,908.
• We compared total remuneration for each of the identified employees, calculated with
reference to 31 December 2025, compared to Omar Abbosh’ remuneration as per the
single-figure table on page 135.
• Omar Abbosh’s was not eligible for the 2023 LTIP and therefore did not receive an LTIP
payment in 2025.
• For 2024, in order to maximise the comparability of the figures, we have also provided the
single-figure for Omar Abbosh, with only the value of the buy-out award released to him in
2024 included. As the full value of the buy-out award is required to be included in the single-
figure for 2024 (despite awards only being released to Omar Abbosh over the three-year
period from 2024 to 2026), using the headline single-figure numbers necessarily results in a
higher pay ratio than if calculated by reference to the remuneration actually received by the
CEO in respect of 2024. In addition, the statutory basis for the 2024 pay ratio requires the
figure for CEO remuneration to be the sum of Omar Abbosh and Andy Bird’s 2024
remuneration, which is not representative of the pay received by any single individual.
• A significant proportion of the Chief Executive’s pay is linked to performance and, in respect
of any LTIP award, share price performance.
• The median pay ratio is consistent with our wider policies on employee pay, reward and
progression. The Committee is focused on ensuring that remuneration for all Pearson
colleagues reflects our need to attract and retain the right talent for our digital future.
Relative importance of pay spend
The Committee considers Directors’ remuneration in the context of the company’s allocation
and disbursement of resources to different stakeholders. Adjusted operating profit measures
Pearson’s ability to reinvest, and dividends are an important element of our return to shareholders.
Headline change
All figures in £ 2025 2024 £m %
Adjusted operating profit 614 600 14 2%
Dividends 160 156 4 3%
Dividend per share 25.2p 24.0p 1.2p 5%
Share buybacks
1
352 318 34 11%
Total wages and salaries
2
1,203 1,188 15 1%
Note 1: The Board approved a £350m share buyback programme in February 2025.
Note 2: Wages and salaries include continuing operations only and include Directors. Average
employee numbers for continuing operations for 2025 were 17,062 (2024:17,024). Further details
are set out in Note 5 to the financial statements on page 190.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 141
Directors’ Remuneration Committee report continued
The Remuneration Committee in 2025
Role Name Title
Chair Sherry Coutu CBE Independent Non-Executive Director
Members Alison Dolan Independent Non-Executive Director
Arden Hoffman Independent Non-Executive Director
Esther Lee Independent Non-Executive Director
Annette Thomas Independent Non-Executive Director
Internal
attendees
Omid Kordestani Chair
Omar Abbosh Chief Executive
Sally Johnson Chief Financial Officer
Ali Bebo Chief Human Resources Officer
Graeme Baldwin Company Secretary
External advisers Alvarez & Marsal
No individual is present when their own remuneration is discussed.
Advisers to the Remuneration Committee
During 2025, the Remuneration Committee received advice from Alvarez & Marsal (“A&M”), our
independent Remuneration Committee advisers. A&M were appointed by the Committee in
2023, following a formal tender process. A&M advises the Committee on market trends and
developments, incentive plan design and target setting, investor engagement and other general
executive remuneration matters. For provision of these services in 2025, A&M were paid fees of
£183,250 (excluding VAT), based on time spent. A&M also provide Pearson management with
other remuneration related advice. A&M is a member of the Remuneration Consultants’ Group
and adheres to its Code of Conduct. The Committee is satisfied that A&M’s advice was objective
and independent. The Committee believes that the A&M engagement partner and team do not
have any connections with Pearson or its Directors that may impair its independence.
Terms of reference
The Committee’s full charter and terms of reference are available on the Governance page of our
website. A summary of the Committee’s responsibilities is set out on the right of this page. The
terms of reference reflect the provisions of the UK Corporate Governance Code.
Committee responsibilities
Determine and review policy
Determine and regularly review the remuneration policies for the Executive Directors, Presidents
and other members of Pearson’s Executive Management team who report directly to the Chief
Executive. These policies include base salary, annual and long-term incentives, pension
arrangements, any other benefits and termination of employment. When setting the
Remuneration Policy, the Committee considers remuneration practices and related policies for
all employees.
Shareholder engagement
Ensure Pearson engages with its shareholders and shareholder representative bodies on the
Remuneration Policy and its implementation.
Review and approve implementation
Regularly review the implementation and operation of the Remuneration Policy, and approve
the individual remuneration and benefits packages of Pearson’s Executive Management team,
including Executive Directors.
Approve performance-related plans
Approve the design of, and determine targets for, any performance-related pay plans
operated by the Group for Pearson’s Executive Management team, and approve total
payments to be made under such plans.
Set termination arrangements
Advise and decide on general and specific remuneration arrangements in connection with the
termination of employment of Pearson’s Executive Management team, including Executive
Directors.
Determine Chair’s remuneration
Delegated responsibility for determining the Chair’s remuneration and benefits package.
Appoint remuneration consultants
Appoint and set the terms of engagement for any remuneration consultants who advise the
Committee, and monitor the cost of such advice.
Talent, retention and gender pay gap
Review updates from management on talent, retention and gender pay gap.
Workforce remuneration
Have oversight of workforce remuneration, policies and practice for the wider organisation.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 142
Remuneration Committee meeting focus during 2025
During the year, the Committee undertook the following activities:
• Reviewed and approved annual and long-term performance and payouts to Executive
Directors and senior management for 2024.
• Reviewed and approved incentive arrangements for Pearson, and how these will apply to
Executive Directors and senior management in 2025.
• Approved the 2024 Directors’ Remuneration Report.
• Reviewed and approved the changes to the 2026 Directors’ Remuneration policy
• Engaged extensively with shareholders in advance of and following the 2025 AGM to
understand the views of shareholders on the proposed changes to the 2026 Directors’
Remuneration Policy (further detail on this is set out on page 125).
• Reviewed and considered all feedback received from shareholder engagement
exercises as part of the Committee’s discussions and considered ongoing shareholder
engagement strategy.
• Received updates on Pearson’s financial performance and progress against strategic
measures. Noted and reviewed the status of in-flight incentives.
• Received updates on pay and conditions across Pearson, and took these into account when
determining executive remuneration.
• Noted updates on corporate governance, including a review of the 2025 AGM remuneration
reporting season, and anticipated areas of focus in 2026.
• Reviewed Pearson’s UK gender and ethnicity pay gap disclosures and noted actions to
address the respective gaps.
• Noted the activity of the Standing Committee on operating Pearson’s equity-based reward
programmes and noted Pearson’s use of equity for employee share plans.
• Evaluated the Remuneration Committee’s effectiveness and reviewed the Committee’s
Terms of Reference.
Committee performance review
The Committee undertakes an annual process to review its performance and effectiveness.
For 2025, the Committee performance review was conducted by way of a tailored questionnaire.
The process sought views on an anonymous basis from Committee members, the Chief
Executive and Chair of the Board, together with other key contributors to the Committee,
including the Chief Financial Officer, Chief Human Resources Officer, SVP Reward and external
adviser. Topics covered in the performance review included the effectiveness of the Committee,
the Committee’s oversight of key areas within its remit, the quality of papers and meeting
discussions and the relationships between the Committee and management.
Overall, the Committee was considered to be operating effectively, particularly in relation
to the Committee's delivery of its objectives, with appropriate meeting focus, papers produced
to a good standard and high-quality participation and discussion. The composition of the
Committee is appropriate and includes the necessary skills. The review recognised the positive
relationship with Alvarez & Marsal that continues to evolve well, the thorough and thoughtful
service they provide, and the Chair's leadership in fostering this relationship. There was
acknowledgement of the continued focus needed on shareholder engagement to further
articulate the pay-for-performance alignment between executive remuneration and
shareholders. In 2026, the Committee will continue to focus on ensuring the composition
of the Committee remains appropriate.
Voting on remuneration resolutions
The following table summarises votes cast for remuneration resolutions:
Votes cast for % of votes cast for Votes cast against % of votes cast against Votes withheld
Annual Report on Remuneration (2025 AGM) 485,861,331 92.43% 39,779,388 7.57% 253,482
Directors’ Remuneration Policy (2023 AGM) 299,899,081 53.63% 259,251,476 46.37% 223,851
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 143
Directors’ Remuneration Committee report continued
2026 Directors’ remuneration policy
The Remuneration Committee presents the 2026 Directors’ remuneration policy (2026 policy), which will be put to shareholders for approval at the AGM to be held on 1 May 2026. Subject to shareholder
approval, the effective date of this policy will be 1 May 2026. However, it is proposed, subject to approval at the AGM, that changes to Executive Director incentives be made effective from the start of
the 2026 performance periods. The intention of the Committee is that the policy will remain in place for three years from the date of its approval.
Review of the Directors’ remuneration policy
In determining the 2026 policy, the Committee followed a robust process which included discussions on the content of the policy at Remuneration Committee meetings throughout 2025 and in early
2026. The Committee considered the input of management and its independent advisors, while taking steps to ensure any conflicts of interest were appropriately managed. The Committee also
sought the views of Pearson’s major shareholders and their advisors, considering all feedback received during the extensive shareholder engagement exercise when finalising the 2026 policy. Further
information on the Committee’s decision-making process is set out in the remuneration report.
Changes to policy
The key changes to this 2026 policy compared to the 2023 policy are summarised below:
• Decrease in Retirement Benefits for the Chief Executive to align with US 401k pension contributions and limits set by the IRS. For 2026, the pension value will be £18,000 (c.2% of salary).
• Increase in the maximum opportunity under the Long-Term Incentive Plan to 850% of salary.
• Increase in shareholding guidelines for the Chief Executive to 850% of salary.
• Introduced a non-executive director shareholding guideline of 100% of their basic fee.
Other minor changes have been made to the drafting of the policy to simplify and aid its operation and to increase clarity.
Policy table for Executive Directors
Total remuneration is made up of fixed and performance-linked elements, with each element supporting different strategic objectives. Remuneration is normally reviewed annually in the context of
business performance and conditions prevailing, taking into account pay levels for similar positions in comparable companies as well as internal ratios.
Base salary
Purpose and link to strategy: Helps to recruit, reward and retain; reflects level, role, skills, experience, the competitive market and individual contribution.
Operation Opportunity Performance conditions and period
Base salaries are set to provide the appropriate rate of
remuneration for the job, taking into account relevant
recruitment markets, business sectors and geographic regions.
Base salaries are normally reviewed annually taking into
account: general economic and market conditions; the level
of increases made across the company as a whole; particular
circumstances such as changes in role, responsibilities or
organisation; the remuneration and level of increases for
executives in similar positions in comparable companies in
Pearson’s talent markets which may include the UK, US and
internationally; and individual performance.
While there is no maximum salary level or maximum increase that may be offered, salary increases
will normally be in line with typical increases awarded to other employees in the Group.
However, increases may be above this level, for example, in circumstances including but
not limited to:
• Where a new Executive Director has been appointed to the Board at a lower than
typical market salary to allow for growth in the role then larger increases may be
awarded to move salary positioning closer to typical market level as the Executive
Director gains experience.
• Where an Executive Director has been promoted or has had a change in responsibilities.
• Where there has been a significant change in market practice or where there has been a
significant change in the size and/or scope of the business
None, although performance of both
the company and the individual are
taken into account when
determining an appropriate level of
base salary increase each year.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 144
Allowance and Benefits
Purpose and link to strategy: Helps to recruit, reward and retain; reflects local competitive market.
Operation Opportunity Performance conditions and period
Allowances and benefits comprise cash allowances and non-cash benefits which may include:
• travel-related benefits (such as car allowance, company car and private use of a driver)
• health-related benefits (such as healthcare, health assessment and gym subsidy) and
• risk benefits (such as additional life cover and long-term disability insurance that are not covered by the company’s
retirement plans).
Executive Directors are also eligible to participate in savings-related share acquisition programmes, which are not subject to
any performance conditions, on the same terms and to the same value as other employees.
Where an Executive Director is required to relocate to perform their role, appropriate one-off or ongoing expatriate/
relocation benefits may be provided (e.g., housing, schooling, etc.).
Where necessary any benefits may be grossed up for taxes.
The Committee may introduce other benefits if it is considered appropriate to do so, taking into account the individual
circumstances, the country of residence of a Director, the benefits available to all employees and the wider external market.
The cost of the provision of
allowances and benefits
varies from year to year
depending on the cost to
Pearson and there is no
prescribed maximum limit.
However, the Committee
monitors annually the overall
cost of the benefits
provided, to ensure that it
remains appropriate.
Not applicable
Retirement Benefits
Purpose and link to strategy: Helps to recruit, reward and retain; recognise long-term commitment to the company.
Operation Opportunity Performance conditions and period
Employees in the UK are eligible to join the Money Purchase 2003 section of the Pearson Pension Plan. Executive Directors
are eligible to join this plan or receive a cash allowance of equivalent or lower value as determined by the Committee.
If any Executive Director is from, or works, outside the UK, the Committee retains a discretion to put in place retirement
benefit arrangements for that Director in line with local market practice including defined benefit pension arrangements
operated by Pearson locally. The maximum value of such arrangement will reflect local market practice at the relevant time.
The Chief Executive will be
entitled to a fixed cash
allowance in line with US
401k pension contributions
and limits set by the IRS. For
2026 this fixed cash
allowance will be £18,000.
The Chief Financial Officer
may receive a pension (or
cash allowance) of up to
16% of base salary in line
with the maximum pension
provision for UK employees
of a similar age.
Not applicable
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 145
Directors’ Remuneration Committee report continued
Annual Incentive Plan
Purpose and link to strategy: Helps to recruit, reward and retain; motivate the achievement of annual business goals and strategic objectives; provide a focus on key financial and non-financial
metrics; reward individual contribution to the success of the company; align to strategy execution priorities.
Operation Opportunity Performance conditions and period
Measures and performance targets are typically set by the Committee at the
start of the year with payment usually made after year end following the
Committee’s assessment of performance relative to targets.
Annual incentive plans are discretionary. The Committee reserves the right to
adjust payments up or down if it believes that the outcome does not reflect
underlying financial or non-financial performance or if such other
exceptional factors warrant doing so.
Where an Executive Director has not met their shareholding guideline,
normally a third of any payment would be deferred into Pearson shares for a
period of two years.
Participants may receive additional shares representing the gross value
of dividends that would have been paid on shares that vest during the
vesting period.
The Committee may apply malus and/or clawback for a period of five years
in circumstances of financial misstatement, individual misconduct or
reputational damage to the company. This five-year period is appropriate as
it aligns with the vesting period of incentives and reflects the time during
which risks or exposure may materialise.
Annual incentives will not exceed
300% of base salary.
For 2026, the individual maximum
incentive opportunity that will
apply for the Chief Executive
Officer is 300% of base salary and
for the Chief Financial Officer is
200% of base salary.
1
The Committee has the discretion to select the performance measures and
relative weightings from year to year to ensure continuing alignment with
strategy and to ensure targets are sufficiently stretching. The Committee sets
performance targets for each measure annually.
Annual incentives will normally be based on financial and strategic
performance targets. Financial metrics will normally account for at least 75%
of the total annual opportunity with the remaining portion normally being
based on strategic and/or performance against personal objectives. The
Committee would intend to consult with shareholders in advance if there was
to be a significant change in the weighting of financial and strategic measures.
The plan is designed to incentivise and reward underlying performance.
The proportion of the award that is payable for threshold performance may be
up to 25% of the maximum opportunity. 50% of the maximum opportunity is
payable for on-target levels of performance.
Actual results may be adjusted to remove the effect of foreign exchange and
portfolio changes (acquisitions and disposals) and other relevant factors that
the Committee considers do not reflect the underlying performance of the
business in the performance year.
Details of performance measures, weightings and targets will be disclosed in
the annual remuneration report for the relevant financial year if and to the
extent that the Committee deems them not to be commercially sensitive.
The performance period is one year.
1. As outlined on page 118, Sally Johnson will not be eligible for the 2026 AIP.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 146
Long-term Incentive Plan
Purpose and link to strategy: Helps to recruit, reward and retain; drive long-term earnings, share price growth and value creation; align the interests of executives and shareholders; encourage
long-term shareholding and commitment to the company.
Operation Opportunity Performance conditions and period
Awards of shares are made on an annual basis, which vest on a sliding scale based on
performance against stretching performance targets measured at the end of the three-
year performance period.
Awards are normally subject to a post-vesting holding period (on an after tax basis) for two
years following the end of the performance period.
Participants may receive additional shares representing the gross value of dividends that
would have been paid on shares that vest during the performance period.
The Committee reserves the right to adjust the vesting outcome up or down before they
are released if it believes that this does not reflect underlying financial or non-financial
performance or if such other exceptional factors warrant doing so. In making such
adjustments, the Committee is guided by the principle of aligning shareholder and
management interests.
The Committee may apply malus and/or clawback for a period of five years from grant in
circumstances of financial misstatement, individual misconduct or reputational damage to
the company. This five-year period is appropriate as it aligns with the vesting period of
incentives and reflects the time during which risks or exposure may materialise.
The maximum award is 850%
of base salary in respect of a
financial year.
For 2026, the Chief Executive
Officer’s award will be made at
850% of base salary and the Chief
Financial Officer’s award at 300% of
base salary.
1
The Committee will determine the performance measures,
weightings and targets governing an award of shares prior to
grant to ensure continuing alignment with strategy and to
ensure that targets are sufficiently stretching.
The Committee establishes a threshold below which no payout
is achieved and a maximum at or above which the award pays
out in full. The proportion of the award that vests at threshold
may be up to 20% of the maximum opportunity.
Awards will normally be subject to the achievement of financial
targets (e.g. an earnings measure and a return measure) and
shareholder returns (e.g. total shareholder return).
The Committee may determine that different measures or
weightings may apply for future awards; however, the
Committee would intend to consult with shareholders in
advance if there was to be a significant change in the weighting
of measures or the performance measures used.
The performance period is three years.
Shareholder guidelines
Purpose and link to strategy: Align the interests of Executives and shareholders and encourage long-term shareholding and commitment to the company.
Operation Opportunity Performance conditions and period
Executive Directors are expected to build up a shareholding in the company.
Executive Directors are expected to reach the guideline within five years from the date
of appointment.
Post-employment shareholding: Executive Directors are expected to retain their
shareholding guideline (or actual holding if lower) for two years following stepping down as
an Executive Director. This provision does not apply to any shares purchased by the
Executive Director.
The target holding is aligned
to the prevailing level of LTIP
award for an Executive Director. For
2026, this will be 850% of base
salary for the Chief Executive and
300% of base salary for the Chief
Financial Officer.
Not applicable
1. As outlined on page 118, Sally Johnson will not be eligible for the 2026 LTIP award.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 147
Directors’ Remuneration Committee report continued
Notes to the policy table
Selection of performance measures and target setting
In the selection and weighting of performance measures for the annual and long-term incentive
awards, the Committee takes into account Pearson’s strategic objectives and short and
long-term business priorities.
Annual
incentive
plan
For 2026, the Committee identified sales, adjusted operating profit, free cash
flow and key strategic measures as being relevant measures of Pearson’s
performance against its shorter-term strategic objectives and business
priorities. Further details on how these performance measures align to
Pearson’s strategy are set out in the remuneration report.
Long-
term
incentive
plan
For 2026 LTIP awards, the Committee has judged the following to be most
closely matched to sustained delivery of strategy and alignment with
shareholders’ interests:
• Adjusted earnings (40%) rewards the delivery of the desired outcomes from
our strategic growth objectives and is imperative if the company is to
improve our total shareholder return and our return on capital.
• Relative total shareholder return (40%) is used as the Committee believes, in line
with many of our shareholders, that part of Executive Directors’ rewards should
be linked to long-term performance relative to comparable global companies.
• Return on capital (20%) is a measure of how efficiently Pearson generates
returns from its asset base and is considered a fair and robust assessment of
management’s performance given the current structure of the business.
Performance targets are set to provide a careful balance between upside opportunity and
downside risk and are normally set in accordance with the company’s operating and strategic
plans, while also considering analyst consensus to reflect market expectations.
Pre-existing commitments
The Committee reserves the right to make remuneration payments and payments for loss of
office (which includes exercising related discretions) that are not in line with this policy if the terms
of the payment were agreed:
• before the policy came into effect, if the payment was agreed or made in line with the policy in
force at the time or was otherwise approved by shareholders; and
• at a time when the recipient was not subject to the policy, provided the Committee does not
consider the payment to have been made in consideration of the recipient becoming subject
to the policy.
For these purposes ‘payment’ means any payment that would otherwise be subject to the policy
and, in relation to a share award, will not be considered to have been ‘agreed’ any later than the
date of grant.
Remuneration policy for other employees
Pearson has a set of remuneration principles that govern pay for the whole organisation, although
how these principles are applied varies by business need, level and geography as required. The
key difference in remuneration for Executive Directors compared to the approach to
remuneration across the workforce is that remuneration for Executive Directors is more heavily
weighted towards variable pay and linked to the delivery of Pearson’s strategic objectives and
short and long-term business priorities.
Further details on remuneration across the workforce at Pearson are set out in the remuneration
report on page 133.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 148
Performance scenario Elements of remuneration and assumptions
Maximum plus 50% share price
appreciation
• Fixed pay
• Maximum individual annual incentive (300% of base salary for Chief Executive and 200% of salary for Chief Financial Officer)
• Maximum value of 2026 LTIP award (850% for Chief Executive and 300% of salary for Chief Financial Officer) with 50% share price growth assumed
Maximum • Fixed pay
• Maximum individual annual incentive (300% of base salary for Chief Executive and 200% of salary for Chief Financial Officer)
• Maximum value of 2026 LTIP award (850% for Chief Executive and 300% of salary for Chief Financial Officer) with no share price growth assumed
Target • Fixed pay
• 50% of the maximum individual annual incentive
• 50% of the maximum value of 2026 long-term incentive award with no share price growth assumed
Minimum • Fixed pay only
Note 1: Fixed pay includes 2026 base salary (£1,022,000 for the Chief Executive and £620,000 for the Chief Financial Officer), allowances and benefits (calculated as the actual amounts incurred in the 2025 financial year) and
retirement benefits (for the Chief Executive is fixed for 2026 at £18,000 and for the Chief Financial Officer at 16% of their base salary).
Note 2: The Chief Financial Officer performance scenarios is illustrative and based on what Sally Johnson’s arrangements would have been if she remained eligible for 2026 AIP and 2026 LTIP award.
Note 3: The value of long-term incentives does not take into account dividend awards that are payable on the release of LTIP shares.
The charts below illustrate what each Executive Director could expect to receive under the 2026 Policy in different performance scenarios. The relative weighting of fixed and performance-related
remuneration and the absolute size of the remuneration packages for the Chief Executive and the Chief Financial Officer is shown. Consistent with its policy, the Committee places considerable
emphasis on the performance-linked elements (the annual and long-term incentives) and will continue to review the mix of fixed and performance-linked remuneration on an annual basis.
Chief Financial Officer £000Chief Executive £000
£1,081
£6,958
£12,834
£17,178
Maximum plus
50% share price
appreciation
MaximumTargetMinimum
Fixed Pay LTIPAIP Share price appreciation
6%8%15%100%
22%
63%
18%
51%
24%
68%
25%
£743
£2,293
£3,843
£4,773
Maximum plus
50% share price
appreciation
MaximumTargetMinimum
Fixed Pay LTIPAIP Share price appreciation
15%19%32%100%
27%
41%
26%
39%
32%
49%
20%
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 149
Directors’ Remuneration Committee report continued
Recruitment
The Committee expects any new Executive Directors to be engaged on the same terms and to be
awarded variable remuneration within the same normal limits and subject to the same conditions
as for the current Executive Directors outlined in the policy.
The maximum level of variable remuneration which may be awarded (excluding any ‘buyout’
awards) in respect of recruitment is in line with the maximum limits under the annual and long-term
incentive described in the policy table above.
In setting the basic salary for any new Executive Director, the Committee will apply a level
appropriate to recruit a suitable candidate, having regard to the factors set out in the policy table.
The Committee recognises that it cannot always predict accurately the circumstances in which
any new Directors may be recruited. The Committee may determine that it is in the interests of the
company and shareholders to secure the services of a particular individual which may require the
Committee to take account of the terms of that individual’s existing employment and/or their
personal circumstances. The Committee may do this in the following circumstances:
• Where an individual is relocating in order to take up the role, in which case the company may
provide certain benefits such as reasonable relocation expenses, accommodation and
assistance with visa applications or other immigration issues and ongoing arrangements such
as tax equalisation, annual flights home, schooling and housing allowance.
• Where an individual is required to forego compensation to take up the appointment or forfeits
outstanding variable pay opportunities or contractual rights at a previous employer as a result
of appointment, the Committee may offer compensatory payments or awards, in such form as
the Committee considers appropriate taking into account all relevant factors including where
applicable the form of compensation or awards, expected value and vesting time-frame of
forfeited opportunities. The Committee would require reasonable evidence of the nature and
value of any foregone or forfeited amounts and would, to the extent practicable, ensure any
compensation was provided on a like-for-like basis and was no more valuable than the
foregone or forfeited amounts.
• Where an individual incurs legal or other professional fees in connection with their
appointment as an Executive Director, the Committee retains the discretion to compensate
for these.
In making any decision on any aspect of the remuneration package for a new recruit, the
Committee would balance shareholder expectations, current best practice and the
requirements of any new recruit and would strive not to pay more than is necessary to achieve the
recruitment. The Committee would disclose full details of the terms of the package of any new
recruit in the next annual remuneration report.
Where an existing employee of the company is promoted to the Board, the company may honour
all existing contractual commitments including any outstanding share awards and benefits,
including retirement benefits.
Pearson expects any new Chair or Non-Executive Director to be engaged on terms that are
consistent with the general remuneration principles outlined in the relevant sections of this Policy.
Service contracts and termination provisions
In accordance with long established policy, all Executive Directors have service agreements
under which, other than by termination in accordance with the terms of these agreements,
employment continues indefinitely.
There are no special provisions for notice or non-share-based compensation in the event of a
change of control of Pearson.
The Chair and other Non-Executive Directors serve under letters of appointment.
It is the company’s policy that the company may terminate the Chair’s letter of appointment and
the Executive Directors’ service agreements by giving no more than 12 months’ notice.
Other Non-Executive Directors letters of appointment do not contain provision for notice
periods or compensation if their appointments are terminated.
Payment in lieu of notice
As an alternative, for Executive Directors the company may at its discretion pay in lieu of
that notice. Payment in lieu of notice may be made in equal monthly instalments from the
date of termination to the end of any unexpired notice period. Payment in lieu of notice in
instalments may also be subject to mitigation and reduced taking into account earnings from
alternative employment.
For Executive Directors, payment in lieu of notice comprises 100% of the annual salary at
the date of termination and the annual cost to the company of providing pension and all other
benefits. For the Chair, payment in lieu of notice comprises 100% of the annual fees at the
date of termination.
The company may, depending on the circumstances of the termination, determine that it will not
pay the Director in lieu of notice and may instead terminate a Director’s contract in breach and
make a damages payment, taking into account as appropriate the Director’s ability to mitigate
his or her loss.
The company may also pay an amount considered to be reasonable by the Remuneration
Committee in respect of fees for legal and tax advice and outplacement support for the
departing Director. The Committee reserves the right to make any other payments in connection
with a Director’s cessation of office or employment where the payments are made in good faith,
in discharge of an existing legal obligation (or by way of damages for breach of such an
obligation) or by way of settlement of any claim arising in connection with the cessation of a
Director’s office or employment.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 150
Share awards
On cessation of employment, treatment of unvested shares awards will be determined based on
the rules of Pearson’s share plans.
In respect of unvested deferred annual incentive awards, these will ordinarily subsist, except in
circumstances where an individual is summarily dismissed. Awards would ordinarily vest on the
original vesting date or be released in line with normal time horizons unless determined otherwise
by the Committee.
In respect of unvested long-term incentive awards, unless otherwise provided for under the rules
of Pearson’s discretionary share plans, Executive Directors’ entitlements would lapse
automatically. In the case of death, injury, disability, ill-health or redundancy (as determined by
the Committee), where a participant’s employing business ceases to be part of Pearson, or any
other reason if the Committee so decides in its absolute discretion:
• awards will stay in force as if the participant had not ceased employment and shall ordinarily
vest on the original vesting date/ be released in line with normal time horizons subject to
performance conditions.
• the number of shares that are released shall be pro-rated for the period of the participant’s
service in the vesting period (although the Committee may in its absolute discretion waive or
vary the pro-rating).
In determining whether and how to exercise its discretion under Pearson’s discretionary share
plans, the Committee will have regard to all relevant circumstances distinguishing between
different types of leaver, the circumstances at the time the award was originally made, the
Director’s performance and the circumstances in which the Director left employment.
The rules of Pearson’s discretionary share plans also make provision for the treatment of awards
in respect of corporate activity, including a change of control of Pearson. The Committee would
act in accordance with the terms of the awards in these circumstances, which includes terms as
to the assessment of performance conditions and time apportionment.
Annual bonus
On cessation of employment, Executive Directors may, at the Committee’s discretion, retain
entitlement to a pro rata annual incentive for their period of service in the financial year prior to
their leaving date. Such payout will normally be calculated in good faith on the same terms and
paid at the same time as for continuing Executive Directors.
Other elements of remuneration
Eligibility for allowances and benefits including retirement benefits (other than pension payments
in connection with subsequent retirement) normally ceases on retirement or on the termination of
employment for any other reason.
The termination provisions described above may be varied to the extent necessary to comply
with applicable laws, including taxation laws in the United States.
Individual service agreements and letters of appointment
Details of each individual’s arrangement are outlined in the table below. Employment agreements
for other employees are determined according to local labour law and market practice.
Position
Date of letter /
agreement
Notice period
Compensation on termination
of employment by the company
without notice or cause
Chair Omid Kordestani,
16 December 2021
12 months from the
Director; 12 months
from the company
Payment in lieu of notice of
100% of annual fees at the
date of termination
Executive
Directors
Omar Abbosh,
19 September 2023
Sally Johnson,
15 January 2020
6 months from the
Director; 12 months
from the company
Payment in lieu of notice of
100% of annual salary at the
date of termination and the
annual cost of pension and all
other benefits
Note 1: Under payment in lieu of notice, the annual cost of pension for Executive Directors is
normally calculated as the sum, where applicable, of: an amount equal to the company’s cost of
providing the Executive’s pension under the pension plan based on the Future Service Company
Contribution Rate for the relevant section of the pension plan as stated in the most recent
actuarial valuation (as at the date of termination of employment) as limited by the earnings cap,
and any cash allowance in lieu of pension or to take account of the fact that pension benefits and
life assurance cover are restricted by the earnings cap.
Executive Directors’ non-Executive Directorships
The Committee’s policy is that Executive Directors may, by agreement with the Board, serve as
non-executives of other companies and retain any fees payable for their services.
Consideration of employment conditions across Pearson
Under the Committee’s charter and terms of reference, the Committee’s remit includes
determining remuneration for the Chief Executive, other Executive Directors and other members
of the Pearson Executive Management team. In addition, the Committee’s remit includes
oversight of certain remuneration matters below this level and review of remuneration policies
and practices across the broader employee population.
When determining remuneration for Executive Directors and other members of the Pearson
Executive Management team, the Committee considers reports from the Chief Executive and
Chief Human Resources Officer on pay and conditions for the broader employee population,
including information on the recruitment and retention of talent, general pay trends in the market
and the level of pay increases and incentives across the company as a whole. This helps to ensure
that remuneration for senior management is considered in the context of the wider organisation.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 151
There are a number of established channels for consulting with employees and employee representative bodies – including trade unions and works councils in some jurisdictions – about the company’s
strategy, competitiveness and performance of the business and other matters affecting employees. The views of employees are also sought via the Employee Engagement Network, feedback from
which is reported to the Board, and engagement surveys. These activities provide employees with the opportunity to express how they feel about working for Pearson, what they think about the work
they do, the opportunities they have and the rewards (including pay and benefits) they get.
The Committee has not consulted directly with employees on the development of the Directors’ remuneration policy.
Consideration of shareholder views
The company consults regularly with shareholders on all matters affecting its strategy and business operations. This includes executive remuneration. Over the last year, whilst developing the 2026
Policy and considering its implementation, the Remuneration Committee has engaged extensively with shareholders to ensure remuneration for Executive Directors is set appropriately, rewards for
performance and aligns management with the shareholder experience.
This engagement exercise included writing to and meeting with many of Pearson’s shareholders and their advisors, to seek their input on the proposed changes to the policy. We would like to thank our
shareholders for the time they have spent with us in this regard. All feedback received, which reflected a significant range of opinions, was duly considered by the Remuneration Committee as it
finalised the 2026 Policy. Further details on the shareholder engagement exercise can be found on pages 125.
The Committee continues to monitor and respond to best practice guidelines published by shareholders and their representative bodies. Pearson remains committed to an open and transparent
dialogue with its shareholders.
Policy table for Chair’s and Non-Executive Directors’ remuneration
The table below summarises the policy with respect to remuneration of the Chair and Non-Executive Directors.
Chair and Non-Executive Director remuneration
Purpose and link to strategy: To attract and retain high-calibre individuals, with appropriate experience or industry-relevant skills, by offering market competitive fee levels.
Operation Opportunity Performance conditions and period
The Chair and Deputy Chair are paid a single fee for all of their responsibilities.
The Chair and Deputy Chair fee is set at a level that is competitive considering similar positions in comparable companies.
The Non-Executive Directors are paid a basic fee.
The Committee Chairs, members of the main Board Committees and, if relevant, the Senior Independent Director are paid an
additional fee to reflect their extra responsibilities. Fees for Non-Executive Directors are determined by the full Board having
regard to market practice.
Additional fees or other payments may be paid to reflect additional responsibilities, roles or contribution, as appropriate.
The Chair, Deputy Chair and Non-Executive Directors are not eligible to participate in any annual or long-term incentive, nor are
they entitled to any retirement or other employee benefits. Selected benefits may be introduced, if considered appropriate.
The company reimburses travel and other business expenses and any tax incurred thereon, if applicable.
Non-Executive Directors are encouraged to build up and retain Pearson shares equivalent to 100% of their basic fee (i.e.,
single fee for the Chair and Deputy Chair). Non-Executive Directors’ are encouraged to reach the guideline within five years
from the later of the date this policy is effective or the date of their appointment.
Fee levels are reviewed on
a periodic basis.
None
The Directors’ Remuneration Report has been approved by the Board on 12 March 2026 and signed on its behalf by:
Sherry Coutu, CBE
Chair of Remuneration Committee
Directors’ Remuneration Committee report continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 152
The Directors’ report for the year ended 31 December 2025 is
on pages 70-157 of this document.
Set out below is other statutory and regulatory information that
Pearson is required to disclose in its Directors’ report.
Going concern
The Directors have confirmed that there are no material
uncertainties that cast doubt on the Group’s going concern status
and that they have a reasonable expectation that the Group
has adequate resources to continue in operational existence
beyond 30June 2027. The consolidated financial statements
have therefore been prepared on a going concernbasis.
Further details on the procedures undertaken may be found on
page 182.
Viability statement
The Board assessed the prospects of the company using the
company’s long-range plan. Viability was assessed by
considering downside scenarios. Basedon the result of these
procedures and considering the company’s strong balance
sheet, the Directors have a reasonable expectation that
Pearson will be able to continue in operation and to meet its
liabilities as they fall due over the five-year period ending 31
December 2030. Further details may be found on page 69.
Share capital
Details of share issues and cancellations are given in note 27 to
the financial statements on page 217-218. The company has a
single class of shares which is divided into ordinary shares of 25p
each. The ordinary shares are in registered form. As at 31
December 2025, 635,814,880 ordinary shares were in issue. At the
AGM held on 2 May 2025, the company was authorised, subject to
certain conditions, to acquire up to 66,657,551 ordinary shares by
market purchase and to issue up to 444,383,672 ordinary shares.
This authorisation will expire at the close of the AGM on 1 May
2026 or 18 months from the date of the 2025 AGM (whichever is
earlier). Shareholders will be asked to renew these authorities,
subject to revised caps, at the AGM on 1 May 2026. As at 31
December 2025, 40,264,292 ordinary shares remained under
the authority granted at the 2025 AGM.
As at 9 March 2026, 2,112 record holders with registered
addresses in the United States held 30,674,553 ADRs which
represented 4.87% of the company’s outstanding ordinary
shares. Some of these ADRs are held by nominees and so
these numbers may not accurately represent the number of
shares beneficially owned in the United States.
Share buyback
On 18 March 2025, the company launched a £350m share
buyback programme. The programme completed on 10
November 2025 and approximately 32m shares were bought
back and cancelled at a cost of £352m. The nominal value of
these shares, approximately £8m, was transferred to the
capital redemption reserve.
On 21 January 2026, the company announced a further
£350m share buyback programme. The programme launched
on 21 January 2026 and is expected to end on or before
29 May 2026. The repurchased shares will be cancelled and the
nominal value of the shares will be transferred to the capital
redemption reserve.
The Board believes that the company’s strategic priorities,
combined with the disciplined approach to capital allocation,
will enable Pearson to create sustainable, long-term value for
every stakeholder.
We have set out clear capital allocation priorities as follows:
• Maintaining a strong balance sheet and solid investment-
grade credit ratings through an appropriate capital structure
• Focused and disciplined approach to investing in the
business to accelerate growth opportunities
• Delivering shareholder returns through a progressive and
sustainable dividend policy
• Returning surplus cash to shareholders as and when
appropriate through buybacks or special dividends
Major shareholders
Information provided to the company pursuant to the Financial
Conduct Authority’s Disclosure Guidance and Transparency
Rules (DTR) is published on a Regulatory Information Service
and on the company’s website.
As at 31 December 2025, the company had been notified
under DTR 5 of the following holders of significant voting rights
in its shares.
Number
of voting rights
Percentage as at
date of
notification
Cevian Capital II GP Limited 90,120,099 14.17%
BlackRock, Inc.
1
63,894,697 9.96%
Artisan Partners
Limited Partnership 33,783,078 5.04%
Libyan Investment Authority
2
24,431,000 3.01%
1. Includes 11,934,078 (1.85%) qualifying financial instruments to which
voting rights are attached.
2. Based on notification to the company dated 7 June 2010. We have
not been notified of any change to this holding since that date.
Assets belonging to, or owned, held or controlled on 16 September
2011 by the Libyan Investment Authority and located outside Libya
on that date, are frozen in accordance with The Libya (Sanctions) (EU
Exit) Regulations 2020.
Between 31 December 2025 and 9 March 2026, being the
latest practicable date before the publication of this report,
the company received further notifications under DTR 5, with
the most recent position being as follows:
Number
of voting rights
Percentage as at
date of
notification
Cevian Capital II GP Limited 114,944,951 18.09%
Artisan Partners
Limited Partnership 63,821,238 10.11%
Annual general meeting
The notice convening the AGM, to be held at 10:30am on Friday,
1 May 2026 at 80 Strand, London WC2R 0RL, is contained in a
circular to shareholders to be dated 26 March 2026.
Registered auditors
In accordance with section 489 of the Companies Act 2006 (the
Act), a resolution proposing the re-appointment of Ernst & Young
LLP as auditors to the company will be proposed at the AGM, at a
level of remuneration to be agreed by the Audit Committee.
Additional disclosures
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 153
Additional disclosures continued
Amendment to Articles of Association
Any amendments to the Articles of Association of the company
(the Articles) may be made in accordance with the provisions
of the Act by way of a special resolution.
Rights attaching to shares
The rights attaching to the ordinary shares are defined in the
Articles. A shareholder whose name appears on the company’s
register of members can choose whether their shares are
evidenced by share certificates (i.e. in certificated form) or
held electronically (i.e. uncertificated form) in CREST (the
electronic settlement system in the UK).
Subject to any restrictions below, shareholders may attend any
general meeting of the company and, on a show of hands,
every shareholder (or his/her representative) who is present at
a general meeting has one vote on each resolution and, on a
poll, every shareholder (whether an individual or a corporation)
present in person or by proxy shall have one vote for every 25p
of nominal share capital held. A resolution put to the vote at a
general meeting held partly by means of electronic facility or
facilities shall, unless the chair of the meeting determines that it
shall be decided on a show of hands, be decided on a poll.
Subject to this, at any general meeting, a resolution put to the
vote at the meeting shall be decided on a show of hands,
unless before, or on the declaration of the result of, a vote on a
show of hands, a poll is demanded. A poll can be demanded by
the chair of the meeting, or by at least three shareholders (or
their representatives) present in person and having the right to
vote, or by any shareholders (or their representatives) present
in person having at least 10% of the total voting rights of all
shareholders, or by any shareholders (or their representatives)
present in person holding ordinary shares on which an
aggregate sum has been paid up of at least 10% of the total
sum paid up on all ordinary shares. At this year’s AGM, voting will
again be conducted on a poll, consistent with best practice.
Shareholders can declare a final dividend by passing an
ordinary resolution but the amount of the dividend cannot
exceed the amount recommended by the Board. The Board
can pay interim dividends on any class of shares of the
amounts and on the dates and for the periods it decides. In all
cases, the distributable profits of the company must be
sufficient to justify the payment of the relevant dividend.
The Board may, if authorised by an ordinary resolution of the
shareholders, offer any shareholder the right to elect to
receive new ordinary shares, which will be credited as fully
paid, instead of their cash dividend.
Any dividend which has not been claimed for eight years after it
became due for payment will be forfeited and will then belong
to the company, unless the Directors decide otherwise. We are
currently conducting a shareholder tracing programme with
Georgeson. For more information please visit plc.pearson.
com/investors/shareholders/shares-shareholding.
If the company is wound up, the liquidator can, with the
sanction of a special resolution passed by the shareholders,
divide among the shareholders in specie all or any part of the
assets of the company and can value assets and determine
how the division shall be carried out as between the
shareholders or different classes of shareholders.
The liquidator can also, with the same sanction, transfer the
whole or any part of the assets to trustees upon such trusts for
the benefit of the shareholders.
Voting at general meetings
Any form of proxy sent by the shareholders to the company in
relation to any general meeting must be delivered to the
company (via its registrars), whether in written or electronic
form, not less than 48 hours before the time appointed for
holding the meeting or adjourned meeting at which the person
named in the appointment proposes to vote.
The Board may decide that a shareholder is not entitled to attend
or vote either personally or by proxy at a general meeting or to
exercise any other right conferred by being a shareholder if they
or any person with an interest in shares has been sent a notice
under section 793 of the Act (which confers upon public
companies the power to require information with respect to
interests in their voting shares) and they or any interested person
failed to supply the company with the information requested
within 14 days after delivery of that notice.
The Board may also decide, where the relevant shareholding
comprises at least 0.25% of the nominal value of the issued
shares of that class, that no dividend is payable in respect of
those default shares and that no transfer of any default shares
shall be registered unless the shareholder is not themself in
default as regards supplying the information requested and
the transfer, when presented for registration, is accompanied
by a certificate from the shareholder in such form as the Board
of Directors may require to the effect that after due and careful
inquiry, the shareholder is satisfied that no person in default is
interested in any of the ordinary shares which are being
transferred, or the transfer is an approved transfer as defined in
the Articles, or the registration of the transfer is required by the
Uncertificated Securities Regulations 2001.
Pearson operates an employee benefit trust to hold shares,
pending employees becoming entitled to them under the
company’s employee share plans. There were 725,025 shares
held as at 31 December 2025. The trust has an independent
trustee which has full discretion in relation to the voting of such
shares. A dividend waiver operates on the shares held in the trust.
Pearson also operates nominee shareholding arrangements
which hold shares on behalf of employees. As at
31 December 2025, there were 1,919,412 shares held
in the Corporate Sponsored Nominee account administered
by Computershare Investor Services PLC. The beneficial
owners of shares held in the Corporate Sponsored
Nominee are invited to submit voting instructions online at
http://www.investorcentre.co.uk/eproxy. If no instructions
are given by the beneficial owner by the date specified, the
trustees holding these shares will not exercise the voting rights.
Transfer of shares
The Board may refuse to register a transfer of a certificated
share which is not fully paid, provided that the refusal does not
prevent dealings in shares in the company from taking place on
an open and proper basis. The Board may also refuse to
register a transfer of a certificated share unless: (i) the
instrument of transfer is lodged, duly stamped (if stampable) or
duly certified or otherwise shown to the satisfaction of the
Board to be exempt from stamp duty, at the registered office
of the company or any other place decided by the Board, and
is accompanied by the certificate for the share to which it
relates and such other evidence as the Board may reasonably
require to show the right of the transferor to make the transfer;
(ii) it is in respect of only one class of shares; and (iii) it is in
favour of not more than four transferees.
Transfers of uncertificated shares must be carried out using
CREST and the Board can refuse to register a transfer of an
uncertificated share in accordance with the regulations
governing the operation of CREST.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 154
Variation of rights
If at any time the capital of the company is divided into
different classes of shares, the special rights attaching to any
class may be varied or revoked either:
i. with the written consent of the holders of at least 75%
in nominal value of the issued shares of the relevant
class; or
ii. with the sanction of a special resolution passed at a
separate general meeting of the holders of the shares
of the relevant class.
Without prejudice to any special rights previously conferred on
the holders of any existing shares or class of shares, any share
may be issued with such preferred, deferred or other special
rights, or such restrictions, whether in regard to dividend,
voting, return of capital or otherwise as the company may from
time to time by ordinary resolution determine.
Appointment and replacement of Directors
The Articles contain the following provisions in relation
to Directors.
Directors shall be no less than two in number. Directors may
be appointed by the company by ordinary resolution or by
the Board.
A Director appointed by the Board shall hold office only until
the next AGM and shall then be eligible for re-appointment.
The Board may from time to time appoint one or more
Directors to hold Executive office with the company for such
period (subject to the provisions of the Act) and upon such
terms as the Board may decide and may revoke or terminate
any appointment so made.
The Articles provide that, at every AGM of the company, every
Director shall retire from office and, unless not willing to act, be
eligible for re-appointment.
If a Director is not re-appointed, they shall, subject to the
Articles, retain office until the meeting appoints someone in
their place, or, if it does not do so, until the end of the meeting,
or, if the meeting is adjourned, the end of the adjourned
meeting. Where a Director has been appointed after notice
of the AGM has been given, that Director shall retire at the
next AGM of which notice is first given after their appointment
as Director.
If there is an insufficient number of appointed or re-appointed
Directors at any of the company’s AGMs thus rendering the
Board inquorate, all Directors shall be automatically re-
appointed only for the purposes of filling vacancies and
convening general meetings of the company and to perform
such duties as are appropriate to maintain the company as a
going concern and to enable it to comply with its legal and
regulatory obligations. The Directors are required to convene a
further general meeting of the company as soon as reasonably
practicable to allow new Directors to be appointed, and such
Directors who were not appointed at the original general
meeting shall subsequently retire.
The company may by ordinary resolution remove any Director
before the expiration of their term of office. In addition, the
Board may terminate an agreement or arrangement with any
Director for the provision of their services to the company.
Powers of the Directors
Subject to the Articles, the Act and any directions given by
special resolution, the business of the company will be
managed by the Board which may exercise all the powers of
the company, including powers relating to the issue and/or
buying back of shares by the company (subject to
authorisation, and any statutory restrictions or restrictions
imposed by shareholders in a general meeting).
Directors’ indemnities
A qualifying third-party indemnity (QTPI), as permitted by the
Articles and sections 232 and 234 of the Act, has been granted
by the company to each of its Directors. Under the provisions
of the QTPI, the company undertakes to indemnify each
Director against liability to third parties (excluding criminal and
regulatory penalties) and to pay Directors’ costs as incurred,
provided that they are reimbursed to the company if the
Director is found guilty, the court refuses to grant the relief
sought or, in an action brought by the company, judgement is
given against the Director. The indemnity has been in force for
the financial year ended 31 December 2025 and is currently in
force. The company has purchased and maintains Directors’
and Officers’ insurance cover against certain legal liabilities
and costs for claims in connection with any act or omission by
such Directors and Officers in the execution of their duties.
Significant agreements
The following significant agreements contain provisions
entitling the counterparties to exercise termination or other
rights in the event of a change of control of the company.
As at 31 December 2025, the Group’s two principal bank
facilities (the $1bn revolving credit facility (RCF) agreement,
and the subsequently executed $800m RCF agreement)
allowed that upon a change of control of the company, any
participating bank may require any outstanding advances,
together with accrued interest and any other amounts payable
in respect of either such facility, and its commitments, to be
cancelled, each within 55 days of notification to the banks by
the agent. The $1bn facility was undrawn at year end and the
$800m facility was £300m drawn at year end. The Group’s
outstanding fixed rate notes (see note 18 Borrowings for more
information) also contain a provision requiring that, in the event
of a change of control which leads to a downgrade in credit
rating below Baa3 (Moody’s) or BBB- (Fitch Ratings), the issuing
company, Pearson Funding plc, is required to make an offer to
investors to repurchase outstanding instruments at par plus
accrued interest, which investors are not obliged to accept.
For these purposes, a ‘change of control’ occurs if the company
becomes a subsidiary of any other company, or one or more
persons acting either individually or in concert obtains control
(as defined in section 1124 of the Corporation Tax Act 2010) of
the company.
Shares acquired through the company’s employee share plans
rank pari passu with shares in issue and have no special rights.
For legal and practical reasons, the rules of these plans set out
the consequences of a change of control of the company.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 155
Other statutory information
Other information that is required by the Act and by the Large
and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 (as amended) to be included in the
Directors’ report, and which is incorporated by reference, can
be located as follows:
Summary disclosures index See more
Dividend recommendation page 31
Financial instruments and financial
riskmanagement page 206
Important events since year end page 224
Future development of the business pages 10-11
Research and development activities page 16
Employment of disabled persons page 42
Employee involvement page 40
Greenhouse gas emissions and energy
consumption data page 50
Statement describing employee
engagement page 21
Statement describing regard to suppliers,
customers and other stakeholders’ interests page 22
With the exception of the dividend waiver described on page
154, there is no information to be disclosed in accordance with
UK Listing Rule 6.6.1.
No political donations or contributions were made or
expenditure incurred by the company or its subsidiaries during
the year.
Our disclosures are consistent with the recommendations of
the Task Force on Climate-related Financial Disclosures (TCFD)
and are set out on pages 45-49.
Fair, balanced and understandable
reporting and disclosure of information
As required by the UK Corporate Governance Code, we have
established arrangements to ensure that all information we
report to investors and regulators is fair, balanced and
understandable. In making its assessment, the Board pays
particular attention to a set of criteria recommended by the
Financial Reporting Council, including the use of
straightforward language, focus on content that is important
to investors and exclusion of irrelevant information.
A process and timetable for the production and approval of
this year’s annual report and accounts was agreed by the
Board at its meeting in December 2025. The full Board then
had the opportunity to review and comment on the report
as it progressed.
The Audit Committee is available to advise the Board on certain
aspects of the annual report and accounts, to enable the
Directors to fulfil their responsibility in this regard. As part of
supporting the Board in this regard, the Audit Committee
considers a report evidencing how the fair, balanced and
understandable criteria are satisfied throughout the annual
report and accounts.
Following their review, and taking into account a
recommendation by the Audit Committee, the Directors consider
that the annual report and accounts, taken as a whole, are fair,
balanced and understandable and provide the information
necessary for shareholders to assess the company’s position,
performance, business model and strategy.
Representatives from the Financial Reporting, Strategy,
Investor Relations, Communications, Sustainability, Company
Secretarial, Legal, Internal Audit, Risk, HR and Reward teams
are involved in the preparation and review of the annual report
to ensure a cohesive and balanced approach and, as with all of
our financial reporting, a thorough verification of narrative and
financial statements is conducted. We also have procedures in
place to ensure the timely release of inside information,
through our Market Disclosure Committee.
The Directors also confirm that, for each Director in office at
the date of this report:
• so far as the Director is aware, there is no relevant audit
information of which the Group and company’s auditors
are unaware
• they have taken all the steps that they ought to have taken
as Directors to make themselves aware of any relevant audit
information and to establish that the Group and the
company’s auditors are aware of that information
Streamlined Energy and Carbon
Reporting (SECR)
In line with the requirements set out in the UK Government’s
guidance on Streamlined Energy and Carbon Reporting, the
following data points representing Pearson’s energy use and
associated GHG emissions from electricity and fuel can be
found on page 51 in the Sustainability section of this report:
• Annual global and UK GHG emissions from activities for
which the company is responsible, including combustion of
fuel and operation of any facility, and the annual emissions
from the purchase of electricity, heat, steam or cooling by
the company for its own use
• Underlying global and UK energy use
• Energy use and GHG emissions figures from previous year
• Emissions intensity ratio
• Energy efficiency measures taken throughout the year
Our performance metrics have been calculated with reference
to the Greenhouse Gas Protocol, and externally verified.
The external verification statement can be found here:
https://plc.pearson.com/en-GB/sustainability/our-
sustainability-reporting
Directors in office
The following Directors were in office during the year and up to
the date of approval of these financial statements:
O P Abbosh
S L Coutu
A A Dolan
A H Hardiman
A M Hoffman appointed on 1 June 2025
S K M Johnson
O Kordestani
E S Lee
C Maglaras appointed on 1 November 2025
G D Pitkethly
A C Thomas
L A Wallen retired on 31 December 2025
The Directors’ report has been approved by the Board on
12 March 2026 and signed on its behalf by:
Graeme Baldwin
Company Secretary
Additional disclosures continued
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 156
Statement of Directors’ responsibilities in respect of the financial statements
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual report
and accounts and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the
Directors have prepared the consolidated financial
statements in accordance with UK-adopted international
accounting standards. In preparing the consolidated
financial statements, the Directors have also elected to
comply with IFRS Accounting Standards as issued by the
International Accounting Standards Board (IFRS Accounting
Standards as issued by IASB). The Directors have elected to
prepare the individual Company financial statements in
accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework.
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and
company and of the profit or loss of the Group for that period.
In preparing the consolidated financial statements, the
Directors are required to:
• Select suitable accounting policies and then apply
them consistently.
• State whether applicable UK-adopted international
accounting standards and IFRS Accounting Standards
as issued by IASB have been followed, subject to any
material departures disclosed and explained in the
financial statements.
• Make judgements and accounting estimates that are
reasonable and prudent.
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
will continue in business.
In preparing the company financial statements, the Directors
are required to:
• Select suitable accounting policies and then apply
them consistently.
• State whether Financial Reporting Standard 101 Reduced
Disclosure Framework has been followed, subject to any
material departures disclosed and explained in the
financial statements.
• Make judgements and accounting estimates that are
reasonable and prudent.
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for safeguarding the assets
of the Group and company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group and company’s transactions, and disclose with
reasonable accuracy at any time the financial position of the
Group and company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance
and integrity of the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names and functions are listed in
the Governance report, confirms that, to the best of their
knowledge:
• The Group financial statements, which have been prepared
in accordance with UK-adopted international accounting
standards and IFRS Accounting Standards as issued by
the IASB, give a true and fair view of the assets, liabilities
and financial position of the Group, and of the profit of
the Group.
• The company financial statements, which have been
prepared in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework, give a true and fair
view of the assets, liabilities and financial position of the
company, and of the profit of the company.
• The Strategic report includes a fair review of the
development and performance of the business and the
position of the Group and company, together with a
description of the principal risks and uncertainties that
it faces.
This responsibility statement has been approved by the Board
on 12 March 2026 and signed on its behalf by:
Sally Johnson
Chief Financial Officer
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 157
Independent Auditor’s Report to the members of Pearson plc
Opinion
In our opinion:
• Pearson plc’s group financial statements and parent
company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of the
parent company’s affairs as at 31 December 2025 and of
the group’s profit for the year then ended;
• the group financial statements have been properly
prepared in accordance with UK adopted international
accounting standards and IFRS accounting standards as
issued by the International Accounting Standards Board
(IASB);
• the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements of Pearson plc (the
‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2025 which comprise:
Group Parent company
Consolidated income
statement for the year ended
31 December 2025
Balance sheet as at
31 December 2025
Consolidated statement of
comprehensive income for the
year ended 31 December 2025
Statement of changes in
equity for the year ended
31 December 2025
Consolidated balance sheet as at
31 December 2025
Related notes 1 to 11 to
the financial statements
including material
accounting policy
information
Group Parent company
Consolidated statement of
changes in equity for the year
ended 31 December 2025
Consolidated cash flow
statement for the year ended
31 December 2025
Related notes 1 to 37 to
the financial statements,
including material accounting
policy information
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law,
UK adopted international accounting standards and IFRS
accounting standards as issued by the International
Accounting Standards Board (IASB). The financial reporting
framework that has been applied in the preparation of the
parent company financial statements is applicable law and
United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the group and parent in accordance
with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the group or the parent
company and we remain independent of the group and the
parent company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the group and
parent company’s ability to continue to adopt the going
concern basis of accounting included:
• In conjunction with our walkthrough of the group’s financial
statement close process, we confirmed our understanding
of management’s going concern assessment process to
understand and challenge the key assumptions made in
their assessment.
• We assessed the appropriateness of the duration of the
going concern assessment period to 30 June 2027 and
considered the existence of any significant events or
conditions beyond this period based on our procedures on
the group’s long-range plan and knowledge arising from
other areas of the audit.
• We agreed the 31 December 2025 cash and debt balances
included in the going concern assessment to the group’s
year end balances.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 158
• We read the group’s debt agreements to confirm availability
and to understand the covenant requirements and
reperformed management’s covenant compliance test to
confirm that no covenants have been breached during the
year to 31 December 2025. We have also tested
management’s forecast covenant compliance test to confirm
that there is no forecast covenant breach in either the base or
severe but plausible downside case scenarios during the
going concern assessment period to 30 June 2027.
• We checked the logic and arithmetical integrity of
management’s going concern model that includes the
cash forecasts for the going concern assessment period
to 30 June 2027.
• We challenged the appropriateness of the assumptions
used to calculate the cash forecasts under base and
severe but plausible downside case scenarios, including
whether the downside scenarios were sufficiently
severe, by reference to historical forecasting accuracy
and comparison to other evidence obtained during
the audit, such as audit procedures on the long range
plans which underpin management’s goodwill
impairment assessments.
• We evaluated the key assumptions by searching for
contrary evidence to challenge these assumptions,
including third party sector forecasts and analyst
expectations. Further, we validated that these cash flow
forecasts were consistent with the long range plan
approved by Pearson’s Board.
• We considered the mitigating actions that are within the
control of the group and evaluated the group’s ability to
control these outflows if required.
• We considered the group’s reverse stress testing to identify
the magnitude of decline in revenue and operating profit
that would lead to the group utilising all liquidity or
breaching a covenant during the going concern
assessment period and we have challenged the likelihood
of such a decline.
• We reviewed the group’s going concern disclosures
included in the Annual Report, in note 1(b) to the financial
statements, to assess that they were accurate and in
conformity with the reporting standards.
We observe that in management’s base case and severe but
plausible downside scenarios, there is sufficient headroom
without taking the benefit of any identified mitigations.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group and parent company’s ability to continue as a going
concern for a period to 30 June 2027.
In relation to the group and parent company’s reporting on
how they have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee
as to the group’s ability to continue as a going concern.
Overview of our audit approach
Audit
scope
• We performed an audit of the complete
financial information of 5 components
and audit procedures on specific
balances for a further 3 components. We
also performed specified audit
procedures on two accounts for 2
additional components. We performed
central procedures on financial
statement line items as detailed in the
“Tailoring the scope” section below.
Key audit
matters
• Fraud risk in revenue recognition
• Valuation of acquired intangible assets
of eDynamic Holdings LP
• Valuation of United Kingdom (UK) Group
Pension Plan defined benefit obligation
• Investment in subsidiaries impairment
reversal (Parent Company)
Materiality • Overall group materiality of £25.8m
which represents 5% of adjusted Profit
before tax, excluding intangible charges.
An overview of the scope of the parent
company and group audits
Tailoring the scope
In the current year our audit scoping reflects the requirements
of ISA (UK) 600 (Revised). We have followed a risk-based
approach when developing our audit approach to obtain
sufficient appropriate audit evidence on which we base our
audit opinion. We performed risk assessment procedures to
identify and assess risks of material misstatement of the group
financial statements and identified significant accounts and
disclosures. When identifying components at which audit work
needed to be performed to respond to the identified risks of
material misstatement of the group financial statements, we
considered our understanding of the group and its business
environment, the applicable financial framework, the group’s
system of internal control at the entity level, the existence of
centralised processes, applications and any relevant internal
audit results.
We determined that audit procedures on the total group
balances would be performed for goodwill, acquired
intangible assets, other financial assets, finance income,
finance costs, income tax expense, equity, intercompany,
current and deferred income tax assets and liabilities, defined
benefit plan liability and related OCI amounts, financial
liabilities (borrowings), financial assets and liabilities (derivative
financial instruments).
We then identified 5 of the components of the group as
individually relevant due to materiality or financial size of the
component relative to the group. We then identified a further 3
of the components as individually relevant to the group based
on the materiality of specific accounts relative to the group.
For the above 8 individually relevant components, we
identified the significant accounts where audit work needed to
be performed at these components by applying professional
judgement, having considered the group’s significant
accounts on which centralised procedures will be performed,
the reasons for identifying the financial reporting component
as an individually relevant component and the size of the
component’s account balance relative to the group’s
significant financial statement account balances.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 159
Independent Auditor’s Report continued
We then considered whether the remaining group significant
account balances not yet subject to audit procedures, in
aggregate, could give rise to a risk of material misstatement of
the group financial statements. We selected 2 further
components of the group to include in our audit scope to
address these risks.
Having identified the components for which work will
be performed, we determined the scope to assign to
each component.
Of the 10 components selected, we designed and performed
audit procedures on the entire financial information of 5
components (“full scope components”), some of which were
performed centrally as described above. For a further 3
components, we designed and performed audit procedures
on specific significant financial statement account balances or
disclosures of the financial information of the component
(“specific scope components”). For the remaining
components, we performed specified audit procedures to
obtain evidence for one or more relevant assertions over two
significant financial statement account balances.
Our scoping to address the risk of material misstatement for
each key audit matter is set out in the Key audit matters section
of our report.
All audit work performed for the purposes of the audit was
undertaken by the group audit team.
The group operates finance shared service centres in Belfast
and Manila, the outputs of which are included in the financial
information of the reporting components they service and
therefore they are not separate reporting components.
The audit procedures performed at the finance shared
service centres were performed by the group audit team
which included staff members from EY teams in Belfast and
Manila. Senior members of the Belfast audit team visited the
London-based team during the year. The Senior Statutory
Auditor visited both Belfast and Manila locations, and another
senior member of the London-based team visited the
Manila location.
Climate change
Stakeholders are increasingly interested in how climate
change will impact Pearson plc. The group has determined that
the most significant future impacts from climate change on
their operations will be from physical risks in the long term.
These risks are explained on page 45-49 in the required Task
Force on Climate-related Financial Disclosures. They have also
explained their climate commitments on page 43. All of these
disclosures form part of the “Other information”, rather than
the audited financial statements. Our procedures on these
unaudited disclosures therefore consisted solely of
considering whether they are materially inconsistent with the
financial statements or our knowledge obtained in the course
of the audit or otherwise appear to be materially misstated, in
line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential
impacts of climate change on the group’s business and any
consequential material impact on its financial statements.
The group has explained in note 1c to the financial statements
how they have reflected the impact of climate change in their
financial statements including how this aligns with their
commitment to the aspirations of the Paris Agreement to
achieve net zero emissions by 2050. The impact on the group’s
significant judgements and estimates relating to climate
change are included in note 1c.
Our audit effort in considering the impact of climate change on
the financial statements was focused on evaluating
management’s assessment of the impact of physical and
transition climate risk, their climate commitments, the effects
of material climate risks disclosed on page 47 and the impact
on the significant judgements and estimates as disclosed in
note 1c. We have considered whether the impact of climate
change has been appropriately reflected in asset values and
associated sensitivity disclosures, this primarily being
impairment assessments following the requirements of
UK-adopted international accounting standards and IFRS
accounting standards as issued by the International
Accounting Standards Board (IASB). As part of this evaluation,
we performed our own risk assessment, supported by our
climate change internal specialists, to determine the risks of
material misstatement in the financial statements from climate
change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate
change risks in their assessment of going concern and viability
and associated disclosures. Where considerations of climate
change were relevant to our assessment of going concern,
these are described above.
Based on our work we have not identified the impact of climate
change on group financial statements to be a key audit matter
or to impact a key audit matter.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 160
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Fraud risk in revenue recognition
(revenues of £3,577 million, 2024 £3,552 million)
Refer to the Audit Committee’s Report (page 114); Accounting
policies (page 180); and note 3 of the consolidated financial
statements (page 185)
Given revenue is a key performance indicator, both in
communication of the group’s results and for management
incentives, we have identified a risk of management override of
controls through inappropriate topside manual journal entries
or adjustments recorded by management to revenue.
The risk is consistent with the prior year.
We obtained an understanding of, and evaluated the design and tested the operating effectiveness of controls over the group’s
material revenue and financial statement close processes.
The audit of topside manual journals included central testing of the consolidation and close-process adjustments, testing any
journals that had an entry impacting revenue and obtaining corroborative evidence.
We have understood each significant revenue stream and considered for each individual process where management override of
controls is more likely to occur. We have determined that the fraud risk procedures were targeted on the potential for recording
fictitious manual journals to revenue by management, particularly near the year-end, to achieve the target profit or delay
recognition of revenue if targets have been met. Our testing of these manual journals and adjustments involved tracing these
back to underlying source documentation, to evaluate the appropriateness, completeness and accuracy of the postings.
We performed journal entry procedures, which included:
• A search for journals that had been posted by key management personnel;
• A search for journals with unusual pairings, namely between revenue accounts to fixed assets or debt accounts, and;
• An analysis of the business rationale for all journal entries to revenue posted in January 2026 with an effective date of 2025
(i.e. impacting 2025 financial statements) to identify potential unusual back posting activity that could indicate
management override;
Key observations communicated to the Audit Committee
Revenue for the year to 31 December 2025 has been recognised in accordance with IFRS 15: Revenue from Contracts with Customers.
How we scoped our audit to respond to the risk
We performed testing over revenue recognition in 4 full scope components and 2 specific scope components, which covered 81% of the risk amount.
All audit work performed to address this risk was undertaken by the group audit team.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 161
Independent Auditor’s Report continued
Risk Our response to the risk
Valuation of acquired intangible assets of eDynamic
Holdings LP
(Valuation of acquired intangible assets of £71 million)
Refer to the Audit Committee Report (page 116); Accounting
policies (page 175); and Note 30 of the consolidated financial
statements (page 220).
During the year, Pearson acquired eDynamic Holdings LP (‘eDL’)
for cash consideration of £168 million.
The valuation of acquired intangible assets requires specialised
skills since it involves complex judgement due to the estimation
uncertainty and the application of valuation techniques built, in
part, on assumptions around the future performance of the
acquired business. Changes in certain of these assumptions
can have a material effect on the valuation of acquired
intangible assets.
We focused our procedures on the most significant elements
of the valuation, which principally consisted of customer
relationships, with a value of approximately £71 million.
Thesignificant assumptions that are most sensitive for the
valuation of these assets are revenue growth rates, forecasted
profit margins, and discount rate.
The risk is new compared to the prior year.
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Group’s
process to identify and value intangible assets, including their use of an external valuation specialist.
We assessed the independence and expertise of management’s external valuation specialist.
We assessed the valuation methodology applied by management, with the assistance of EY valuation specialists, to validate that
they were appropriate.
We tested the reasonableness of the most significant assumptions by testing the historical revenue performance and retention
rates, reviewing pipeline information, market study reports and revenue contracts and performing sensitivity analysis over these
key assumptions. In addition, we involved our EY valuation specialists to assist us with independently testing and deriving an
appropriate discount rate range.
We evaluated the adequacy of the business combination disclosures in note 30 with respect to the requirements in IFRS 3.
Key observations communicated to the Audit Committee
Based on our procedures performed, the valuation of the acquired eDL intangibles is acceptable and the methodology used is in accordance with IFRS 3 Business Combinations.
We agree that the disclosures in Note 30 of the consolidated financial statements provide the detail required by IFRS 3.
How we scoped our audit to respond to the risk
We performed audit procedures over the consolidated balance, covering 100% of the risk amount.
All audit work performed to address this risk was undertaken by the group audit team.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 162
Risk Our response to the risk
Valuation of United Kingdom (UK) Group Pension Plan defined
benefit obligation
(Defined benefit obligation of £2,480 million, 2024 £2,443
million)
Refer to the Audit Committee’s Report (page 116); Accounting
policies (page 180); and note 25 of the consolidated financial
statements (page 211)
Calculating the present value of the UK Group Pension Plan
defined benefit pension obligation is complex and requires the
involvement of actuarial specialists due to the highly
judgemental nature of actuarial assumptions, including
discount rates, price inflation and mortality rates, and the
application of IAS 19, Employee Benefits, on those
assumptions used in the valuation and measurement process.
The present value of the UK defined benefit pension obligation
is very sensitive to changes in these assumptions.
The risk is consistent with the prior year.
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the
measurement and valuation of the UK defined benefit pension obligation.
We performed audit procedures that included evaluating the methodology used by management’s independent actuary for the
significant actuarial assumptions, discount rates, price inflation and mortality rates.
We involved our actuarial specialists to assist with our audit procedures specific to the valuation and measurement of the defined
benefit obligation.
We compared the actuarial assumptions used by management to historical trends, current investment conditions, market
practice and the requirements of the accounting standard.
We assessed the individual impact that changes in the key assumptions (discount rate, price inflation and mortality rate) at year
end has on the total benefit pension obligation. As part of this evaluation, we compared management’s selected discount rate
and price inflation to an independently developed range.
To evaluate the mortality rate assumption, we compared the information with recent publicly available mortality base tables, and
whether a consistent approach to developing the mortality assumption was applied against prior year.
Key observations communicated to the Audit Committee
Based on our procedures performed, we conclude that management’s valuation and measurement of the UK Group Pension Plan defined benefit obligation is in line within our independently
developed range of outcomes and the methodology used is in line with the requirements of IAS 19.
How we scoped our audit to respond to the risk
We performed audit procedures over the consolidated balance, covering 100% of the risk amount.
All audit work performed to address this risk was undertaken by the group audit team.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 163
Independent Auditor’s Report continued
Risk Our response to the risk
Investments in subsidiaries impairment reversal
(Parent Company)
(Investments in subsidiaries of £7,198 million,
2024 £6,695 million)
Refer to the Audit Committee’s Report (page 115); Accounting
policies (page 227); and note 2 of the company financial
statements (page 228).
The company holds investments in subsidiaries amounting to
£7,198m at 31 December 2025 (2024: £6,695m). Investments in
subsidiaries are accounted for at cost less provision for
impairment in the company balance sheet. Investments are
tested for impairment or impairment reversal if such indicators
exist. If such indicators exist, the recoverable amounts of
investments in subsidiaries are estimated in order to determine
the extent of any impairment loss or reversal, if any. Any such
impairment loss or reversal is recognised in the income
statement.
An impairment reversal indicator was identified in connection
with one of Pearson plc’s investments in subsidiaries due to a
sustained improvement in financial performance and an
impairment reversal of £464m was recorded in the parent
company income statement.
We concluded that the risk related to measuring the
recoverable amount of the subsidiary due to:
• The judgement in the method used to allocate a proportion
of the Group’s value in use to the investment.
• The estimation in respect of the future cash flows used to
calculate the value in use.
The risk has increased compared to the prior year.
We evaluated management’s assessment that an impairment reversal indicator had been identified by considering external
factors such as the group’s market capitalisation compared to when the impairment was recorded and internal factors such as
completion of strategic reviews.
We assessed whether the method used to allocate a proportion of the group’s value in use was a reasonable basis and also
considered the sensitivity of the impairment reversal amount to alternative allocation methods.
We validated that the group value in use that was proportioned was consistent with other areas of our group audit such as
goodwill impairment.
We performed our own independent calculation of the valuation of the recoverable amount of the investment holding company.
We compared the disclosures in the parent company financial statements against the requirements of FRS101 “Reduced
Disclosure Framework”.
Key observations communicated to the Audit Committee
We are satisfied that the £464m impairment reversal is appropriate and the disclosure, including sensitivity analysis meets the requirements of FRS101.
How we scoped our audit to respond to the risk
We tested the entire impairment reversal and all audit work performed to address this risk was undertaken by the group audit team.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 164
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements
on the audit and in forming our opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be expected
to influence the economic decisions of the users of the
financial statements. Materiality provided a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the group to be £25.8 million
(2024: £25.7 million), which is 5% (2024: 5%) of adjusted Profit
before tax, excluding intangible charges. We believe that
adjusted Profit before tax, excluding intangible charges is the
appropriate basis since it is earning-based and excludes
certain non-recurring items.
We determined materiality for the Parent Company to be
£57.8 million (2024: £55.9 million), which is 1% (2024: 1%) of
net assets.
Starting basis • Profit before tax – £457 million
Adjustments
• Add: £87 million product
development impairment
• Add: £3 million other net gains
and losses
• Less: £7 million other net
finance income
• Less: £25 million property charges
Materiality
• Adjusted Profit before tax £515
million (materiality basis)
• Materiality of £25.8 million (5% of
materiality basis)
During the course of our audit, we reassessed initial
materiality and updated it for actual 2025 results, which
resulted in a small decrease.
Performance materiality
The application of materiality at the individual account
or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our
assessment of an improvement in the group’s overall control
environment, our judgement was that performance materiality
was 75% (2024: 50%) of our planning materiality, namely £19.3
million (2024: £12.8 million). We have set performance
materiality at this percentage to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and corrected misstatements exceeds materiality.
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £1.3 million
(2024: £1.3 million), which is set at 5% of planning materiality, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluated any uncorrected misstatements against both
the quantitative measures of materiality discussed above and
in light of other relevant qualitative considerations in forming
our opinion.
Other information
The other information comprises the information included in
the annual report pages 1 to 156, other than the financial
statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a
material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the strategic report and the
directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the strategic report and the directors’ report have
been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of the group
and the parent company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 165
• the parent company financial statements and the part of
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to
going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the group and
company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review by the
UK Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any
material uncertainties identified set out on page 157;
• Directors’ explanation as to its assessment of the
company’s prospects, the period this assessment covers
and why the period is appropriate set out on page 69;
• Directors’ statement on whether it has a reasonable
expectation that the group will be able to continue in
operation and meet its liabilities set out on page 69;
• Directors’ statement on fair, balanced and understandable
set out on page 104;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 57;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control
systems set out on page 109; and
• The section describing the work of the audit committee set
out on page 105.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 157, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group and parent company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities,
including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with
governance of the company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and
determined that the most significant frameworks which are
directly relevant to specific assertions in the financial
statements are those that relate to the reporting framework
(UK-adopted International Accounting Standards, IFRS
accounting standards as issued by the International
Accounting Standards Board (IASB), the Companies Act
2006 and the UK Corporate Governance Code) and the
relevant tax laws and regulations in the countries in which
the group operates.
• We understood how Pearson plc is complying with those
frameworks by making enquiries of management, Internal
Audit, those responsible for legal and compliance
procedures and the General Counsel. We corroborated our
enquiries through reading of Board minutes and papers
provided to the Audit Committee and observation in Audit
Committee meetings, as well as consideration of the results
of our audit procedures across the group.
• We assessed the susceptibility of the group’s financial
statements to material misstatement, including how fraud
might occur and met with finance and operational
management from various parts of the business to
understand where they considered there was susceptibility
to fraud. We also considered performance targets and their
potential to influence management to manage earnings or
influence the perception of analysts. We have determined
that there is a fraud risk on revenue recognition referred to
in the Key audit matters section. We considered the
policies, processes and controls that the group has
established to address the risks identified, including the
design of controls over each significant revenue stream and
the financial statement close process. We also considered
the controls that the group has that otherwise prevent,
deter and detect fraud, and how senior management
monitors those controls.
Independent Auditor’s Report continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 166
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations including where necessary using our forensic
and other relevant specialists. Our procedures included
reading any correspondence with regulators, making
enquiries of management’s specialists, and journal entry
testing, with a focus on manual journal entries, consolidation
journals and journal entries indicating large or unusual
transactions using data analytics. We based this testing on
our understanding of the business, enquiries of
management, including internal audit and other advisors,
the Company Secretary and reading relevant reports. We
performed specific searches derived from forensic
investigations experience and leveraged our data analytics
platform in performing our testing. We have also reviewed
the whistleblowing reports issued during the year.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters we are required to address
• Following the recommendation from the Audit Committee
we were appointed by the company on 29 April 2022 to
audit the financial statements for the year ending 31
December 2022 and subsequent financial periods.
• The period of total uninterrupted engagement including
previous renewals and reappointments is four years,
covering the years ending 31 December 2022 to 31
December 2025.
• The audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
for and on behalf of Ernst & Young LLP , Statutory Auditor
London
12 March 2026
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 167
Consolidated income statement
Year ended 31 December 2025
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
| Continuing operations | ||||
Sales | 2,3 | |||
Cost of goods sold | 4 | ( | ( | ( |
Gross profit | ||||
Operating expenses | 4 | ( | ( | ( |
Other net gains and losses | 4 | ( | ( | ( |
Share of results of joint ventures and associates | 12 | |||
Operating profit | 2 | |||
Finance costs | 6 | ( | ( | ( |
Finance income | 6 | |||
Profit before tax | ||||
Income tax | 7 | ( | ( | ( |
Profit for the year | ||||
| Attributable to: | ||||
Equity holders of the company | ||||
Non-controlling interest | ||||
| Earnings per share attributable to equity holders of the company during the year (expressed in pence per share) | ||||
• basic | 8 | |||
• diluted | 8 |
Pearson plc Annual report and accounts 2025 168Strategic report Governance report Financial statements Other information
Consolidated statement of comprehensive income
Year ended 31 December 2025
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
Profit for the year | ||||
| Items that may be reclassified to the income statement | ||||
Net exchange differences on translation of foreign operations | ( | ( | ( | |
Currency translation adjustment disposed | 31 | ( | ||
Attributable tax | 7 | |||
| Items that are not reclassified to the income statement | ||||
Fair value (losses)/gains on other financial assets | 15 | ( | ( | |
Attributable tax | 7 | |||
Remeasurement of retirement benefit obligations | 25 | ( | ||
Attributable tax | 7 | ( | ( | |
Other comprehensive expense for the year | 29 | ( | ( | ( |
Total comprehensive income for the year | ||||
| Attributable to: | ||||
Equity holders of the company | ||||
Non-controlling interest |
Pearson plc Annual report and accounts 2025 169Strategic report Governance report Financial statements Other information
Consolidated balance sheet
As at 31 December 2025
All figures in £ millions | Notes | 2025 | 2024 |
| Current liabilities | |||
Trade and other liabilities | 24 | ( | ( |
Financial liabilities – borrowings | 18 | ( | ( |
Financial liabilities – derivative financial instruments | 16 | ( | ( |
Income tax liabilities | 7 | ( | ( |
Provisions for other liabilities and charges | 23 | ( | ( |
( | ( | ||
Liabilities classified as held for sale | |||
Total liabilities | ( | ( | |
Net assets | |||
| Equity | |||
Share capital | 27 | ||
Share premium | 27 | ||
Treasury shares | 28 | ( | ( |
Capital redemption reserve | |||
Fair value reserve | ( | ( | |
Translation reserve | |||
Retained earnings | |||
Total equity attributable to equity holders of the company | |||
Non-controlling interest | |||
Total equity |
Pearson plc
Registered number: 00053723
All figures in £ millions | Notes | 2025 | 2024 |
| Assets | |||
| Non-current assets | |||
Property, plant and equipment | 10 | ||
Investment property | 10 | ||
Intangible assets | 11 | ||
Investments in joint ventures and associates | 12 | ||
Deferred income tax assets | 13 | ||
Financial assets – derivative financial instruments | 16 | ||
Retirement benefit assets | 25 | ||
Other financial assets | 15 | ||
Income tax assets | 7 | ||
Trade and other receivables | 22 | ||
| Current assets | |||
Intangible assets – product development | 20 | ||
Inventories | 21 | ||
Trade and other receivables | 22 | ||
Financial assets – derivative financial instruments | 16 | ||
Income tax assets | 7 | ||
Cash and cash equivalents (excluding overdrafts) | 17 | ||
Assets classified as held for sale | |||
Total assets | |||
| Liabilities | |||
| Non-current liabilities | |||
Financial liabilities – borrowings | 18 | ( | ( |
Financial liabilities – derivative financial instruments | 16 | ( | ( |
Deferred income tax liabilities | 13 | ( | ( |
Retirement benefit obligations | 25 | ( | ( |
Provisions for other liabilities and charges | 23 | ( | ( |
Other liabilities | 24 | ( | ( |
( | ( |
Pearson plc Annual report and accounts 2025 170Strategic report Governance report Financial statements Other information
Consolidated statement of changes in equity
Year ended 31 December 2025
| Equity attributable to equity holders of the company | ||||||||||
| Share | Share | Treasury | Capital redemption | Fair value | Translation | Retained | Non-controlling | Total | ||
| All figures in £ millions | capital | premium | shares | reserve | reserve | reserve | earnings | Total | interest | equity |
At | ( | ( | ||||||||
Profit for the year | ||||||||||
Other comprehensive (expense)/income | ( | ( | ( | ( | ( | |||||
Total comprehensive (expense)/income | ( | ( | ||||||||
Equity-settled transactions 1 | ||||||||||
Taxation on equity-settled transactions | ( | ( | ( | |||||||
Issue of ordinary shares under share option schemes | ||||||||||
Buyback of equity | ( | ( | ( | ( | ||||||
Purchase of treasury shares | ( | ( | ( | |||||||
Release of treasury shares | ( | |||||||||
Dividends | ( | ( | ( | |||||||
At | ( | ( |
1. Equity-settled transactions are presented net of withholding taxes that the Group is obligated to pay on behalf of employees. The payments to the tax authorities are accounted for as a deduction from equity for the shares withheld.
The capital redemption reserve reflects the nominal value of shares cancelled in the Group’s share buyback programme. The fair value reserve arises on revaluation of other financial assets. The translation
reserve includes exchange differences arising from the translation of the net investment in foreign operations and of borrowings and other currency instruments designated as hedges of such investments.
| Equity attributable to equity holders of the company | |||||||||||
| Share | Share | Treasury | Capital redemption | Fair value | Translation | Retained | Non-controlling | Total | |||
| All figures in £ millions | capital | premium | shares | reserve | reserve | reserve | earnings | Total | interest | equity | |
At 1 January 2024 | ( | ( | |||||||||
Profit for the year | |||||||||||
Other comprehensive (expense)/income | ( | ( | ( | ( | |||||||
Total comprehensive (expense)/income | ( | ( | |||||||||
Equity-settled transactions 1 | |||||||||||
Taxation on equity-settled transactions | |||||||||||
Issue of ordinary shares under share option schemes | |||||||||||
Buyback of equity | ( | ( | ( | ( | |||||||
Purchase of treasury shares | ( | ( | ( | ||||||||
Release of treasury shares | ( | ||||||||||
Dividends | ( | ( | ( | ||||||||
At 31 December 2024 | ( | ( | |||||||||
Pearson plc Annual report and accounts 2025 171Strategic report Governance report Financial statements Other information
| Equity attributable to equity holders of the company | |||||||||||
| Capital | Fair | Non- | |||||||||
| Share | Share | Treasury | redemption | value | Translation | Retained | controlling | Total | |||
| All figures in £ millions | capital | premium | shares | reserve | reserve | reserve | earnings | Total | interest | equity | |
At 1 January 2023 | ( | ( | |||||||||
Profit for the year | |||||||||||
Other comprehensive (expense)/income | ( | ( | ( | ( | ( | ||||||
Total comprehensive (expense)/income | ( | ||||||||||
Equity-settled transactions | |||||||||||
Taxation on equity-settled transactions | |||||||||||
Issue of ordinary shares under share option schemes | |||||||||||
Buyback of equity | ( | ( | ( | ( | |||||||
Purchase of treasury shares | ( | ( | ( | ||||||||
Release of treasury shares | ( | ||||||||||
Dividends | ( | ( | ( | ||||||||
At 31 December 2023 | ( | ( | |||||||||
Consolidated statement of changes in equity continued
Year ended 31 December 2025
Pearson plc Annual report and accounts 2025 172Strategic report Governance report Financial statements Other information
Consolidated cash flow statement
Year ended 31 December 2025
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
| Cash flows from operating activities | ||||
Profit before tax | ||||
Net finance costs | ||||
| Depreciation and impairment – PPE, investment | ||||
property and assets held for sale | ||||
Amortisation and impairment – software | ||||
| Amortisation and impairment – acquired | ||||
intangible assets | ||||
Other net gains and losses | ||||
Product development capital expenditure | ( | ( | ( | |
| Amortisation and impairment – product | ||||
development | ||||
Share-based payment costs | ||||
Change in inventories | ||||
Change in trade and other receivables | ( | ( | ||
Change in trade and other liabilities | ( | ( | ||
| Change in provisions for other liabilities | ||||
and charges | ( | ( | ( | |
Other movements | ( | ( | ||
Net cash generated from operations | ||||
Interest paid | ( | ( | ( | |
Tax paid | ( | ( | ( | |
Net cash generated from operating activities | ||||
| Cash flows from investing activities | ||||
Acquisition of subsidiaries, net of cash acquired | 30 | ( | ( | ( |
Acquisition of joint ventures and associates | ( | |||
Purchase of investments | ( | ( | ( | |
Purchase of property, plant and equipment and investment property | ( | ( | ( | |
Purchase of intangible assets | ( | ( | ( | |
Disposal of subsidiaries, net of cash disposed | 31 | ( | ( |
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
Proceeds from disposal of investments | ||||
| Proceeds from disposal of property, plant | ||||
and equipment | ||||
Lease receivables repaid including disposals | ||||
Interest received | ||||
Dividends received | ||||
Net cash used in investing activities | ( | ( | ( | |
| Cash flows from financing activities | ||||
Proceeds from issue of ordinary shares | 27 | |||
Buyback of equity | 27 | ( | ( | ( |
Settlement of share-based payments | 28 | ( | ( | ( |
Proceeds from borrowings | ||||
Repayment of borrowings | ( | ( | ( | |
Repayment of lease liabilities | ( | ( | ( | |
Dividends paid to company’s shareholders | 9 | ( | ( | ( |
Net cash used in financing activities | ( | ( | ( | |
Effects of exchange rate changes on cash and cash equivalents | ( | ( | ( | |
Net (decrease)/increase in cash and cash equivalents | ( | ( | ||
Cash and cash equivalents at beginning of year | ||||
Cash and cash equivalents at end of year | 17 |
Pearson plc Annual report and accounts 2025 173Strategic report Governance report Financial statements Other information
Notes to the consolidated financial statements
Pearson plc Annual report and accounts 2025 174Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Pearson plc Annual report and accounts 2025 175Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Consolidation continued
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 176Strategic report Governance report Financial statements Other information
| estimate of the expected useful life. Amortisation is included in the income statement in cost of |
| goods sold. |
| The assessment of the useful economic life and the recoverability of product development |
1a. Accounting policies continued
Pearson plc Annual report and accounts 2025 177Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 178Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Typical reason for designation | Reporting of gains and losses on effective portion of the hedge | Reporting of gains and losses on disposal |
| Net investment hedge | ||
| The derivative creates a foreign currency asset or liability which is | Recognised in other comprehensive income. | On the disposal of foreign operations or |
| used to hedge changes in the value of a subsidiary which | subsidiaries, the accumulated value of gains and | |
| transacts in that currency. | losses reported in other comprehensive income is | |
| transferred to the income statement. | ||
| Fair value hedges | ||
| The derivative transforms the interest profile on debt from fixed | Gains and losses on the derivative are reported in finance | If the debt and derivative are disposed of, the value |
| rate to floating rate. Changes in the value of the debt as a result of | income or finance costs. However, an equal and opposite | of the derivative and the debt (including the fair |
| changes in interest rates and foreign exchange rates are offset by | change is made to the carrying value of the debt (a ‘fair value adjustment) are reset to zero. Any resultant | |
| equal and opposite changes in the value of the derivative. When | value adjustment’) with the benefit/cost reported in | gain or loss is recognised in finance income or |
| the Group’s debt is swapped to floating rates, the contracts used | finance income or finance costs. The net result should be a | finance costs. |
| are designated as fair value hedges. | zero charge on a perfectly effective hedge. | |
| Non-hedge accounted contracts | ||
| These are not designated as hedging instruments. Typically, these | Recognised in the income statement. No hedge | |
are short-term contracts to convert debt back to fixed rates or foreign exchange contracts where a natural offset exists. | accounting applies. | |
Pearson plc Annual report and accounts 2025 179Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 180Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Pearson plc Annual report and accounts 2025 181Strategic report Governance report Financial statements Other information
1a. Accounting policies continued
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 182Strategic report Governance report Financial statements Other information
Sales | Adjusted operating profit | ||||||
2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||
Assessment & Qualifications | 1,604 | 1,591 | 1,559 | 361 | 368 | 350 | |
Virtual Learning | 511 | 489 | 616 | 81 | 66 | 76 | |
English Language Learning | 405 | 420 | 415 | 50 | 50 | 47 | |
Enterprise Learning & Skills 1 | 282 | 271 | 269 | 29 | 20 | 6 | |
Higher Education 1 | 775 | 781 | 806 | 93 | 96 | 96 | |
Strategic Review | – | – | 9 | – | – | (2) | |
Total | 3,577 | 3,552 | 3,674 | 614 | 600 | 573 | |
2025 | 2024 | 2023 | ||
Adjusted operating profit | 614 | 600 | 573 | |
Cost of major reorganisation | – | 2 | – | |
Product development impairment | (87) | – | – | |
Property charges | 25 | – | (11) | |
Intangible charges | (42) | (41) | (48) | |
UK pension discretionary increases | – | (13) | – | |
Other net gains and losses | (3) | (7) | (16) | |
Operating profit | 507 | 541 | 498 | |
Finance costs | 6 | (98) | (112) | (81) |
Finance income | 6 | 48 | 81 | 76 |
Profit before tax | 457 | 510 | 493 | |
Income tax | 7 | (121) | (75) | (113) |
Profit for the year | 336 | 435 | 380 |
Pearson plc Annual report and accounts 2025 183Strategic report Governance report Financial statements Other information
Property charges – In 2025, there was gain of £25m, relating to reversals of impairments of
property assets that were previously impaired through property charges. In 2024, there were no
property charges. In 2023, charges of £11m related to impairments of property assets arising
from the impact of updates in 2023 to assumptions initially made during the 2022 and 2021
reorganisation programmes.
Intangible charges – These represent amortisation relating to intangibles acquired through
business combinations. These amortisation charges are excluded as they reflect past acquisition
activity and do not necessarily reflect the current year performance of the Group. Intangible
amortisation charges in 2025 were £42m compared to a charge of £41m in 2024. This is due to
increased amortisation from recent acquisitions partially offset by decreased amortisation from
assets reaching the end of their useful economic lives. In 2023, intangible charges were £48m. In
all three years, there were no impairment charges.
Other net gains and losses – These represent profits and losses on the sale of subsidiaries, joint
ventures, associates and other financial assets and are excluded from adjusted operating profit
in order to show the performance of the Group on a more comparable basis year-on-year. Other
net gains and losses also includes costs related to business closures and acquisitions. Other net
gains and losses in 2025 relate to the gain on disposal of Copp Clark, a business in our Higher
Education division, a fair value gain relating to a previous disposal and costs relating to current
and prior year acquisitions and disposals. Other net gains and losses in 2024 relate to costs
related to prior year acquisitions and disposals, which were partially offset by a gain on the partial
disposal of our investment in an associate. In 2023, they relate to the gain on the disposal of the
POLS business and gains related to the release of accruals and a provision related to historical
acquisitions, offset by losses on the disposal of Pearson College and costs related to current and
prior year disposals and acquisitions.
UK pension discretionary increases – Charges in 2024 relate to one-off pension increases
awarded to certain cohorts of pensioners in response to the cost of living crisis. There were no
such awards in 2025 or 2023.
2. Segment information continued
There were no material inter-segment sales in either 2025, 2024 or 2023. Corporate costs are
allocated to business segments on an appropriate basis depending on the nature of the cost and
therefore the total segment result is equal to the Group operating profit.
Other segment disclosures are as follows:
| Amortisation, depreciation, and impairment | |||
All figures in £ millions | 2025 | 2024 | 2023 |
Assessment & Qualifications | 186 | 196 | 196 |
Virtual Learning | 53 | 64 | 76 |
English Language Learning | 51 | 56 | 58 |
Enterprise Learning & Skills 1 | 32 | 30 | 28 |
Higher Education 1 | 249 | 180 | 182 |
Strategic Review | - | – | 3 |
Total | 571 | 526 | 543 |
1. Comparative amounts have been restated to reflect the move between operating segments.
Adjusted operating profit is shown in the previous tables as it is the key financial measure used by
management to evaluate the performance of the Group. The measure also enables investors to
more easily, and consistently, track the underlying operational performance of the Group and its
business segments over time by separating out those items of income and expenditure relating
to acquisition and disposal transactions, certain property charges, major reorganisation
programmes and certain other items that are also not representative of underlying performance,
which are explained below and reconciled within this note.
Cost of major reorganisation – In 2025, there were no costs of major reorganisation. In 2024,
there was a release of £2m relating to amounts previously accrued. In 2023, there were no
costs of major reorganisation. The costs of these reorganisation programmes are significant
enough to exclude from the adjusted operating profit measure so as to better highlight the
underlying performance.
Product development impairment charges - In 2025, these relate to the impairment of product
development assets as a result of courseware platform convergence (see note 20). There were
no such amounts in 2024 or 2023.
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 184Strategic report Governance report Financial statements Other information
2. Segment information continued
Sales | Non-current assets | ||||
All figures in £ millions | 2025 | 2024 | 2023 | 2025 | 2024 |
UK | 510 | 487 | 450 | 516 | 505 |
Other European countries | 126 | 120 | 130 | 157 | 160 |
US | 2,400 | 2,444 | 2,504 | 2,287 | 2,310 |
Canada | 68 | 68 | 83 | 182 | 174 |
Asia Pacific | 354 | 313 | 386 | 165 | 169 |
Other countries | 119 | 120 | 121 | 11 | 13 |
Total | 3,577 | 3,552 | 3,674 | 3,318 | 3,331 |
| 2025 | |||||||
| English | Enterprise | ||||||
| Assessment & | Virtual | Language | Learning & | Higher | Strategic | ||
| All figures in £ millions | Qualifications | Learning | Learning | Skills | Education | Review | Total |
Services | 1,174 | 511 | 186 | 202 | - | - | 2,073 |
Software | 229 | - | 47 | 69 | 627 | - | 972 |
Print | 201 | - | 172 | 11 | 148 | - | 532 |
Total | 1,604 | 511 | 405 | 282 | 775 | - | 3,577 |
2024 1 | |||||||
| English | Enterprise | ||||||
| Assessment & | Virtual | Language | Learning & | Higher | Strategic | ||
| All figures in £ millions | Qualifications | Learning | Learning | Skills | Education | Review | Total |
Services | 1,150 | 489 | 193 | 193 | - | – | 2,025 |
Software | 209 | – | 49 | 61 | 605 | – | 924 |
Print | 232 | – | 178 | 17 | 176 | – | 603 |
Total | 1,591 | 489 | 420 | 271 | 781 | – | 3,552 |
Pearson plc Annual report and accounts 2025 185Strategic report Governance report Financial statements Other information
3. Revenue from contracts with customers continued
2023 1 | |||||||
| English | Enterprise | ||||||
| Assessment & | Virtual | Language | Learning & | Higher | Strategic | ||
| All figures in £ millions | Qualifications | Learning | Learning | Skills | Education | Review | Total |
Services | 1,120 | 616 | 194 | 187 | 6 | – | 2,123 |
Software | 202 | – | 45 | 65 | 595 | – | 907 |
Print | 237 | – | 176 | 17 | 205 | 9 | 644 |
Total | 1,559 | 616 | 415 | 269 | 806 | 9 | 3,674 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 186Strategic report Governance report Financial statements Other information
3. Revenue from contracts with customers continued
Pearson plc Annual report and accounts 2025 187Strategic report Governance report Financial statements Other information
3. Revenue from contracts with customers continued
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 188Strategic report Governance report Financial statements Other information
All figures in £ millions | 2025 | 2024 | 2023 |
| By function: | |||
Cost of goods sold | 1,717 | 1,741 | 1,839 |
| Operating expenses | |||
Distribution costs | 38 | 43 | 47 |
Selling, marketing and product development costs | 525 | 510 | 549 |
Administrative and other expenses | 733 | 754 | 767 |
Reorganisation costs | – | (2) | – |
Product development impairment | 87 | – | – |
Other income | (32) | (40) | (41) |
Total net operating expenses | 1,351 | 1,265 | 1,322 |
Other net gains and losses | 3 | 7 | 16 |
Total | 3,071 | 3,013 | 3,177 |
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
| By nature: | ||||
Royalties expensed | 162 | 162 | 164 | |
Other product costs | 354 | 371 | 393 | |
Employee benefit expense | 5 | 1,423 | 1,411 | 1,467 |
Contract labour | 29 | 56 | 70 | |
Employee-related expense | 47 | 53 | 60 | |
Promotional costs | 126 | 113 | 146 | |
Depreciation and impairment of property, plant and equipment and investment property | ||||
and assets held for sale 1 | 10 | 54 | 77 | 90 |
Amortisation and impairment of intangible assets – product development | 20 | 364 | 291 | 284 |
Amortisation and impairment of intangible assets – software | 11 | 112 | 117 | 123 |
Amortisation and impairment of intangible assets – other | 11 | 41 | 41 | 46 |
Property and facilities | 68 | 70 | 82 | |
Technology and communications | 218 | 215 | 215 | |
Professional and outsourced services | 424 | 395 | 443 | |
Other general and administrative costs | 92 | 72 | 43 | |
Costs capitalised 2 | (414) | (398) | (424) | |
Other net gains and losses | 3 | 7 | 16 | |
Other income | (32) | (40) | (41) | |
Total | 3,071 | 3,013 | 3,177 |
Pearson plc Annual report and accounts 2025 189Strategic report Governance report Financial statements Other information
5. Employee information
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
| Employee benefit expense | ||||
| Wages and salaries (including termination | ||||
costs) | 1,203 | 1,188 | 1,252 | |
Social security costs | 113 | 100 | 107 | |
Share-based payment costs | 26 | 39 | 42 | 37 |
| Retirement benefits – defined contribution | ||||
plans | 25 | 41 | 41 | 45 |
Retirement benefits – defined benefit plans | 25 | 27 | 40 | 26 |
Total | 1,423 | 1,411 | 1,467 |
In 2025, there were no additional share-based payment costs (2024: £2m; 2023: £3m) in respect
of remuneration for post-acquisition services for recent acquisitions included in other net gains
and losses in the income statement.
The details of the emoluments of the Directors of Pearson plc are shown in the report on
Directors’ remuneration.
Average number employed | 2025 | 2024 | 2023 |
| Employee numbers | |||
UK | 2,830 | 2,798 | 3,045 |
Other European countries | 675 | 681 | 633 |
US | 9,336 | 9,258 | 10,125 |
Canada | 306 | 315 | 398 |
Asia Pacific | 3,081 | 3,111 | 3,257 |
Other countries | 834 | 861 | 902 |
Total | 17,024 | 18,360 |
4. Operating expenses continued
All figures in £ millions | 2025 | 2024 | 2023 |
| The audit of parent company and consolidated financial | |||
statements | 7 | 7 | 8 |
The audit of the company’s subsidiaries | 2 | 2 | 2 |
Total audit fees | 9 | 9 | 10 |
Audit-related and other assurance services | – | – | – |
Other non-audit services | – | – | – |
Total other services | – | – | – |
Total non-audit services | – | – | – |
Total 1 | 9 | 9 | 10 |
All figures in £ millions | 2025 | 2024 | 2023 |
| Group audit fees including fees for attestation under | |||
section 404 of the Sarbanes-Oxley Act | 9 | 9 | 10 |
Non-audit fees | – | – | – |
Total | 9 | 9 | 10 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 190Strategic report Governance report Financial statements Other information
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
| Interest payable on financial liabilities at | ||||
amortised cost and associated derivatives | (51) | (48) | (34) | |
Interest on lease liabilities | 34 | (20) | (22) | (23) |
| Interest on deferred and contingent | ||||
consideration | (1) | (2) | (4) | |
Fair value movements on investments held at fair value | 15 | (7) | (11) | – |
Net foreign exchange losses | (7) | (3) | – | |
| Interest on provisions for uncertain tax | ||||
positions | (3) | (7) | – | |
Fair value movement on derivatives | (9) | (19) | (20) | |
Finance costs | (98) | (112) | (81) | |
Interest receivable on financial assets at amortised cost | 14 | 25 | 16 | |
Interest on lease receivables | 34 | 3 | 4 | 4 |
| Net finance income in respect of retirement | ||||
benefits | 25 | 25 | 21 | 26 |
Fair value movements on investments held at fair value | 15 | – | – | 13 |
Net foreign exchange gains | – | – | 3 | |
| Interest on provisions for uncertain tax | ||||
positions | – | 5 | 4 | |
Fair value movement on derivatives | 6 | 26 | 10 | |
Finance income | 48 | 81 | 76 | |
Net finance costs | (50) | (31) | (5) |
7. Income tax
All figures in £ millions | Notes | 2025 | 2024 | 2023 |
| Current tax | ||||
Charge in respect of current year | (108) | (132) | (105) | |
Adjustments in respect of prior years | (6) | 60 | 20 | |
Total current tax charge | (114) | (72) | (85) | |
| Deferred tax | ||||
In respect of temporary differences | (9) | 8 | (11) | |
Other adjustments in respect of prior years | 2 | (11) | (17) | |
Total deferred tax charge | 13 | (7) | (3) | (28) |
Total tax charge | (121) | (75) | (113) |
The adjustments in respect of prior years in 2025 is primarily due to movements in provisions for
tax uncertainties. In 2024, the difference is primarily driven by the State Aid provision release (see
page 192 for further details), with 2024 and 2023 also being impacted by revising the previous
year’s reported tax provision to reflect the tax returns subsequently filed.
Pearson plc Annual report and accounts 2025 191Strategic report Governance report Financial statements Other information
7. Income tax continued
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using
the UK tax rate as follows:
All figures in £ millions | 2025 | 2024 | 2023 |
Profit before tax | 457 | 510 | 493 |
| Tax calculated at UK rate (2025: 25%; 2024: 25%; | |||
2023: 23.5%) | (114) | (127) | (116) |
Effect of overseas tax rates | (3) | (1) | (1) |
Effect of UK rate change | – | – | (1) |
Net (expense)/income not subject to tax | (5) | 3 | (3) |
Gains and losses on sale of businesses not subject to tax | – | – | 5 |
Unrecognised tax losses | 6 | 2 | 1 |
State Aid provision release | – | 63 | – |
Movement in provisions for tax uncertainties – current year | (1) | (1) | (2) |
Movement in provisions for tax uncertainties – prior years | (4) | (12) | 1 |
Other prior year adjustments | – | (2) | 3 |
Total tax charge | (121) | (75) | (113) |
UK | (41) | 21 | (54) |
Overseas | (80) | (96) | (59) |
Total tax charge | (121) | (75) | (113) |
Tax rate reflected in earnings | 26.5% | 14.7% | 23.0% |
Included in net (expense)/income not subject to tax is the benefit of available tax credits less the
impact of foreign taxes not creditable, the tax impact of share-based payments and other
expenses not deductible.
Factors which may affect future tax charges include changes in tax legislation, transfer pricing
regulations, the level and mix of profitability in different countries, and settlements with tax authorities.
The 2024 State Aid provision release of £63m was a result of the Court of Justice of the European
Union handing down its decision on 19 September 2024 determining that the United Kingdom
controlled foreign company group financing partial exemption did not constitute State Aid. The
Group had a receivable for the £97m tax and £8m interest on tax paid under the Charging Notices
issued by HMRC in 2021. These amounts were received in 2025, along with the anticipated
additional interest paid on the tax amounts collected.
The movement in provisions for tax uncertainties primarily reflects reassessment of existing
exposures based on currently available information and tax authority correspondence, releases
due to the expiry of relevant statutes of limitation and settlement of certain audits. The current tax
liability of £47m (2024: £32m) includes £46m (2024: £35m) of provisions for tax uncertainties,
whilst the net deferred income tax liability of £31m (2024: £11m) includes £21m (2024: £25m)
of provisions for tax uncertainties, both principally in respect of several matters in the US and the
UK. This includes matters under enquiry from the UK tax authorities with the relevant years being
2019 to 2021.
The Group is currently under audit in several countries, and the timing of any resolution of these
audits is uncertain. In most of these countries, tax years up to and including 2018 are now statute
barred from examination by tax authorities, however, a balance of £17m relates to certain
remaining open issues. Of the remaining £50m balance, £21m relates to 2019, £8m to 2020, £5m
to 2021, £3m to 2022, £5m to 2023, £6m to 2024 and £2m to 2025. The tax authorities may take a
different view from management and the final liability may be greater or lower than provided.
Refer to note 33 for details of other uncertain tax positions.
• The application of tax legislation in relation to provisions for uncertain tax positions.
• The level of provisions required in relation to uncertain tax positions is complex and each
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 192Strategic report Governance report Financial statements Other information
9. Dividends
All figures in £ millions | 2025 | 2024 | 2023 |
| Final paid in respect of prior year | |||
2023: 14.9p) | 110 | 107 | 106 |
| Interim paid in respect of current year 7.8p (2024: 7.4p; | |||
2023: 7.0p) | 50 | 49 | 49 |
160 | 156 | 155 |
The Directors are proposing a final dividend in respect of the financial year ended 31 December
2025 of 17.4p per equity share which will absorb an estimated £109m of shareholders’ funds. It
will be paid on 8 May 2026 to shareholders who are on the register of members on 20 March 2026.
These financial statements do not reflect this dividend as a liability.
7. Income tax continued
The tax benefit/(charge) recognised in other comprehensive income is as follows:
All figures in £ millions | 2025 | 2024 | 2023 |
Net exchange differences on translation of foreign operations | – | 2 | – |
Fair value gains on other financial assets | – | – | – |
Remeasurement of retirement benefit obligations | (3) | (2) | 20 |
(3) | – | 20 |
8. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity
shareholders of the company (earnings) by the weighted average number of ordinary shares
in issue during the year, excluding ordinary shares purchased by the company and held as
treasury shares.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary
shares to take account of all dilutive potential ordinary shares and adjusting the profit
attributable, if applicable, to account for any tax consequences that might arise from conversion
of those shares.
Certain contingently issuable shares vested on 31 December 2023 but had not yet been issued.
These shares were considered dilutive but did not materially impact basic EPS.
All figures in £ millions | 2025 | 2024 | 2023 |
Earnings for the year | 336 | 435 | 380 |
Non-controlling interest | (1) | (1) | (2) |
Earnings attributable to equity shareholders | 335 | 434 | 378 |
Weighted average number of shares (millions) | 651.3 | 673.0 | 711.5 |
Effect of dilutive share options (millions) | 9.0 | 11.0 | 5.8 |
| Weighted average number of shares (millions) for diluted | |||
earnings | 660.3 | 684.0 | 717.3 |
| Earnings per share (in pence per share) | |||
Basic | 51.4p | 64.5p | 53.1p |
Diluted | 50.7p | 63.5p | 52.7p |
Pearson plc Annual report and accounts 2025 193Strategic report Governance report Financial statements Other information
| Owned assets | ||||||
| Assets in the | ||||||
| Investment | Right-of- | Land and | Plant and | course of | ||
| All figures in £ millions | property | use assets | buildings | equipment | construction | Total |
| Depreciation and impairment | ||||||
At 1 January 2024 | (135) | (234) | (125) | (177) | – | (671) |
Exchange differences | – | (2) | (2) | (2) | – | (6) |
Charge for the year | (8) | (35) | (8) | (25) | – | (76) |
Disposals and retirements | – | 32 | 22 | 83 | – | 137 |
Reclassifications and transfers | – | – | – | – | – | – |
| Reversal of impairment/ | ||||||
(impairment) | (1) | – | – | – | – | (1) |
At 31 December 2024 | (144) | (239) | (113) | (121) | – | (617) |
Exchange differences | – | 12 | 7 | 8 | – | 27 |
Charge for the year | (8) | (34) | (9) | (23) | – | (74) |
Disposals and retirements | – | 32 | – | 12 | – | 44 |
Reclassifications and transfers | – | – | – | – | – | – |
| Reversal of impairment/ | ||||||
(impairment) | 11 | 6 | – | – | – | 17 |
At 31 December 2025 | (141) | (223) | (115) | (124) | – | (603) |
| Carrying amounts | ||||||
At 1 January 2024 | 79 | 108 | 40 | 60 | 9 | 296 |
At 31 December 2024 | 77 | 111 | 38 | 58 | 9 | 293 |
At 31 December 2025 | 91 | 111 | 34 | 55 | 10 | 301 |
| Owned assets | ||||||
| Assets in | ||||||
| Investment | Right-of- | Land and | Plant and | the course of | ||
| All figures in £ millions | property | use assets | buildings | equipment | construction | Total |
| Cost | ||||||
At 1 January 2024 | 214 | 342 | 165 | 237 | 9 | 967 |
Exchange differences | – | 2 | 1 | 1 | 1 | 5 |
Additions | 7 | 39 | – | 4 | 27 | 77 |
Disposals and retirements | – | (33) | (22) | (84) | – | (139) |
Reclassifications and transfers | – | – | 7 | 21 | (28) | – |
At 31 December 2024 | 221 | 350 | 151 | 179 | 9 | 910 |
Exchange differences | – | (19) | (9) | (10) | – | (38) |
Additions | 11 | 41 | – | 4 | 26 | 82 |
Disposals and retirements | – | (38) | – | (12) | – | (50) |
Reclassifications and transfers | – | – | 7 | 18 | (25) | – |
At 31 December 2025 | 232 | 334 | 149 | 179 | 10 | 904 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 194Strategic report Governance report Financial statements Other information
10. Property, plant and equipment and investment
property continued
| Acquired | |||||||
| customer lists, | Acquired | Acquired | Other | ||||
| contracts and | trademarks | publishing | intangibles | ||||
| All figures in £ millions | Goodwill | Software | relationships | and brands | rights | acquired | Total |
| Cost | |||||||
At 1 January 2024 | 2,434 | 1,137 | 580 | 184 | 100 | 444 | 4,879 |
Exchange differences | 2 | 12 | 6 | (7) | – | (20) | (7) |
| Additions – internal | |||||||
development | – | 91 | – | – | – | – | 91 |
Additions – purchased | – | – | – | – | – | – | – |
| Disposals and | – | ||||||
| retirements | – | (89) | – | (1) | – | (5) | (95) |
Acquisition of business (note 30) | 1 | – | – | – | – | 1 | 2 |
Transfers | – | (5) | – | – | – | – | (5) |
At 31 December 2024 | 2,437 | 1,146 | 586 | 176 | 100 | 420 | 4,865 |
Exchange differences | (114) | (56) | (33) | (6) | (3) | (13) | (225) |
| Additions – internal | |||||||
development | – | 105 | – | – | – | – | 105 |
Additions – purchased | – | – | – | – | – | – | – |
Disposals and retirements | – | (15) | – | – | – | – | (15) |
Acquisition of business (note 30) | 102 | – | 54 | 3 | – | 14 | 173 |
Transfers | – | – | – | – | – | – | – |
At 31 December 2025 | 2,425 | 1,180 | 607 | 173 | 97 | 421 | 4,903 |
Pearson plc Annual report and accounts 2025 195Strategic report Governance report Financial statements Other information
| At 31 December 2025 | |
| Useful economic life | |
| Class of intangible asset | |
Acquired customer lists, contracts and relationships | 3-20 years |
Acquired trademarks and brands | 2-20 years |
Acquired publishing rights | 5-20 years |
Other intangibles acquired | 2-20 years |
| At 31 December 2025 | |||||
| One to | Six to | Eleven to | Sixteen to | ||
| All figures in £ millions | five years | ten years | fifteen years | twenty years | Total |
| Class of intangible asset | |||||
| Acquired customer lists, contracts | |||||
and relationships | 72 | 50 | 34 | 4 | 160 |
Acquired trademarks and brands | 16 | 4 | – | – | 20 |
Acquired publishing rights | 1 | – | – | – | 1 |
Other intangibles acquired | 69 | 9 | 4 | – | 82 |
11. Intangible assets continued
| Acquired | |||||||
| customer lists, | Acquired | Acquired | Other | ||||
| contracts and | trademarks | publishing | intangibles | ||||
| All figures in £ millions | Goodwill | Software | relationships | and brands | rights | acquired | Total |
Amortisation and impairment | |||||||
At 1 January 2024 | – | (765) | (434) | (155) | (99) | (335) | (1,788) |
Exchange differences | – | (8) | (6) | 7 | – | 18 | 11 |
Charge for the year | – | (117) | (17) | (6) | – | (18) | (158) |
Disposals and retirements | – | 89 | – | 1 | – | 5 | 95 |
Transfers | – | 1 | – | – | – | – | 1 |
At 31 December 2024 | – | (800) | (457) | (153) | (99) | (330) | (1,839) |
Exchange differences | – | 38 | 26 | 5 | 3 | 11 | 83 |
Charge for the year | – | (112) | (16) | (5) | – | (20) | (153) |
Disposals and retirements | – | 15 | – | – | – | – | 15 |
Transfers | – | – | – | – | – | – | – |
At 31 December 2025 | – | (859) | (447) | (153) | (96) | (339) | (1,894) |
| Carrying amounts | |||||||
At 1 January 2024 | 2,434 | 372 | 146 | 29 | 1 | 109 | 3,091 |
At 31 December 2024 | 2,437 | 346 | 129 | 23 | 1 | 90 | 3,026 |
At 31 December 2025 | 2,425 | 321 | 160 | 20 | 1 | 82 | 3,009 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 196Strategic report Governance report Financial statements Other information
11. Intangible assets continued
| 2025 | 2024 | |
| All figures in £ millions | Goodwill | Goodwill |
Assessment & Qualifications | 1,288 | 1,369 |
Virtual Learning | 397 | 426 |
English Language Learning | 250 | 246 |
Enterprise Learning & Skills | 338 | 330 |
Higher Education | 152 | 66 |
Total | 2,425 | 2,437 |
Pearson plc Annual report and accounts 2025 197Strategic report Governance report Financial statements Other information
All figures in £ millions | 2025 | 2024 |
Deferred income tax assets | 58 | 52 |
Deferred income tax liabilities | (89) | (63) |
Net deferred income tax liability | (31) | (11) |
Gross | Tax effected | ||||||||
| Year ended | |||||||||
| 31 December 2025 | UK | US | Other | Total | UK | US | Other | Total | |
| Tax losses expiring: | |||||||||
Within 10 years | – | 411 | 14 | 425 | – | 86 | 3 | 89 | |
Within 10-20 years | – | 117 | – | 117 | – | 6 | – | 6 | |
Available indefinitely | 167 | 39 | 148 | 354 | 42 | 2 | 47 | 91 | |
Total | 167 | 567 | 162 | 896 | 42 | 94 | 50 | 186 | |
11. Intangible assets continued
2025 | 2024 | |||
| Discount | Perpetuity | Discount | Perpetuity | |
| rate | growth rate | rate | growth rate | |
Assessment & Qualifications | 10.5% | 2.0% | 11.0% | 2.0% |
Virtual Learning | 10.3% | 2.0% | 10.9% | 2.0% |
English Language Learning | 12.6% | 3.5% | 13.2% | 3.5% |
Enterprise Learning & Skills | 10.6% | 2.0% | 10.8% | 2.0% |
Higher Education | 10.5% | 2.0% | 10.8% | 2.0% |
All figures in £ millions 2025 | 2024 | |
Associates | 8 | 12 |
Total | 8 | 12 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 198Strategic report Governance report Financial statements Other information
Gross | Tax effected | |||||||
| Year ended | ||||||||
| 31 December 2024 | UK | US | Other | Total | UK | US | Other | Total |
| Tax losses expiring: | ||||||||
Within 10 years | – | 443 | 21 | 464 | – | 92 | 5 | 97 |
Within 10-20 years | – | 135 | – | 135 | – | 7 | – | 7 |
Available indefinitely | 167 | 38 | 161 | 366 | 42 | 2 | 52 | 96 |
Total | 167 | 616 | 182 | 965 | 42 | 101 | 57 | 200 |
| Accruals | Retirement | Goodwill | ||||||
| Trading | and other | benefit | Deferred | and | Interest | |||
| All figures in £ millions | losses | provisions | obligations | revenue | intangibles | limitations | Other | Total |
| Deferred income tax | ||||||||
| assets/(liabilities) | ||||||||
At 1 January 2024 | 101 | 59 | (114) | 43 | (152) | 34 | 18 | (11) |
Exchange differences | (2) | – | – | – | – | – | (1) | (3) |
Acquisitions and disposals of subsidiaries | – | – | – | – | – | – | – | – |
| Income statement | ||||||||
benefit/(charge) | (23) | (2) | 3 | 2 | 29 | (16) | 4 | (3) |
Tax charge in OCI/equity | – | 7 | (2) | – | – | – | 1 | 6 |
At 31 December 2024 | 76 | 64 | (113) | 45 | (123) | 18 | 22 | (11) |
Exchange differences | – | (2) | – | (1) | – | – | – | (3) |
Acquisitions and disposals of subsidiaries | – | – | – | – | (1) | – | – | (1) |
| Income statement | ||||||||
benefit/(charge) | (10) | 2 | (6) | (2) | 35 | (18) | (8) | (7) |
Tax charge in OCI/equity | – | (6) | (3) | – | – | – | – | (9) |
At 31 December 2025 | 66 | 58 | (122) | 42 | (89) | – | 14 | (31) |
13. Deferred income tax continued
Pearson plc Annual report and accounts 2025 199Strategic report Governance report Financial statements Other information
| 2025 | ||||||
| Amortised | ||||||
| Fair value | cost | |||||
| Fair value | Fair value | |||||
| through other | through | Fair value | Total | |||
| comprehensive | profit and | – hedging | Financial | carrying | ||
| All figures in £ millions | Notes | income | loss | instrument | assets | value |
Investments in listed and unlisted securities | 15 | 24 | 101 | – | – | 125 |
Cash and cash equivalents | 17 | – | 11 | – | 322 | 333 |
Derivative financial instruments | 16 | – | 14 | 2 | – | 16 |
Trade receivables | 22 | – | – | – | 661 | 661 |
| Investment in finance lease | ||||||
receivable | 22 | – | – | – | 66 | 66 |
Other receivable | – | 16 | – | – | 16 | |
Total financial assets | 24 | 142 | 2 | 1,049 | 1,217 |
| 2024 | ||||||
| Amortised | ||||||
| Fair value | cost | |||||
| Fair value | Fair value | |||||
| through other | through | Fair value | Total | |||
| comprehensive | profit and | – hedging | Financial | carrying | ||
| All figures in £ millions | Notes | income | loss | instrument | assets | value |
Investments in listed and unlisted securities | 15 | 28 | 113 | – | – | 141 |
Cash and cash equivalents | 17 | – | 62 | – | 481 | 543 |
Derivative financial instruments | 16 | – | 30 | 21 | – | 51 |
Trade receivables | 22 | – | – | – | 614 | 614 |
Contract assets - unbilled 1 | 22 | – | – | – | 71 | 71 |
| Investment in finance lease | ||||||
receivable | 22 | – | – | – | 83 | 83 |
Other receivable | – | 12 | – | – | 12 | |
Total financial assets | 28 | 217 | 21 | 1,249 | 1,515 |
| 2025 | ||||||
| Amortised | ||||||
| Fair value | cost | |||||
| Fair value | ||||||
| through | Fair value | Other | Total | Total | ||
| profit and | – hedging | financial | carrying | market | ||
| All figures in £ millions | Notes | loss | instrument | liabilities | value | value |
Derivative financial instruments | 16 | (2) | (1) | – | (3) | (3) |
Trade payables | 24 | – | – | (281) | (281) | (281) |
| Deferred and contingent | ||||||
consideration | 24 | (1) | – | (16) | (17) | (17) |
Borrowings due within one year | 18 | – | – | (62) | (62) | (62) |
Borrowings due after more than one year | 18 | – | – | (1,419) | (1,419) | (1,398) |
Total financial liabilities | (3) | (1) | (1,778) | (1,782) | (1,761) |
| 2024 | ||||||
| Amortised | ||||||
| Fair value | cost | |||||
| Fair value | ||||||
| through | Fair value | Other | Total | Total | ||
| profit | – hedging | financial | carrying | market | ||
| All figures in £ millions | Notes | and loss | instrument | liabilities | value | value |
Derivative financial instruments | 16 | (10) | (48) | – | (58) | (58) |
Trade payables | 24 | – | – | (273) | (273) | (273) |
| Deferred and contingent | ||||||
consideration | 24 | (1) | – | (21) | (22) | (22) |
Borrowings due within one year | 18 | – | – | (315) | (315) | (312) |
Borrowings due after more than one year | 18 | – | – | (1,157) | (1,157) | (1,123) |
Total financial liabilities | (11) | (48) | (1,766) | (1,825) | (1,788) |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 200Strategic report Governance report Financial statements Other information
2025 | 2024 | |||
| Deferred | Contingent | |||
| All figures in £ millions | consideration | consideration | Total | Total |
At 1 January | (21) | (1) | (22) | (57) |
Exchange differences | 1 | – | 1 | – |
Acquisitions | – | – | – | (1) |
Fair value movements – income statement | – | – | – | (2) |
Repayments | 4 | – | 4 | 38 |
At 31 December | (16) | (1) | (17) | (22) |
14. Classification of financial instruments continued
2025 | 2024 | |||
| Investments | ||||
| Other | in unlisted | |||
| All figures in £ millions | receivable | securities | Total | Total |
At 1 January | 12 | 135 | 147 | 155 |
Exchange differences | – | (7) | (7) | 2 |
Acquisition of investments and other receivable | – | 5 | 5 | 9 |
Repayments | (1) | – | (1) | – |
Reclassification out of level 3 | – | – | – | (6) |
Fair value movements – OCI | – | (2) | (2) | (2) |
Fair value movements – income statement | 2 | (7) | (5) | (11) |
At 31 December | 13 | 124 | 137 | 147 |
Pearson plc Annual report and accounts 2025 201Strategic report Governance report Financial statements Other information
All figures in £ millions | 2025 | 2024 |
At 1 January | 141 | 143 |
Exchange differences | (7) | 2 |
Acquisition of investments | 5 | 9 |
Disposal of investments | – | – |
Fair value movements – OCI | (7) | (2) |
Fair value movements – income statement | (7) | (11) |
At 31 December | 125 | 141 |
2025 | 2024 | |||||
| Gross | Gross | |||||
| notional | notional | |||||
| All figures in £ millions | amounts | Assets | Liabilities | amounts | Assets | Liabilities |
Interest rate derivatives – in a fair value hedge relationship | – | – | – | 166 | – | (1) |
Interest rate derivatives – not in a hedge relationship | 375 | 14 | (2) | 779 | 22 | (6) |
| Cross-currency rate | ||||||
| derivatives – in a hedge | ||||||
relationship | – | – | – | 342 | 21 | (32) |
| Cross-currency rate | ||||||
| derivatives – not in a hedge | ||||||
relationship | – | – | – | 83 | – | (4) |
| FX derivatives – in a hedge | ||||||
relationship | 993 | 2 | (1) | 1,049 | – | (15) |
| FX derivatives – not in a hedge | ||||||
relationship | 163 | – | – | 711 | 8 | – |
Total | 1,531 | 16 | (3) | 3,130 | 51 | (58) |
| Analysed as expiring: | ||||||
In less than one year | 1,156 | 2 | (1) | 2,505 | 31 | (54) |
Later than one year and not later than five years | 75 | – | (1) | 325 | 3 | (1) |
In greater than five years | 300 | 14 | (1) | 300 | 17 | (3) |
Total | 1,531 | 16 | (3) | 3,130 | 51 | (58) |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 202Strategic report Governance report Financial statements Other information
| 2025 | |||
| Change in fair | |||
| Carrying | value of hedging | Nominal | |
| amount of | instrument used to | amounts of | |
| hedging | determine hedge | hedging | |
| All figures in £ millions | instruments | ineffectiveness | instruments |
Derivative financial instruments for interest rate risk | – | 1 | – |
Derivative financial instruments for currency risk | – | (21) | – |
16. Derivative financial instruments and hedge
accounting continued
Pearson plc Annual report and accounts 2025 203Strategic report Governance report Financial statements Other information
| 2025 | |||||
| Change in value of | Hedging | ||||
| Carrying | hedging instrument | Nominal | gains/ | Hedge | |
| amount of | used to determine | amounts | (losses) | ineffectiveness | |
| hedging | hedge | of hedging | recognised | recognised in | |
| All figures in £ millions | instruments | ineffectiveness | instruments | in OCI | profit or loss |
| Derivative financial | |||||
instruments | 1 | 48 | 993 | 48 | – |
| Financial liabilities – | |||||
borrowings | – | – | – | – | – |
| 2024 | |||||
| Change in value of | Hedging | ||||
| Carrying | hedging instrument | Nominal | gains/ | Hedge | |
| amount of | used to determine | amounts | (losses) | ineffectiveness | |
| hedging | hedge | of hedging | recognised | recognised in | |
| All figures in £ millions | instruments | ineffectiveness | instruments | in OCI | profit or loss |
| Derivative financial | |||||
instruments | (47) | (29) | 1,225 | (29) | – |
| Financial liabilities – | |||||
borrowings | – | – | – | – | – |
16. Derivative financial instruments and hedge
accounting continued
| 2024 | |||
| Change in fair value | |||
| Carrying | of hedging | Nominal | |
| amount of | instrument used to | amounts of | |
| hedging | determine hedge | hedging | |
| All figures in £ millions | instruments | ineffectiveness | instruments |
Derivative financial instruments for interest rate risk | (1) | 5 | 166 |
Derivative financial instruments for currency risk | 21 | (8) | 166 |
| 2025 | |||||
| Accumulated | Change in fair | ||||
| Carrying | amount of fair value | value of hedged | Line item in | ||
| amount | hedge adjustments | item used to | profit or loss | ||
| of | on the hedged item | determine | that includes | ||
| hedged | included in the | hedge | Hedge | hedge | |
| All figures in £ millions | items | carrying amount | ineffectiveness | ineffectiveness | ineffectiveness |
| Interest rate risk | |||||
| Financial liabilities – | Finance | ||||
borrowings | – | – | – | – | costs |
| Currency risk | |||||
| Financial liabilities – | Finance | ||||
borrowings | – | – | – | – | costs |
| 2024 | |||||
| Accumulated | Change in fair | ||||
| Carrying | amount of fair value | value of hedged | Line item in | ||
| amount | hedge adjustments | item used to | profit or loss | ||
| of | on the hedged item | determine | that includes | ||
| hedged | included in the | hedge | Hedge | hedge | |
| All figures in £ millions | items | carrying amount | ineffectiveness | ineffectiveness | ineffectiveness |
| Interest rate risk | |||||
| Financial liabilities – | Finance | ||||
borrowings | (166) | 1 | (5) | – | costs |
| Currency risk | |||||
| Financial liabilities – | Finance | ||||
borrowings | (166) | n/a | 8 | – | costs |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 204Strategic report Governance report Financial statements Other information
Included within cash at bank and in hand is £11m (2024: £62m) of money market funds. Short-term
bank deposits are invested with banks and earn interest at the prevailing short-term deposit rates.
At the end of 2025, the currency split of cash and cash equivalents was US dollar 29%
(2024: 33%), sterling 14% (2024: 27%), and other 57% (2024: 40%).
Cash and cash equivalents have fair values that approximate to their carrying value due to their
short-term nature.
The Group has certain cash pooling arrangements in US dollars, sterling, Euro and Canadian
dollars where both the company and the bank have a legal right of offset. The company presents
these amounts net in the balance sheet where legal right of offset exists and the company has
the intention to settle net if required. As at 31 December 2025, £nil of financial liabilities
(2024: £2m) were presented net within financial assets.
All figures in £ millions | 2025 | 2024 |
| Non-current | ||
3.75% GBP notes 2030 (nominal amount £350m) | 356 | 355 |
5.375% GBP notes 2034 (nominal amount £350m) | 350 | 350 |
Revolving Credit Facilities | 297 | – |
Lease liabilities (see note 34) | 416 | 452 |
1,419 | 1,157 | |
| Current (due within one year or on demand) | ||
1.375% Euro notes 2025 (nominal amount €300m) | – | 250 |
Lease liabilities (see note 34) | 62 | 65 |
Overdrafts | – | – |
62 | 315 | |
Total borrowings | 1,481 | 1,472 |
16. Derivative financial instruments and hedge
accounting continued
2025 | 2024 | |||||
| Gross | Gross | Net derivative | Gross | Gross | ||
| derivative | derivative | assets/ | derivative | derivative | Net assets/ | |
| All figures in £ millions | assets | liabilities | liabilities | assets | liabilities | liabilities |
Counterparties in an asset position | 16 | (3) | 13 | 24 | (7) | 17 |
Counterparties in a liability position | – | – | – | 27 | (51) | (24) |
Total as presented in the balance sheet | 16 | (3) | 13 | 51 | (58) | (7) |
17. Cash and cash equivalents (excluding overdrafts)
All figures in £ millions | 2025 | 2024 |
Cash at bank and in hand | 327 | 444 |
Short-term bank deposits | 6 | 99 |
Cash and cash equivalents | 333 | 543 |
All figures in £ millions | 2025 | 2024 |
Cash and cash equivalents | 333 | 543 |
Bank overdrafts | – | – |
Cash and cash equivalents in the cash flow statement | 333 | 543 |
Pearson plc Annual report and accounts 2025 205Strategic report Governance report Financial statements Other information
18. Financial liabilities – borrowings continued
All figures in £ millions | 2025 | 2024 |
Between one and two years | 70 | 71 |
Between two and five years | 778 | 149 |
Over five years | 571 | 937 |
1,419 | 1,157 |
2025 | 2024 | |||||
| Effective | Carrying | Market | Effective | Carrying | Market | |
| All figures in £ millions | interest rate | value | value | interest rate | value | value |
1.375% Euro notes 2025 | – | – | – | 1.44% | 250 | 247 |
3.75% GBP notes 2030 | 3.93% | 356 | 338 | 3.93% | 355 | 328 |
5.375% GBP notes 2034 | 5.6% | 350 | 347 | 5.6% | 350 | 343 |
| Revolving Credit | ||||||
Facilities | n/a | 297 | 297 | – | – | – |
1,003 | 982 | 955 | 918 |
All figures in £ millions | 2025 | 2024 |
US dollar | 153 | 187 |
Sterling | 1,309 | 1,013 |
Euro | 2 | 253 |
Other | 17 | 19 |
1,481 | 1,472 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 206Strategic report Governance report Financial statements Other information
| 2025 | |||||
| Impact of | Impact of | ||||
| Impact of 1% | Impact of 1% | 10% | 10% | ||
| Carrying | increase in | decrease in | strengthening | weakening | |
| All figures in £ millions | value | interest rates | interest rates | in sterling | in sterling |
| Investments in listed and unlisted | |||||
securities | 125 | – | – | (8) | 10 |
Other receivable | 16 | – | – | (1) | 2 |
Cash and cash equivalents | 333 | – | – | (23) | 27 |
Derivative financial instruments | 13 | 2 | (2) | 41 | (56) |
Bonds | (706) | – | – | – | – |
Other borrowings | (775) | – | – | 16 | (19) |
Investment in finance lease receivable | 66 | – | – | (6) | 7 |
| Deferred and contingent | |||||
consideration | (17) | – | – | 2 | (2) |
Other net financial assets | 465 | – | – | (36) | 45 |
Total | (480) | 2 | (2) | (15) | 14 |
| 2024 | |||||
| Impact of | |||||
| Impact of 1% | Impact of 1% | Impact of 10% | 10% | ||
| Carrying | increase in | decrease in | strengthening | weakening | |
| All figures in £ millions | value | interest rates | interest rates | in sterling | in sterling |
Investments in unlisted securities | 141 | – | – | (10) | 12 |
Other receivable | 12 | – | – | (1) | 1 |
Cash and cash equivalents | 543 | – | – | (32) | 40 |
Derivative financial instruments | (7) | 4 | (4) | 22 | (24) |
Bonds | (955) | – | – | 23 | (28) |
Other borrowings | (517) | – | – | 19 | (23) |
Investment in finance lease receivable | 83 | – | – | (8) | 9 |
| Deferred and contingent | |||||
consideration | (22) | – | – | 2 | (2) |
Other net financial assets | 412 | – | – | (32) | 40 |
Total | (310) | 4 | (4) | (17) | 25 |
19. Financial risk management continued
All figures in £ millions | 2025 | 2024 |
Cash and cash equivalents | 333 | 543 |
Overdrafts | – | – |
Derivative financial instruments | 13 | (7) |
Revolving Credit Facilities | (297) | – |
Bonds | (706) | (955) |
Investment in finance lease receivable | 66 | 83 |
Lease liabilities | (478) | (517) |
Net debt | (1,069) | (853) |
Pearson plc Annual report and accounts 2025 207Strategic report Governance report Financial statements Other information
Analysed by maturity | Analysed by currency | |||||||||
| Greater | ||||||||||
| than one | Later | |||||||||
| month | than one | |||||||||
| and less | year but | Five | ||||||||
| than one | less than | years | ||||||||
| All figures in £ millions | year | five years | or more | Total | USD | GBP | Other | Total | ||
| At 31 December 2025 | ||||||||||
Bonds | 32 | 478 | 425 | 935 | – | 935 | – | 935 | ||
| Rate derivatives – | ||||||||||
inflows | (11) | (39) | (32) | (82) | – | (82) | – | (82) | ||
| Rate derivatives – | ||||||||||
outflows | 9 | 32 | 26 | 67 | – | 67 | – | 67 | ||
FX forwards – inflows | (326) | – | – | (326) | – | (326) | – | (326) | ||
| FX forwards – | ||||||||||
outflows | 324 | – | – | 324 | 324 | – | – | 324 | ||
Total | 28 | 471 | 419 | 918 | 324 | 594 | – | 918 | ||
| At 31 December 2024 | ||||||||||
Bonds 1 | 250 | – | 705 | 955 | – | 705 | 250 | 955 | ||
| Rate derivatives – | ||||||||||
inflows | (394) | (3) | (17) | (414) | (2) | (163) | (249) | (414) | ||
| Rate derivatives – | ||||||||||
outflows | 408 | 1 | 3 | 412 | 176 | 235 | 1 | 412 | ||
FX forwards – inflows | (1,034) | – | – | (1,034) | – | (1,034) | (1,034) | – | ||
| FX forwards – | ||||||||||
outflows | 1,049 | – | – | 1,049 | 1,049 | – | 1,049 | – | ||
Total | 279 | (2) | 691 | 968 | 1,223 | (257) | 968 | 2 |
19. Financial risk management continued
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 208Strategic report Governance report Financial statements Other information
All figures in £ millions | 2025 | 2024 |
| Cost | ||
At 1 January | 2,514 | 2,517 |
Exchange differences | (135) | 17 |
Additions | 285 | 284 |
Disposals and retirements | (38) | (309) |
Transfers | – | 5 |
At 31 December | 2,626 | 2,514 |
| Amortisation | ||
At 1 January | (1,567) | (1,570) |
Exchange differences | 89 | (14) |
Charge for the year | (276) | (287) |
Impairment | (88) | (4) |
Disposals and retirements | 38 | 309 |
Transfers | – | (1) |
At 31 December | (1,804) | (1,567) |
Carrying amounts at 31 December | 822 | 947 |
19. Financial risk management continued
Pearson plc Annual report and accounts 2025 209Strategic report Governance report Financial statements Other information
21. Inventories
All figures in £ millions | 2025 | 2024 |
Raw materials | 3 | 5 |
Work in progress | 1 | 2 |
Finished goods | 59 | 63 |
Returns asset | 3 | 4 |
66 | 74 |
The cost of inventories recognised as an expense and included in the income statement in cost of
goods sold amounted to £120m (2024: £129m; 2023: £155m) including £8m (2024: £7m; 2023:
£19m) of inventory provisions. None of the inventory is pledged as security. Included within the
inventory balance is the estimation of the right to receive goods from contracts with customers
via returns. The value of the returns asset is measured at the carrying amount of the assets at the
time of sale aligned to the Group’s normal inventory valuation methodology less any expected
costs to recover the asset and any expected reduction in value. Impairment charges against the
inventory returns asset are £1m in 2025 (2024: £nil; 2023: £nil). The returns asset all relates to
finished goods. The year-on-year reduction in inventories is due to the increasing shift towards
print on demand.
22. Trade and other receivables
All figures in £ millions | 2025 | 2024 |
| Current | ||
Trade receivables | 651 | 605 |
Contract assets – unbilled | 86 | 71 |
Investment in finance lease receivable | 21 | 19 |
Prepayments and other receivables | 324 | 335 |
1,082 | 1,030 | |
| Non-current | ||
Trade receivables | 10 | 9 |
Investment in finance lease receivable | 45 | 64 |
Prepayments and other receivables | 50 | 52 |
105 | 125 |
Contract assets – unbilled represents contract assets which are unbilled amounts generally
resulting from US assessments where the performance obligations are yet to be fully delivered
and therefore the revenue to be recognised over time has been recognised in excess of
customer billings to date. Impairment charges on these contract assets are £nil (2024: £nil).
Where performance obligations have been fully delivered but the amounts have not yet been
billed, these are included within trade receivables. Contract assets arising from costs incurred to
obtain a contract are included in other receivables. The carrying value of the Group’s trade and
other receivables approximates its fair value. Trade receivables are stated net of provisions for
bad and doubtful debts.
The movements in the provision for bad and doubtful debts are as follows:
All figures in £ millions | 2025 | 2024 |
At 1 January | (40) | (51) |
Exchange differences | 1 | 2 |
Income statement movements | (24) | (4) |
Utilised | 7 | 13 |
At 31 December | (56) | (40) |
Concentrations of credit risk with respect to trade receivables are limited due to the Group’s
large number of customers, who are internationally dispersed.
The ageing of the Group’s gross trade receivables is as follows:
All figures in £ millions | 2025 | 2024 |
Contract assets – unbilled | 86 | 71 |
Within due date and one month past due date | 554 | 488 |
One to three months past due date | 57 | 53 |
Three to six months past due date | 24 | 22 |
Six to nine months past due date | 12 | 24 |
Nine to 12 months past due date | 8 | 13 |
More than 12 months past due date | 62 | 54 |
Gross trade receivables | 803 | 725 |
The Group reviews its bad debt provision at least twice a year following a detailed review of
receivable balances, historical payment profiles, and assessment of relevant forward-looking
risk factors including macroeconomic trends. Management believes all the remaining receivable
balances are fully recoverable.
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 210Strategic report Governance report Financial statements Other information
| Legal | |||
| All figures in £ millions | Property | and other | Total |
At 1 January 2025 | 15 | 21 | 36 |
Provisions made during the year | – | 9 | 9 |
Provisions reversed during the year | (5) | (2) | (7) |
Provisions used during the year | – | (19) | (19) |
Acquisition of businesses (note 30) | – | 1 | 1 |
At 31 December 2025 | 10 | 10 | 20 |
| 2025 | |||
| Legal | |||
| All figures in £ millions | Property | and other | Total |
Current | 4 | 4 | 8 |
Non-current | 6 | 6 | 12 |
10 | 10 | 20 | |
| 2024 | |||
Current | 3 | 20 | 23 |
Non-current | 12 | 1 | 13 |
15 | 21 | 36 |
All figures in £ millions | 2025 | 2024 |
| Current | ||
Trade payables | 281 | 273 |
Sales return liability | 19 | 27 |
Deferred income | 328 | 329 |
Interest payable | 13 | 12 |
Accruals and other liabilities | 402 | 413 |
1,043 | 1,054 | |
| Non-current | ||
Deferred income | 61 | 62 |
Accruals and other liabilities | 15 | 21 |
76 | 83 |
Pearson plc Annual report and accounts 2025 211Strategic report Governance report Financial statements Other information
25. Retirement benefit and other post-retirement obligations
All figures in % | Active | Deferred | Pensioners | Total |
Defined benefit | – | 12 | 35 | 47 |
Defined contribution | 11 | 42 | – | 53 |
Total | 11 | 54 | 35 | 100 |
2025 | 2024 | 2023 | |||||||
| UK | UK | UK | |||||||
| Group | Other | Group | Other | Group | Other | ||||
| All figures in % | plan | plans | PRMB | plan | plans | PRMB | plan | plans | PRMB |
Inflation | 2.8 | 2.0 | – | 3.1 | 2.0 | – | 3.0 | 2.0 | – |
Rate used to discount plan | |||||||||
liabilities | 5.5 | 4.9 | 4.9 | 5.5 | 5.1 | 5.4 | 4.6 | 4.9 | 5.0 |
| Expected rate | |||||||||
of increase in salaries | 3.3 | 2.5 | – | 3.6 | 2.5 | – | 3.5 | 2.5 | – |
| Expected rate | |||||||||
of increase for pensions in payment and deferred | 1.70 to | 1.85 to | 1.75 to | ||||||
| pensions | 5.10 | – | – | 5.15 | – | – | 5.10 | – | – |
Initial rate of increase in healthcare | |||||||||
rate | – | – | 6.8 | – | – | 7.0 | – | – | 6.5 |
| Ultimate rate | |||||||||
of increase in healthcare | |||||||||
rate | – | – | 5.0 | – | – | 5.0 | – | – | 5.0 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 212Strategic report Governance report Financial statements Other information
25. Retirement benefit and other post-retirement obligations
continued
UK | US | |||||
All figures in years | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 |
Male | 21.5 | 21.3 | 21.8 | 20.8 | 20.7 | 20.7 |
Female | 24.5 | 24.5 | 24.1 | 22.8 | 22.7 | 22.6 |
UK | US | |||||
All figures in years | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 |
Male | 23.1 | 22.9 | 23.4 | 22.3 | 22.2 | 22.2 |
Female | 26.2 | 26.2 | 25.8 | 24.2 | 24.1 | 24.1 |
| 2025 | ||||||
| Defined | ||||||
| UK Group | benefit | Defined | ||||
| All figures in £ millions | plan | other | Sub-total | contribution | PRMB | Total |
Current service cost | 17 | 1 | 18 | 41 | – | 59 |
Past service cost | – | – | – | – | – | – |
Settlements | – | – | – | – | – | – |
Administration expenses | 9 | – | 9 | – | – | 9 |
Total operating expense | 26 | 1 | 27 | 41 | – | 68 |
Interest on plan assets | (158) | (3) | (161) | – | – | (161) |
Interest on plan liabilities | 132 | 3 | 135 | – | 1 | 136 |
| Net finance | ||||||
(income)/expense | (26) | – | (26) | – | 1 | (25) |
| Net income | ||||||
statement charge | – | 1 | 1 | 41 | 1 | 43 |
| 2024 | ||||||
| Defined | ||||||
| UK Group | benefit | Defined | ||||
| All figures in £ millions | plan | other | Sub-total | contribution | PRMB | Total |
Current service cost | 17 | 2 | 19 | 41 | – | 60 |
Past service cost | 13 | – | 13 | – | – | 13 |
Settlements | – | – | – | – | – | – |
Administration expenses | 8 | – | 8 | – | – | 8 |
Total operating expense | 38 | 2 | 40 | 41 | – | 81 |
Interest on plan assets | (138) | (5) | (143) | – | – | (143) |
Interest on plan liabilities | 116 | 5 | 121 | – | 1 | 122 |
| Net finance | ||||||
(income)/expense | (22) | – | (22) | – | 1 | (21) |
| Net income | ||||||
statement charge | 16 | 2 | 18 | 41 | 1 | 60 |
Pearson plc Annual report and accounts 2025 213Strategic report Governance report Financial statements Other information
All figures in £ millions | 2025 | 2024 | 2023 |
Amounts recognised for defined benefit plans | 11 | 4 | (86) |
| Amounts recognised for post-retirement medical benefit | |||
plans | (1) | 1 | 1 |
Total recognised in year | 10 | 5 | (85) |
2025 | 2024 | |||||
| UK Group | Other | UK Group | Other | |||
| All figures in % | plan | funded plans | Total | plan | funded plans | Total |
Insurance | 30 | – | 30 | 31 | – | 31 |
Equities | 19 | – | 19 | 17 | 1 | 18 |
| Fixed interest | ||||||
securities | 8 | – | 8 | 7 | 2 | 9 |
Property | 5 | – | 5 | 5 | – | 5 |
| Pooled asset | ||||||
| investment funds | ||||||
(including LDI) | 21 | – | 21 | 22 | – | 22 |
Infrastructure | 10 | – | 10 | 11 | – | 11 |
| Cash and cash | ||||||
equivalents | 4 | 1 | 5 | 2 | – | 2 |
Other | 2 | – | 2 | 2 | – | 2 |
25. Retirement benefit and other post-retirement
obligations continued
| 2023 | ||||||
| Defined | ||||||
| UK Group | benefit | Defined | ||||
| All figures in £ millions | plan | other | Sub-total | contribution | PRMB | Total |
Current service cost | 16 | 2 | 18 | 45 | – | 63 |
Past service cost | – | – | – | – | – | – |
Settlements | – | – | – | – | – | – |
Administration expenses | 8 | – | 8 | – | – | 8 |
Total operating expense | 24 | 2 | 26 | 45 | – | 71 |
Interest on plan assets | (148) | (5) | (153) | – | – | (153) |
Interest on plan liabilities | 121 | 6 | 127 | – | – | 127 |
| Net finance | ||||||
(income)/expense | (27) | 1 | (26) | – | – | (26) |
| Net income | ||||||
statement charge | (3) | 3 | – | 45 | – | 45 |
2025 | 2024 | |||||||
| UK | Other | Other | UK | Other | Other | |||
| Group | funded | unfunded | Group | funded | unfunded | |||
| All figures in £ millions | plan | plans | plans | Total | plan | plans | plans | Total |
Fair value of plan assets | 2,994 | 5 | – | 2,999 | 2,927 | 84 | – | 3,011 |
| Present value of defined | ||||||||
benefit obligation | (2,480) | (1) | (12) | (2,493) | (2,443) | (77) | (14) | (2,534) |
| Net pension asset/ | ||||||||
(liability) | 514 | 4 | (12) | 506 | 484 | 7 | (14) | 477 |
| Other post-retirement | ||||||||
| medical benefit | ||||||||
obligation | (17) | (19) | ||||||
Other pension accruals | (7) | (8) | ||||||
| Net retirement benefit | ||||||||
asset | 482 | 450 | ||||||
| Analysed as: | ||||||||
| Retirement | ||||||||
benefit assets | 518 | 491 | ||||||
| Retirement benefit | ||||||||
obligations | (36) | (41) |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 214Strategic report Governance report Financial statements Other information
2025 | 2024 | |||||
| UK Group | Other | UK Group | Other | |||
| All figures in £ millions | plan | plans | Total | plan | plans | Total |
| Fair value of plan assets | ||||||
Opening fair value of plan assets | 2,927 | 84 | 3,011 | 3,060 | 107 | 3,167 |
Exchange differences | – | (4) | (4) | – | (2) | (2) |
Interest on plan assets | 158 | 3 | 161 | 138 | 5 | 143 |
| Return on plan assets | ||||||
excluding interest | 40 | – | 40 | (144) | 1 | (143) |
Contributions by employer | 16 | 3 | 19 | 8 | 1 | 9 |
Contributions by employees | 7 | – | 7 | 7 | – | 7 |
Benefits paid | (154) | (11) | (165) | (142) | (12) | (154) |
Settlements | – | (70) | (70) | – | (16) | (16) |
Closing fair value of plan assets | 2,994 | 5 | 2,999 | 2,927 | 84 | 3,011 |
| Present value of defined | ||||||
| benefit obligation | ||||||
Opening defined benefit obligation | (2,443) | (91) | (2,534) | (2,569) | (114) | (2,683) |
Exchange differences | – | 4 | 4 | – | – | – |
Current service cost | (17) | (1) | (18) | (17) | (2) | (19) |
Past service cost | – | – | – | (13) | – | (13) |
Administration expenses | (9) | – | (9) | (8) | – | (8) |
Interest on plan liabilities | (132) | (3) | (135) | (116) | (5) | (121) |
Actuarial losses – experience | (50) | (2) | (52) | (53) | – | (53) |
Actuarial gains – demographic | 6 | – | 6 | 38 | – | 38 |
Actuarial gains/(losses) – financial | 18 | (1) | 17 | 160 | 2 | 162 |
Contributions by employees | (7) | – | (7) | (7) | – | (7) |
Benefits paid | 154 | 11 | 165 | 142 | 12 | 154 |
Settlements | – | 70 | 70 | – | 16 | 16 |
Closing defined benefit obligation | (2,480) | (13) | (2,493) | (2,443) | (91) | (2,534) |
25. Retirement benefit and other post-retirement
obligations continued
2025 | 2024 | |||
| Quoted | No quoted | Quoted | No quoted | |
| All figures in % | market price | market price | market price | market price |
Insurance | – | 30 | – | 31 |
Equities | 19 | – | 18 | – |
Fixed-interest securities | 8 | – | 9 | – |
Property | – | 5 | – | 5 |
Pooled asset investment funds (including LDI) | 21 | – | 22 | – |
Infrastructure | – | 10 | – | 11 |
Cash and cash equivalents | – | 5 | – | 2 |
Other | – | 2 | – | 2 |
Total | 48 | 52 | 49 | 51 |
All figures in % | 2025 | 2024 |
Liquid – call <1 month | 53 | 50 |
Less liquid – call 1–3 months | 2 | 2 |
Illiquid – call >3 months | 45 | 48 |
Pearson plc Annual report and accounts 2025 215Strategic report Governance report Financial statements Other information
| 2025 | ||
All figures in £ millions | 1% increase | 1% decrease |
| Effect: | ||
(Decrease)/increase in defined benefit obligation – UK Group plan | (151) | 181 |
(Decrease)/increase in defined benefit obligation – US plan | (1) | 1 |
| 2025 | ||
| One year | One year | |
| All figures in £ millions | increase | decrease |
| Effect: | ||
Increase/(decrease) in defined benefit obligation – UK Group plan | 40 | (39) |
Increase/(decrease) in defined benefit obligation – US plan | – | – |
| 2025 | ||
| 0.5% | 0.5% | |
| All figures in £ millions | increase | decrease |
| Effect: | ||
Increase/(decrease) in defined benefit obligation – UK Group plan | 38 | (36) |
Increase/(decrease) in defined benefit obligation – US plan | – | – |
25. Retirement benefit and other post-retirement
obligations continued
All figures in £ millions | 2025 | 2024 |
Opening defined benefit obligation | (19) | (21) |
Exchange differences | 2 | – |
Interest on plan liabilities | (1) | (1) |
Actuarial gains – experience | (1) | 1 |
Actuarial losses – financial | – | – |
Benefits paid | 2 | 2 |
Closing defined benefit obligation | (17) | (19) |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 216Strategic report Governance report Financial statements Other information
The following shares were granted under restricted share arrangements:
2025 | 2024 | |||
| Number of | Weighted average | Number of | Weighted average | |
| shares | fair value | shares | fair value | |
| All figures in £ millions | 000s | £ | 000s | £ |
| Long-Term | ||||
Incentive Plan | 3,893 | 11.09 | 6,262 | 8.96 |
| Number of | Share | Share | |
| shares | capital | premium | |
| 000s | £m | £m | |
At 1 January 2024 | 697,299 | 174 | 2,642 |
Issue of ordinary shares – share option schemes | 955 | – | 7 |
Buyback of equity | (31,989) | (8) | – |
At 31 December 2024 | 666,265 | 166 | 2,649 |
Issue of ordinary shares – share option schemes | 1,447 | – | 9 |
Buyback of equity | (31,897) | (8) | – |
At 31 December 2025 | 635,815 | 158 | 2,658 |
25. Retirement benefit and other post-retirement obligations
continued
All figures in years | 2025 | 2024 | 2023 |
Pearson plans | 39 | 44 | 40 |
Pearson plc Annual report and accounts 2025 217Strategic report Governance report Financial statements Other information
| 2025 | ||||||
| Non- | ||||||
| Fair value | Translation | Retained | controlling | |||
| All figures in £ millions | reserve | reserve | earnings | Total | interest | Total |
| Items that may be reclassified | ||||||
| to the income statement | ||||||
Net exchange differences on translation of foreign | ||||||
operations | – | (192) | – | (192) | (1) | (193) |
| Currency translation adjustment | ||||||
disposed | – | – | – | – | – | – |
Attributable tax | – | – | – | – | – | – |
| Items that are not reclassified | ||||||
| to the income statement | ||||||
Fair value losses on other financial assets | (7) | – | – | (7) | – | (7) |
Attributable tax | – | – | – | – | – | – |
| Remeasurement of retirement | ||||||
benefit obligations | – | – | 10 | 10 | – | 10 |
Attributable tax | – | – | (3) | (3) | – | (3) |
| Other comprehensive | ||||||
(expense)/income for the year | (7) | (192) | 7 | (192) | (1) | (193) |
27. Share capital and share premium continued
| Number of | ||
| shares | ||
| 000s | £m | |
At 1 January 2024 | 2,160 | 19 |
Purchase of treasury shares | 3,273 | 33 |
Release of treasury shares | (4,754) | (45) |
At 31 December 2024 | 679 | 7 |
Purchase of treasury shares | 5,109 | 63 |
Release of treasury shares | (5,063) | (61) |
At 31 December 2025 | 725 | 9 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 218Strategic report Governance report Financial statements Other information
| 2023 | ||||||
| Non- | ||||||
| Fair value | Translation | Retained | controlling | |||
| All figures in £ millions | reserve | reserve | earnings | Total | interest | Total |
| Items that may be reclassified | ||||||
| to the income statement | ||||||
Net exchange differences on translation of foreign | ||||||
operations | – | (176) | – | (176) | (1) | (177) |
| Currency translation adjustment | ||||||
disposed | – | (122) | – | (122) | – | (122) |
Attributable tax | – | – | – | – | – | – |
| Items that are not reclassified | ||||||
| to the income statement | ||||||
Fair value losses on other financial assets | 1 | – | – | 1 | – | 1 |
Attributable tax | – | – | – | – | – | – |
| Remeasurement of retirement | ||||||
benefit obligations | – | – | (85) | (85) | – | (85) |
Attributable tax | – | – | 20 | 20 | – | 20 |
| Other comprehensive | ||||||
(expense)/income for the year | 1 | (298) | (65) | (362) | (1) | (363) |
29. Other comprehensive income continued
| 2024 | ||||||
| Non- | ||||||
| Fair value | Translation | Retained | controlling | |||
| All figures in £ millions | reserve | reserve | earnings | Total | interest | Total |
| Items that may be reclassified | ||||||
| to the income statement | ||||||
Net exchange differences on translation of foreign | ||||||
operations | – | (35) | – | (35) | – | (35) |
| Currency translation adjustment | ||||||
disposed | – | – | – | – | – | – |
Attributable tax | – | – | 2 | 2 | – | 2 |
| Items that are not reclassified | ||||||
| to the income statement | ||||||
Fair value losses on other financial assets | (2) | – | – | (2) | – | (2) |
Attributable tax | – | – | – | – | – | – |
| Remeasurement of retirement | ||||||
benefit obligations | – | – | 5 | 5 | – | 5 |
Attributable tax | – | – | (2) | (2) | – | (2) |
| Other comprehensive | ||||||
(expense)/income for the year | (2) | (35) | 5 | (32) | – | (32) |
Pearson plc Annual report and accounts 2025 219Strategic report Governance report Financial statements Other information
The Group’s transactions regarding investments in associates are detailed in note 12, and are not
included below.
Details of the fair values of the assets and liabilities recognised at the acquisition date and the
related consideration is shown in the following table:
| 2025 | 2024 | 2023 | |
| All figures in £ millions | Total | Total | Total |
Intangible assets | 71 | 1 | 117 |
Trade and other receivables | 7 | – | 8 |
Cash and cash equivalents | 8 | – | 4 |
Trade and other liabilities | (4) | – | (7) |
Provisions, including uncertain tax provisions | (5) | – | – |
Deferred revenue | (10) | – | – |
Deferred tax | (1) | – | (31) |
Net assets acquired | 66 | 1 | 91 |
Goodwill | 102 | 1 | 61 |
Total | 168 | 2 | 152 |
| Satisfied by: | |||
Cash consideration | 168 | 1 | 152 |
Contingent or deferred consideration | – | 1 | – |
Total consideration | 168 | 2 | 152 |
eDynamic Learning generated revenues of £10m and a loss after tax of £1m for the period from
acquisition date to 31 December 2025. If the acquisition of eDynamic Learning had occurred on 1
January 2025, the Group’s revenue and profit after tax would have been £18m higher and £1m
higher, respectively. The quoted profit numbers include the impact of purchase price
adjustments made on acquisition, including the amortisation of acquired intangibles and
reduced revenue and profit following fair value adjustments to the acquired deferred revenue
balance.
Total acquisition related costs of £7m (2024: £5m; 2023: £12m) were recognised within other net
gains and losses.
In 2023, there was a gain of £5m arising on decreases in the deferred consideration payable
on prior year acquisitions. No such items arose in 2024 or 2025.
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 220Strategic report Governance report Financial statements Other information
The table below shows a summary of the assets and liabilities disposed of:
All figures in £ millions | 2025 | 2024 | 2023 |
| Disposal of subsidiaries and associates | |||
Intangible assets, including goodwill | – | – | (53) |
Property, plant and equipment | – | – | (5) |
Intangible assets – product development | – | – | (15) |
Inventories | – | – | (1) |
Trade and other receivables | (1) | – | (65) |
Deferred tax | – | – | 8 |
Current tax receivable | – | – | (2) |
Cash and cash equivalents (excluding overdrafts) | – | – | (12) |
Trade and other liabilities | – | – | 31 |
Net assets disposed | (1) | – | (114) |
Cumulative currency translation adjustment | – | – | 122 |
Cash proceeds | 9 | – | 1 |
Deferred proceeds | 2 | – | 12 |
Costs of disposal | (2) | (5) | (30) |
Gain/(loss) on disposal | 8 | (5) | (9) |
All figures in £ millions | 2025 | 2024 | 2023 |
| Cash flow from disposals | |||
Proceeds – current year disposals | 9 | – | 1 |
Proceeds – prior year disposals | 1 | – | – |
Cash and cash equivalents disposed | – | – | (12) |
Costs and other disposal liabilities paid | (2) | (7) | (27) |
Net cash inflow/(outflow) | 8 | (7) | (38) |
30. Business combinations continued
The net cash outflows related to the acquisitions are set out in the table below. In addition to the
current year acquisitions, the other net cash outflows on acquisition of subsidiaries relate to
deferred payments for prior year acquisitions.
| 2025 | 2024 | 2023 | |
| All figures in £ millions | Total | Total | Total |
| Cash flow on acquisitions | |||
Cash – current year acquisitions | (168) | (1) | (152) |
Cash paid into escrow account | (3) | – | – |
Cash and cash equivalents acquired | 8 | – | 4 |
Deferred payments for prior year acquisitions and other items | (4) | (38) | (23) |
Net cash outflow | (167) | (39) | (171) |
31. Disposals and business closures
In 2025, the Group disposed of Copp Clark for consideration of £9m, resulting in a gain on
disposal of £8m, which has been recorded within other net gains and losses.
There were no disposals in 2024.
On 30 June 2023, the Group disposed of its interests in its POLS businesses in the US, UK,
Australia and India. The businesses disposed excluded Pearson’s contract with ASU. The
consideration to be received was deferred and comprised a 27.5% share of positive adjusted
EBITDA in each calendar year for six years from the date of acquisition and 27.5% of the proceeds
received by the purchaser in relation to any future monetisation event. In 2023, the consideration
was valued at £12m and a pre-tax gain on disposal of £13m was recognised. In addition, in 2023,
a gain of £9m was recognised arising from the release of a provision related to a historical
disposal, £19m of losses arose from the disposals of Pearson College and the international
courseware local publishing business in India and £12m of costs related to previous disposals
were recognised.
None of the disposals met the criteria to be considered a discontinued operation on the basis
that they did not represent major lines of business or geographical areas of operations.
Pearson plc Annual report and accounts 2025 221Strategic report Governance report Financial statements Other information
All figures in £ millions | 2025 | 2024 |
Net book amount | 3 | 4 |
Profit on sale of property, plant and equipment | – | 2 |
Proceeds from sale of property, plant and equipment | 3 | 6 |
| Transfer | |||||||
| from | New | ||||||
| Fair value | Foreign | non- | leases/ | ||||
| and other | exchange | Financing | current to | disposal of | |||
| All figures in £ millions | 2024 | movements | movements | cash flows | current | leases | 2025 |
| Financial liabilities | |||||||
| Non-current | |||||||
borrowings | 1,141 | 5 | (12) | 297 | (76) | 52 | 1,407 |
| Current | |||||||
borrowings | 338 | (2) | (20) | (331) | 76 | – | 61 |
Total | 1,479 | 3 | (32) | (34) | – | 52 | 1,468 |
| Transfer | |||||||
| from | New | ||||||
| Fair value | Foreign | non- | leases/ | ||||
| and other | exchange | Financing | current to | disposal of | |||
| All figures in £ millions | 2023 | movements | movements | cash flows | current | leases | 2024 |
| Financial liabilities | |||||||
| Non-current | |||||||
borrowings | 1,100 | (8) | 3 | 344 | (344) | 46 | 1,141 |
| Current | |||||||
borrowings | 53 | 8 | 11 | (78) | 344 | – | 338 |
Total | 1,153 | – | 14 | 266 | – | 46 | 1,479 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 222
34. Leases
The Group’s lease portfolio consists of approximately 650 property leases, mainly offices and
test centres, together with a number of vehicle and equipment leases. The Group has elected not
to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term
of 12 months or less and leases of low-value assets. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.
As a lessee:
The amounts recognised in the income statement are as follows:
All figures in £ millions | Note | 2025 | 2024 | 2023 |
Interest on lease liabilities | (20) | (22) | (23) | |
Expenses relating to short-term leases | – | – | – | |
Depreciation of right-of-use assets | 10 | (34) | (35) | (39) |
Reversal of impairment/(impairment) of right-of-use assets | 10 | 6 | – | (2) |
In addition, in 2025, depreciation of £4m (2024: £3m, 2023: £2m) and impairment reversals of
£11m (2024: impairment £1m, 2023: £nil) were recognised in the income statement in relation to
right-of-use assets classified as investment property.
Lease liabilities are included within financial liabilities – borrowings in the balance sheet, see note
18. The maturities of the Group’s lease liabilities are as follows:
All figures in £ millions | 2025 | 2024 |
Less than one year | 81 | 85 |
One to five years | 241 | 270 |
More than five years | 259 | 276 |
Total undiscounted lease liabilities | 581 | 631 |
Lease liabilities included in the balance sheet | 478 | 517 |
| Analysed as: | ||
Current | 62 | 65 |
Non-current | 416 | 452 |
The amounts recognised in the cash flow statement are as follows:
All figures in £ millions | 2025 | 2024 | 2023 |
Total cash outflow for leases as a lessee | 97 | 100 | 107 |
At 31 December 2025, commitments for capital leases contracted for but not yet incurred were
£11m (2024: £14m). Extension and termination options and variable lease payments are not
significant within the lease portfolio. Short-term leases to which the Group is committed at the
balance sheet date are similar to the portfolio of short-term leases to which the short-term lease
expense is disclosed above.
As a lessor:
In the event that the Group has excess capacity in its leased offices and warehouses, the Group
subleases some of its properties under operating and finance leases.
The amounts recognised in the income statement are as follows:
All figures in £ millions | 2025 | 2024 | 2023 |
Interest on lease receivables | 3 | 4 | 4 |
| Income from subleasing right-of-use assets | |||
(within other income) | 10 | 9 | 6 |
The amounts recognised in the cash flow statement are as follows:
All figures in £ millions | 2025 | 2024 | 2023 |
Total cash inflow for leases as a lessor | 21 | 22 | 19 |
The following table sets out the maturity analysis of lease payments receivable for subleases
classified as operating leases, showing the undiscounted lease payments to be received after
the reporting date, and subleases classified as finance leases showing the undiscounted lease
payments to be received after the reporting date and the net investment in the finance lease
receivable. During the year, the investment in finance lease receivable decreased by £17m (2024:
decreased £17m), primarily due to payments received.
| Operating | Finance | 2025 | 2024 | 2023 | |
| All figures in £ millions | leases | leases | Total | Total | Total |
Less than one year | 12 | 23 | 35 | 31 | 31 |
One to two years | 12 | 23 | 35 | 33 | 33 |
Two to three years | 12 | 17 | 29 | 33 | 34 |
Three to four years | 12 | 6 | 18 | 26 | 34 |
Four to five years | 12 | 2 | 14 | 14 | 27 |
More than five years | 28 | – | 28 | 36 | 54 |
| Total undiscounted lease | |||||
payments receivable | 88 | 71 | 159 | 173 | 213 |
Unearned finance income | (5) | ||||
| Net investment in finance | |||||
lease receivable | 66 |
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 223
All figures in £ millions | 2025 | 2024 | 2023 |
Short-term employee benefits | 15 | 10 | 9 |
Retirement benefits | 1 | 1 | 1 |
Share-based payment costs | 16 | 19 | 11 |
Total | 32 | 30 | 21 |
36. Events after the balance sheet date
On 21 January 2026, a £350m share buyback programme in order to return capital to
shareholders was announced. The programme commenced on 21 January 2026.
| Company number | |
Aldwych Finance Limited | 04720439 |
Longman Group (Overseas Holdings) Limited | 00690236 |
Pearson Australia Finance Unlimited | 05578463 |
Pearson Dollar Finance Limited | 05111013 |
Pearson Dollar Finance Two Limited | 06507766 |
Pearson Education Holdings Limited | 00210859 |
Pearson Education Investments Limited | 08444933 |
Pearson Education Limited | 00872828 |
Pearson International Finance Limited | 02496206 |
Pearson Loan Finance No. 3 Limited | 05052661 |
Pearson Loan Finance Unlimited | 05144467 |
Pearson Management Services Limited | 00096263 |
Pearson Overseas Holdings Limited | 00145205 |
Pearson Professional Assessments Limited | 04904325 |
Pearson Services Limited | 01341060 |
Pearson Shared Services Limited | 04623186 |
Pearson Strand Finance Limited | 11091691 |
PVNT Limited | 08038068 |
TQ Global Limited | 07802458 |
Notes to the consolidated financial statements continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 224
Company balance sheet
As at 31 December 2025
All figures in £ millions Note 2025 2024
Assets
Non-current assets
Investments in subsidiaries 2 7,198 6,695
Amounts due from subsidiaries 1,471 3
Deferred income tax assets 37 33
Financial assets – derivative financial instruments 4 10 12
8,716 6,743
Current assets
Amounts due from subsidiaries 740 2,439
Current income tax assets 23 53
Cash and cash equivalents (excluding overdrafts) 3 4 129
Financial assets – derivative financial instruments 4 – 31
Other assets 2 1
769 2,653
Total assets 9,485 9,396
Liabilities
Non-current liabilities
Amounts due to subsidiaries (1,140) (1,179)
Financial liabilities – derivative financial instruments 4 (2) (3)
(1,142) (1,182)
Current liabilities
Amounts due to subsidiaries (2,564) (2,508)
Other liabilities (3) (8)
Financial liabilities – derivative financial instruments 4 – (51)
(2,567) (2,567)
Total liabilities (3,709) (3,749)
Net assets 5,776 5,647
All figures in £ millions Note 2025 2024
Equity
Share capital 5 158 166
Share premium 5 2,658 2,649
Treasury shares 6 (9) (7)
Capital redemption reserve 49 41
Special reserve 447 447
Retained earnings – including profit for the year of £651m
(2024: £1,517m) 2,473 2,351
Total equity attributable to equity holders
of the company 5,776 5,647
These financial statements have been approved for issue by the Board of Directors on
12 March 2026 and signed on its behalf by
Sally Johnson
Chief Financial Officer
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 225
Company statement of changes in equity
Year ended 31 December 2025
Equity attributable to equity holders of the company
All figures in £ millions
Share
capital
Share
premium
Treasury
shares
Capital
redemption
reserve
Special
reserve
Retained
earnings
Total
At 1 January 2025 166 2,649 (7) 41 447 2,351 5,647
Profit for the year – – – – – 651 651
Equity-settled transactions
1
– – – – – 39 39
Issue of ordinary shares under share option schemes
1
– 9 – – – – 9
Purchase of treasury shares – – (63) – – – (63)
Release of treasury shares – – 61 – – (61) –
Buyback of equity (8) – – 8 – (347) (347)
Dividends – – – – – (160) (160)
At 31 December 2025 158 2,658 (9) 49 447 2,473 5,776
Equity attributable to equity holders of the company
All figures in £ millions
Share
capital
Share
premium
Treasury
shares
Capital
redemption
reserve
Special
reserve
Retained
earnings
Total
At 1 January 2024 174 2,642 (19) 33 447 1,195 4,472
Profit for the year – – – – – 1,517 1,517
Equity-settled transactions
1
– – – – – 44 44
Issue of ordinary shares under share option schemes
1
– 7 – – – – 7
Purchase of treasury shares – – (33) – – – (33)
Release of treasury shares – – 45 – – (45) –
Buyback of equity (8) – – 8 – (204) (204)
Dividends – – – – – (156) (156)
At 31 December 2024 166 2,649 (7) 41 447 2,351 5,647
The capital redemption reserve reflects the nominal value of shares cancelled in the Group’s share buyback programme. The special reserve represents the cumulative effect of cancellation of the
company’s share premium account.
1. Full details of the share-based payment plans are disclosed in note 26 to the consolidated financial statements.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 226
Notes to the company financial statements
1. Accounting policies
The financial statements on pages 225-233 comprise the separate financial statements of
Pearson plc.
These company financial statements have been prepared on the going concern basis and in
accordance with Financial Reporting Standard 101 Reduced Disclosure Framework and with the
requirements of the Companies Act 2006.
The company financial statements have been prepared under the historical cost convention as
modified by the revaluation of financial assets and liabilities (including derivative financial
instruments) at fair value.
As permitted by section 408 of the Companies Act 2006, the company income statement and
statement of comprehensive income have not been presented.
The following exemptions from the requirements of IFRS have been applied in the preparation of
these financial statements, in accordance with FRS 101. Where required, equivalent disclosures
are given in the group financial statements of Pearson plc :
• IFRS 7 ‘Financial Instruments: Disclosures’;
• Paragraphs 91-99 of IFRS 13 ‘Fair Value Measurement’;
• Paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative
information in respect of: paragraph 79(a)(iv) of IAS 1;
• The following paragraphs of IAS 1 Presentation of Financial Statements;
• paragraph 10(d)
• paragraph 10(f)
• paragraph 16
• paragraph 38A
• paragraph 40
• paragraph 111
• paragraphs 134-136;
• IAS 7 ‘Statement of Cash Flows’;
• Paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and
Errors’;
• The requirements in IAS 24 ‘Related Party Disclosures’ to disclose related party transactions
entered into between two or more members of a group, provided that any subsidiary which is
a party to the transaction is wholly owned by such a member; and
• paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payments.
The company has no employees (2024: nil).
Key judgements and critical estimates have been used in the preparation of these financial
statements in relation to the reversal of historical impairments of investments in subsidiaries, in
particular related to the determination of the recoverable amount of the investment. See note 2
for further details.
The basis of preparation and accounting policies applied in the preparation of these company
financial statements are the same as those set out in note 1a to the consolidated financial
statements with the addition of the following:
Investments
Investments in subsidiaries are stated at cost less provision for impairment.
The recoverability of investments is tested annually for impairment in accordance with IAS 36
‘Impairment of Assets’. The carrying value (including the investment in subsidiary and amounts
due to and from subsidiaries) is compared to the asset’s recoverable amount which is generally
assessed on a value in use basis.
Amounts owed to/by subsidiaries
Amounts owed to or by subsidiaries are measured at amortised cost. They generally mature
within five years, but can be called upon at short notice, or are repayable on demand. Amounts
owed by subsidiaries are classified as current if they mature within one year of the balance sheet
date or, in the case of loans repayable on demand, if the company intends to call the loan within
one year of the balance sheet date. All other amounts are classified as non-current. Interest is
charged on all intercompany loans at a rate based on a benchmark rate plus a margin. The
company has assessed and concluded that the amounts owed by subsidiaries will be fully
recovered. Therefore credit losses are considered to beimmaterial.
Parent company guarantees
The Company has guaranteed the repayment of bonds and certain other liabilities due by
subsidiary undertakings primarily to third parties. Such guarantees are accounted for by the
Company under IFRS 9. They are initially measured at fair value. Subsequently, they are measured at
the higher of (i) the amount initially recognised less the cumulative amount of revenue recognised in
accordance with IFRS 15, and (ii) the expected credit losses under IFRS 9. The Company has also
entered into performance guarantees whereby in respect of contracts entered into by subsidiary
undertakings, the Company will settle any claims for non-performance under the contract in the
event that the subsidiary does not perform its responsibilities under the contract, and it does not
pay out any amounts due to the third party in the event of non-performance. Such performance
guarantees are accounted for as loan commitments under IFRS 9.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 227
In 2025, the impairment in Pearson plc’s investment in its subsidiary, Pearson Education Holdings
Limited, which was first impaired in 2015, was partially reversed, resulting in a £0.5bn gain in the
income statement. Significant estimation is required in determining the recoverable amount of
the investment which is determined by an internally generated value in use model (see note 11 of
the Consolidated Group Financial Statements for details of the assumptions used including the
discount rates). Significant judgement is then required to allocate the value in use determined at
group level to the investment. After considering various allocation methods, management have
selected an allocation method based on forecast sales. Using an alternative allocation method
would not result in a significantly different outcome. As well as the recoverable amount,
management also considered external factors such as the share price and market capitalisation.
After reversing the impairment, the recoverable amount of the investment is equal to the carrying
value and the headroom is sensitive to reasonably possible changes in assumptions as follows:
• a change of +/- 5% in the Group’s value in use increases/decreases headroom by £80m
• a change of +/- 5% in the forecast sales used in the allocation of the value in use increases/
decreases headroom by £60m
In 2024, the impairment in Pearson plc’s investment in its subsidiary, Pearson Overseas Holdings
Limited, which was first impaired in 2016, was reversed in full, resulting in a £1.3bn gain in the
income statement.
In 2024, the company settled a loan with its subsidiary, Pearson Dollar Finance Limited, and
received dividend income of the same amount. This resulted in an impairment of the company’s
investment in Pearson Dollar Finance Limited of £1.4bn. There were no impairments in 2025.
3. Cash and cash equivalents (excluding overdrafts)
All figures in £ millions 2025 2024
Cash at bank and in hand 4 129
4 129
At the end of 2025, the currency split of cash and cash equivalents was US dollar 1% (2024: 19%),
sterling 58% (2024: 78%) and other 41% (2024: 3%). Cash and cash equivalents have fair values
that approximate their carrying amounts due to their short-term nature.
In 2025, £2m of interest income on these cash balances was recognised within net finance costs
(2024: £1m).
1. Accounting policies continued
Going concern
In assessing the Company’s ability to continue as a going concern for the period to 30 June 2027,
the Board reviewed management’s five-year plan, which was used as the base case. The review
included available liquidity throughout the period and headroom against the Group’s two main
covenants, which require net debt to EBITDA to be a maximum of four times and interest cover to
be at least three times.
At 31 December 2025, the Group had available liquidity of c.£1.3bn, comprising central cash
balances and the undrawn element of its $1.8bn Revolving Credit Facilities (RCFs) maturing June
2028 and February 2029 but which have options to extend maturity to 2030. In both the base case
and severe but plausible scenario, the business has sufficient liquidity to repay this amount and
does not rely on this refinancing in order to remain a going concern. Significant liquidity and
covenant headroom was observed throughout the assessment period in this base model.
A severe but plausible scenario was analysed, where the Group is impacted by all principal risks in
both 2026 and 2027, in the period under assessment, adjusted for probability weighting as well as
other significant risks. The net impact of the risks modelled was to reduce free cash flow during the 18
month going concern assessment period by 41% . Even under a severe downside case, the company
would maintain comfortable liquidity headroom and sufficient headroom against covenant
requirements during the period under assessment. That is, even before modelling the mitigating
effect of actions that management would take if these downside risks were to crystalise.
A reverse stress test was performed to identify the reduction in profit required to cease to be a
going concern at or before 30 June 2027. The model showed that significant profit declines in
excess of the severe but plausible were required in both 2026 and 2027 to exhaust liquidity and
breach covenants, the likelihood of which was assessed as remote.
The Directors have confirmed that there are no material uncertainties that cast doubt on the
Company’s going concern status and that they have a reasonable expectation that the Company
has adequate resources to continue in operational existence beyond 30June 2027. The
Company financial statements have therefore been prepared on a going concern basis.
2. Investments in subsidiaries
All figures in £ millions 2025 2024
At beginning of year 6,695 6,702
Impairment – (1,369)
Impairment reversal 464 1,312
Capital contribution 39 44
Currency revaluations – 6
At end of year 7,198 6,695
Notes to the company financial statements continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 228
On 27 February 2025, the Board approved a £350m share buyback programme in order to return
capital to shareholders. During 2025, approximately 32m (2024: 32m) shares were bought back
and cancelled at a cost of £352m (2024: £318m). The nominal value of these shares, £8m (2024:
£8m), was transferred to the capital redemption reserve, and the remainder of the purchase price
was recorded within retained earnings. At 31 December 2025, no further liability remained (2024:
£nil) for any shares contracted to be repurchased but where the repurchases are still outstanding.
On 21 January 2026, a £350m share buyback programme in order to return capital to
shareholders was announced. The programme commenced on 21 January 2026.
6. Treasury shares
Number of
shares
000s
£m
At 1 January 2025 679 7
Purchase of treasury shares 5,109 63
Release of treasury shares (5,063) (61)
At 31 December 2025 725 9
The company holds its own shares in trust to satisfy its obligations under its restricted share plans.
These shares are treated as treasury shares for accounting purposes and have a par value of 25p
per share.
The nominal value of the company’s treasury shares amounts to £0.2m (2024: £0.2m). Dividends
on treasury shares are waived.
At 31 December 2025, the market value of the company’s treasury shares was £8m (2024: £9m).
The gross book value of the shares at 31 December2025 amounts to £9m (2024: £7m).
7. Dividends
The amounts recognised as distributions to equity shareholders in the year and the proposed
final dividend per equity share are disclosed in note 9 to the consolidated financial statements.
4. Derivative financial instruments
The company’s outstanding derivative financial instruments are comprised of interest rate
derivatives. The outstanding derivative balances at 31 December are as follows:
2025 2024
All figures in £ millions Assets Liabilities Assets Liabilities
Current – – 31 (51)
Non-current 10 (2) 12 (3)
Total 10 (2) 43 (54)
The carrying value of the above derivative financial instruments equals their fair value. Derivatives
are categorised as level 2 on the fair value hierarchy.Fair values are determined by using market
data and the use of established estimation techniques such as discounted cash flow and option
valuation models. As at 31 December 2025, the outstanding contracts all mature within ten years.
In 2025, £3m of fair value losses were recognised within net finance costs (2024: £7m gain).
Fair value hedge accounting
Cash flows from the €300m EUR 2025 bond were received by the company from its subsidiary
creating a foreign currency exposure upon the translation from EUR to GBP. Changes in the
GBP:EUR spot rate will result in changes to the value of amounts due from subsidiaries when
translated into GBP. The hedged item is €100m of this amount due from subsidiaries
denominated in EUR. The hedging instrument is a €100m 2025 cross-currency swap. It is
expected that the change in value of these items will move in the opposite direction as a result of
movements in the EUR:GBP exchange rate.
In 2025, the €300m EUR 2025 bond was repaid. The associated amounts due from subsidiaries
were also repaid and the €100m 2025 cross-currency swap matured.
5. Share capital and share premium
Number of
shares
000s
Share
capital
£m
Share
premium
£m
At 1 January 2025 666,265 166 2,649
Issue of ordinary shares – share option schemes 1,447 – 9
Buyback of equity (31,897) (8) –
At 31 December 2025 635,815 158 2,658
The ordinary shares have a par value of 25p per share (2024: 25p per share). All issued shares are
fully paid. All shareholders are entitled to receive dividends and vote at general meetings of the
company. All shares have the same rights.
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 229
8. Contingencies
There are contingent liabilities that arise in the normal course of business in respect of indemnities, warranties and guarantees in relation to former subsidiaries and in respect of guarantees in relation to
subsidiaries. The total value of guarantees made by the company in relation to its subsidiaries is£0.9bn (2024: £1.2bn). In addition, there are contingent liabilities in respect of legal claims. None of these
claims is expected to result in a material gain or loss to the company.
9. Audit fees
Statutory audit fees relating to the company were £43,000 (2024: £42,000)
10. Related party transactions
Subsidiaries
The company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose transactions with fellow wholly owned subsidiaries.
Associates
There were no related party transactions with associates in 2025 or 2024.
Key management personnel
Key management personnel are deemed to be the Directors and the members of the Pearson Executive Management team.
It is this Committee which had responsibility for planning, directing and controlling the activities of the company in 2025. Key management personnel compensation is disclosed in note 35 to the
consolidated financial statements.
11. Group companies
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries, partnerships, associates, joint ventures and joint arrangements, the country of incorporation, the registered
address and the effective percentage of equity owned, as at 31 December 2025, is disclosed below. Unless otherwise stated, the shares are all indirectly held by Pearson plc. Unless otherwise stated,
all wholly-owned and partly-owned subsidiaries are included in the consolidation and all associated undertakings are included in the Group’s financial statements using the equity method of
accounting. Principal Group companies are identified in bold.
Wholly-owned subsidiaries
Registered company name
Country
ofIncorp.
Reg
office
Addison Wesley Longman, Inc. US 3
Addison-Wesley Educational Publishers Inc. US 4
AEL (S) PTE Limited SG 73
Aldwych Finance Limited UK 1
ATI Professional Development LLC US 4
ATI Studios A.P.P.S. SRL RO 78
Camsaw, Inc. US 4
CamsawUSA, Inc. US 11
Century Consultants Ltd. US 13
Certiport China Holding, LLC US 4
Certiport, Inc. US 4
Registered company name
Country
ofIncorp.
Reg
office
Clutch Learning, Inc. US 4
Connections Academy of Florida, LLC US 20
Connections Academy of Iowa, LLC US 24
Connections Academy of Maine, LLC US 28
Connections Academy of Maryland, LLC US 29
Connections Academy of Nevada, LLC US 31
Connections Academy of New Mexico, LLC US 32
Connections Academy of Oregon, LLC US 37
Connections Academy of Pennsylvania LLC US 38
Connections Academy of Tennessee, LLC US 40
Connections Academy of Texas LLC US 41
Registered company name
Country
ofIncorp.
Reg
office
Connections Education LLC US 4
Connections Education of Florida, LLC US 20
Connections Education, Inc. US 4
Creative Learning Services, LLC US 56
Credly, Inc. US 4
Dominie Press, Inc. US 17
Dorian Finance Limited IE 7
East Lake Parallel II EDL Blocker LLC US 93
eCollege.com US 4
EDL HoldCo ULC CA 92
Education Development International Plc
†
UK 1
Notes to the company financial statements continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 230
Registered company name
Country
ofIncorp.
Reg
office
Education Resources (Cyprus) Limited CY 51
eDynamic GP 2 LLC US 93
eDynamic Holdings LP US 4
eDynamic Learning ULC CA 92
eDynamic LP US 93
English Language Learning and Instruction System, Inc. US 54
Faethm Holdings Pty. Limited AU 48
Faethm IP Pty. Limited AU 48
Faethm Ltd UK 1
Faethm Pty. Limited AU 48
Faethm USA LLC US 6
Falstaff Holdco Inc. US 4
Falstaff Inc. US 55
FBH, Inc. US 4
George (Shanghai) Commercial Information Consulting Co.,
Ltd
CN 21
Globe Fearon Inc. US 17
Greenways Academy, LLC US 52
Heinemann Educational Botswana (Publishers) Proprietary
Limited
BW 8
IndiaCan Education Private Limited IN 2
Integral 7, Inc. US 4
Intellipro, Inc. US 13
Knowledge Analysis Technologies, LLC US 18
LCCIEB Training Consultancy., Ltd CN 64
LessonLab, Inc. US 17
Lignum Oil Company US 4
Longman (Malawi) Limited* MW 65
Longman Group(Overseas Holdings) Limited UK 1
Longman Indochina Acquisition, L.L.C. US 4
Longman Tanzania Limited TZ 68
Longman Zambia Educational Publishers Limited ZM 69
Longmaned Ecuador S.A. EC 71
Lumerit Education, LLC US 41
MeasureUp of Delaware, LLC US 4
Modern Curriculum Inc. US 17
Multi Treinamento e Editora Ltda BR 60
MZ Development Inc. US 4
Registered company name
Country
ofIncorp.
Reg
office
National Computer Systems Japan Co. Ltd JP 74
Navvy Education, LLC US 22
NCS Information Technology Services (Beijing) Co Ltd CN 75
NCS Pearson Pty Ltd AU 48
NCS Pearson Puerto Rico, Inc. PR 76
NCS Pearson, Inc. US 30
NCS Pearson/Jordan JO 47
Opinion Interactive LLC US 16
Ordinate Corporation US 17
Pearson (Beijing) Management Consulting Co., Ltd. CN 77
Pearson America LLC US 4
Pearson Amsterdam B.V. NL 79
Pearson Australia Finance Unlimited UK 1
Pearson Australia Group Pty Ltd AU 48
Pearson Australia Holdings Pty Ltd AU 48
Pearson Benelux B.V. NL 79
Pearson Business Services Inc. US 4
Pearson Canada Assessment Inc. CA 80
Pearson Canada Finance Unlimited UK 1
Pearson Canada Holdings Inc. CA 80
Pearson Canada Inc. CA 80
Pearson Central Europe Spółka z ograniczoną
odpowiedzialnością
PL 39
Pearson DBC Holdings Inc. US 4
Pearson Desarrollo y Capacitación Profesional Chile Limitada CL 81
Pearson Digital Learning Puerto Rico, Inc. PR 76
Pearson Dollar Finance Limited
†
UK 1
Pearson Dollar Finance Two Limited UK 1
Pearson Educacion de Chile Limitada CL 81
Pearson Educacion de Colombia S.A.S. CO 84
Pearson Educacion de Mexico, S.A. de C.V. MX 85
Pearson Educacion de Panama SA PA 86
Pearson Educacion de Peru S.A. PE 87
Pearson Educacion SA ES 88
Pearson Education Achievement Solutions (RF) (Pty) Ltd ZA 62
Pearson Education Africa (Pty) Ltd ZA 62
Pearson Education Asia Limited HK 53
Pearson Education Botswana (Proprietary) Limited BW 8
Pearson Education do Brasil Ltda BR 60
Pearson Education Hellas SA GR 26
Registered company name
Country
ofIncorp.
Reg
office
Pearson Education Holdings Limited
†
UK 1
Pearson Education Indochina Limited TH 89
Pearson Education Investments Limited UK 1
Pearson Education Korea Limited KR 90
Pearson Education Limited UK 1
Pearson Education Namibia (Pty) Limited NA 58
Pearson Education Publishing Limited NG 44
Pearson Education S.A. UY 5
Pearson Education SA AR 67
Pearson Education South Africa (Pty) Ltd ZA 62
Pearson Education South Asia Pte. Ltd. SG 73
Pearson Education Taiwan Ltd TW 9
Pearson Education, Inc. US 4
Pearson Educational Measurement Canada, Inc. CA 80
Pearson Educational Publishers, LLC US 4
Pearson Eğitim Çözümleri Tikaret Limited Şirketi TR 61
Pearson Falstaff (Holdings) Inc. US 4
Pearson Falstaff Holdco LLC US 4
Pearson Federal Holding Company, LLC US 4
Pearson France FR 70
Pearson Funding plc
†
UK 1
Pearson Holdings Inc. US 4
Pearson Holdings Southern Africa (Pty) Limited ZA 62
Pearson Hungary LLC* HU 25
Pearson India Education Services Private Limited IN 2
Pearson International Finance Limited
†
UK 1
Pearson Investment Holdings, Inc. US 4
Pearson Israel (P.I.) Ltd IL 66
Pearson Japan K.K. JP 49
Pearson Lanka (Private) Limited LK 63
Pearson Lanka Support Services (Private) Limited LK 12
Pearson Lesotho (Pty) Ltd LS 91
Pearson Loan Finance No. 3 Limited UK 1
Pearson Loan Finance No. 5 Limited UK 1
Pearson Loan Finance No. 6 Limited UK 1
Pearson Loan Finance Unlimited UK 1
Pearson Longman Uganda Limited UG 43
Pearson Malaysia Sdn. Bhd. MY 59
Pearson Management Services Limited
†
UK 1
11. Group companies continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 231
Registered company name
Country
ofIncorp.
Reg
office
Pearson Management Services Philippines Inc. PH 33
Pearson Maryland, Inc. US 11
Pearson Moçambique, Limitada* MZ 42
Pearson Netherlands B.V. NL 79
Pearson Netherlands Holdings B.V. NL 79
Pearson Nominees Limited
†
UK 1
Pearson Online Tutoring LLC US 4
Pearson Overseas Holdings Limited
†
UK 1
Pearson Pakistan Services (Private) Limited PK 50
Pearson PEM P.R., Inc. PR 19
Pearson Phoenix Pty Ltd AU 48
Pearson Professional Assessments Limited UK 1
Pearson Real Estate Holdings Inc. US 4
Pearson Regional Headquarters Arabia SA 57
Pearson Schweiz AG CH 34
Pearson Services Limited
†
UK 1
Pearson Shared Services Limited
†
UK 1
Pearson Strand Finance Limited
†
UK 1
Pearson Strand Limited UK 1
Pearson Sweden AB SE 14
Pearson Systems AB SE 14
Pearson VUE Europe B.V. NL 79
Pearson VUE Philippines, Inc. PH 27
Pearson Vue Testing Services Kenya Limited KE 15
Penguin Capital, LLC US 4
Personnel Decisions Research Institutes, LLC US 30
PN Holdings Inc. US 4
ProctorCam, Inc. US 4
PT Efficient English Services ID 83
PVNT Limited UK 1
Reading Property Holdings LLC US 3
Rebus Planning Associates, Inc. US 10
Reston Publishing Co, Inc. US 4
Rycade Capital Corporation US 4
SAI Interactive, LLC US 4
Shanghai AWL Education Software Ltd
*
CN 72
Silver Burdett Ginn Inc. US 4
Registered company name
Country
ofIncorp.
Reg
office
Smarthinking, Inc. US 4
Sound Holdings Inc. US 4
Sparrow Phoenix Pty Ltd AU 48
Spear Insurance Company Limited
†
BM 45
The Waite Group, Inc. US 17
TQ Education and Training Limited UK 1
TQ Global Limited UK 1
TQ Group Limited UK 1
TQ Holdings Limited UK 1
Vue Testing Services Israel Ltd IL 46
Vue Testing Services Korea Limited KR 35
Williams Education GmbH DE 82
* In liquidation.
† Directly owned by Pearson plc.
Subsidiary addresses
The following list includes all Pearson registered offices
worldwide.
Registered office address
1 80 Strand, London, WC2R 0RL, England
2 6
th
Floor, Tower 1, Unit A and B, International Tech Park CapitaLand, 200 Feet
Radial Road, Zamin Pallavaram, Old Pallavaram, Chennai, Tamil Nadu, 600117,
India
3 C T Corporation System, 155 Federal St., Suite 700, Boston, MA, 02110, United
States
4 The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle, DE, 19801, United States
5 Juan Benito Blanco 780 – Plaza Business Center, Montevideo, Uruguay
6 340 Halsa Dr, Chattahoochee Hills, GA, GA 30268, United States
7 1
st
Floor The Liffey Trust Centre, 117-126 Sheriff Street Upper, Dublin 1, Ireland
8 Plot 28892, Twin Towers, West Wing, First Floor Fairground, PO Box 1453,
Gaborone, Botswana
9 10F, No 209, Sec. 1, Civic Blvd., Datong District, Taipei City, 10351, Taiwan
(ProvinceofChina)
10 The Corporation Company, 40600 Ann Arbor Rd, E Suite 201, Plymouth, MI,
48170, United States
11 The Corporation Trust Incorporated, Suite 201, 2405 York Road, Lutherville
Timonium, MD, 21093, United States
12 #1, 3, 5
th
Floor, East Tower, World Trade Centre, Echelon Square, Colombo, 01,
SriLanka
13 C T Corporation System, 820, Bear Tavern Road, West Trenton, Mercer, NJ,
08628, United States
14 c/o A House, Katarinahuset, Stadsgården 6, Stockholm, 116 45, Sweden
Registered office address
15 3, 2
nd
Floor, Plaza 2000, Mombasa Road, Embakasi, PO Box 0721175878, 00200
Nairobi
16 105 E Street #2A, Davis, CA, CA 95616, United States
17 C T Corporation System, 330 N Brand Blvd., Glendale, CA, 91203-2336
18 The Corporation Company, 7700 E Arapahoe Rd, Suite 220, Centennial, CO,
80112-1268, United States
19 500, 401, Calle de la Tanca Edificio Ochoa, San Juan, 00901-1969, Puerto Rico
20 C T Corporation System, 1200, South Pine Island Road, Plantation, FL, 33324,
UnitedStates
21 Suite A7b, 3/F, No. 586 Longchang Road, Yangpu District, Shanghai, China
22 CT Corportion System, 289 S Culver St, Lawrenceville, GA, 30046-4805, United
States
23 Kroll Pte. Limited, One Raffles Place, Tower 2, #10-62, Singapore, 048616,
Singapore
24 C T Corporation System, 400 E Court Ave, Des Moines, IA, 50309, United States
25 22 B, 13 em, Népfürdő utca, Budapest, 1138, Hungary
26 4 Zalogou Str., 15343 Agia Paraskevi, Athens, Greece
27 27/F Trident Tower, 312 Sen. Gil Puyat Avenue, Makati City, Metro Manila,
Philippines
28 C T Corporation System, 3 Chase Avenue, Augusta, ME, United States
29 CSC – Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820,
Baltimore, MD, 21202, United States
30 C T Corporation System Inc., 1010 Dale Street North, Saint Paul, MN, 55117-5603,
UnitedStates
31 The Corporation Trust Company of Nevada, 701 S Carson St, Suite 200, Carson
City, NV, 89701, United States
32 C T Corporation System, 206 S Coronado Ave, Espanola, NM, 87532-2792,
UnitedStates
33 7/F North Tower, Rockwell Business Center COR. Sheridan & United Street, Brgy.
Highway Hills, Mandaluyong, Philippines
34 10 Gewerbestrasse, Cham, 6330, Switzerland
35 21, Mugyo-ro Jung-gu, Seoul, Korea (the Republic of)
36 199 Bay Street, Commerce Court West, Suite 2800, Toronto, ON, M5L1A9,
Canada
37 C T Corporation System, 780 Commercial Street SE, STE 100, Salem, OR, OR
97301, United States
38 C T Corporation System, 600 N. 2
nd
Street, Suite 401, Harrisburg, PA, 17101-1071,
United States
39 Ulica Szamocka 8 01-748, Warszawa, Poland
40 C T Corporation System, 300 Montvue Rd, Knoxville, TN, 37919-5546, United
States
41 CT Corporation System, 1999 Bryan Street, Suite 900, Dallas, TX, 75201, United
States
42 Numero 776, Avenida 24 de Julho, Maputo, Mozambique
43 Plot 8, Berkley Road, Old Kampala, Uganda
44 8, Secretariat Road, Obafemi Awolowo Way, Alausa, Ikeja, Lagos State, Nigeria
11. Group companies continued
Notes to the company financial statements continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 232
11. Group companies continued
Registered office address
45 Power House, 7 Par-la-ville Road, PO Box 1826, Hamilton, HM 11, Bermuda
46 Derech Ben Gurion 2, BSR Building 9
th
Floor, Ramat Gan, 5257334, Israel
47 Prince Rashed District, Al Rawabi, Ismail Al Zaben Street, Amman, 11185, Jordan
48 459-471 Church Street, Richmond, Melbourne, VIC, 3121, Australia
49 11F Kanda Square, 2-2-1 Kanda-Nishikicho, Chiyoda-ku, Tokyo, 101-0054, Japan
50 Office #13, First Floor, Mall of Lahore, Lahore, Pakistan
51 195, Archbishop Makarios III Avenue, Neocleous House, Limassol, 3030, Cyprus
52 981 Gardenview Office Parkway, St Louis, MO, 63141, United States
53 18/F, 1063 King’s Road, Quarry Bay, Hong Kong
54 251, Little Falls Drive, Corporation Service Company, Wilmington, DE, 19808,
UnitedStates
55 C T Corporation System, 28 Liberty Street, New York, NY, 10005, United States
56 120 Emerald Green Ct., St Louis, MO, 63141
57 Al Tawuniyya Towers, King Fahd Road, North Block, 2
nd
floor, Riyadh, Saudi Arabia
58 Unit 7 Kingland Park, 98 Nickel Street, Prosperita, Windhoek, Namibia
59 Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South,
No 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia
60 Avenida José Luiz Mazzali, nº 450, Sala H, Setor Módulo 03B, GLP Louveira I,
Santo Antônio, Louveira, SP, CEP 13.290-000, Brazil
61 İçerenköy Mah. Umut Sk. Quick Tower Sitesi No: 10-12 İç Kapı No: 77 Ataşehir,
Istanbul, 34742, Turkey
62 The Towers, 21
st
Floor, Unit 21B, 2 Heerengracht Cnr, Hertzog Boulevard,
Foreshore Cape Town, WC, 8001, South Africa
63 MAGA ONE-Level 8, No. 200, Nawala Road, Narahenpita, Colombo 05, 00500,
SriLanka
64 Room 305, Building 2, 6555 Shangchuan Road, Pudong District, Shanghai, China
65 Alliance House, PO Box 30698, Blantyre, Malawi
66 Meitar Law Offices, 16 Abba Hillel Rd., Ramat Gan, 5250608, Israel
67 498, Libertador Ave, City of Buenos Aires, 3
rd
floor, Buenos Aires, Argentina
68 Plot No 108, Makuyuni Road, Mikocheni Block”B” Kinondoni District, PO Box
10801, Dar es Salaam, Tanzania
69 Plot 1281, Lungwebungu Road, Rhodes Park, Lusaka, Zambia
70 8 Rue des Pirogues de Bercy, Paris 75012, France
71 Andalucía y cordero E12-35. Edificio CYEDE piso 1, Oficina 11, Sector “La
Floresta”, Quito, Pichincha, Ecuador
72 Suite 302-9,Block 3, No. 333 Weining Road, Changning District, Shanghai, China
73 3 Temasek Avenue, #21-23 Centennial Tower, 039190, Singapore
74 Shiodome City Center 18F, 1-5-2, Higashi Shimbashi, Minato-Ku, Tokyo,
105-7118, Japan
Registered office address
75 Room E701, 7
th
Floor, Building 3, No. 36, North Third Ring East Road, Dongcheng
District, Beijing, China
76 268 Munoz Rivera Avenue, Suite 1400, San Juan, 00918, Puerto Rico
77 Room 902, Tower W2, Oriental Plaza, No. 1 East Chang’an Street, Dongcheng
District, Beijing, 11, 100738, China
78 Boulevard 15 Noiembrie, No. 78, AFI Park Brasov Building, Floor 7, Offices 7.16,
7.18, 7.22, 7.24 and 7.25, Braşov, Braşov, 500097, Romania
79 Kabelweg 37, Amsterdam, 1014 BA, Netherlands
80 357 Bay Street, 3
rd
Floor, Toronto, ON, M5H 4A6, Canada
81 Oficina N° 117, edificio Casa Colorada, calle Merced N°838-A Santiago Centro,
Santiago,Chile
82 Williams Education GmbH c/o Pearson Benelux B.V. (Zweignl. Deutschland),
St.-Martin-Str. 82, Munich, 81541, Germany
83 30
th
Floor, Ratu Plaza Office Tower, Jl. Jend. Sudirman Kav 9, Jakarta, 10270,
Indonesia
84 Carrera 7 Nro 156 – 68, Piso 26, Bogota, Colombia
85 Avenida Javier Barros Sierra, número 495, piso 3, oficina 138, Santa Fe, Alcaldía
Álvaro Obregón, Cuidad de México, C.P. 01219, Mexico
86 Punta Pacifica, Torres de las Americas, Torre A Piso 15 Ofic. 1517, Panama,
0832-0588, Panama
87 Av. Primavera No. 543 Int. 4to, Urb. Chacarilla, Distrito de San Borja, Lima, 15037,
Peru
88 85, Paseo de la Castellana, Planta 8, Madrid, 28046, Spain
89 87/1 Capital Tower Building, All Seasons Place unit 1604 – 6 16
th
floor, Wireless
Road, Lumpini, Pathumwan, Bangkok, Thailand
90 #512, 5
th
Floor, 12, Mapo-daero 10-gil, Mapo-gu, Seoul, Korea (the Republic of)
91 1
st
Floor Christie House, Orpen Road, Maseru, Lesotho
92 1133 Melville Street, Suite 3500, The Stack, Vancouver, BC, V6E 4E5, Canada
93 251, Little Falls Drive, Corporation Service Company, Wilmington, DE, 19808,
United States
Partly-owned subsidiaries
Registered company Name
Country
ofIncorp.
% Owned
Reg office
Certiport China Co Ltd CN 50.69 1
Educational Publishers LLP UK 85 2
GED Domains LLC US 70 3
GED Testing Service LLC US 70 4
TQ Education and Training Limited SA 90 5
Associated undertakings
Registered company Name
Country
ofIncorp.
%
Owned
Reg
office
Learn Capital Special Opportunities Fund I, L.P.
‡
US 99.59 8
Learn Capital Venture Partners II, L.P.
‡
US 72.93 8
Learn Capital Venture Partners IIIA, L.P.
‡
KY 99 9
Learn Capital Venture Partners, L.P.
‡
US 99.15 8
Pearson Pension Nominees Limited UK 50 2
Pearson Pension Property Fund Limited UK 50 2
Pearson Pension Trustee Limited UK 50 2
Pearson Pension Trustee Services Limited UK 50 2
Peking University Pearson (Beijing) Cultural
Development Co., Ltd
CN 45 10
Prepona Sistemas de Testagem e Avaliação S.A. BR 22.2 7
Pui Man Publishing Limited* MO 49 11
Smashcut, Inc. US 25.93 6
The Egyptian International Publishing
Company-Longman
EG 49 12
* In liquidation.
‡ Accounted for as an ‘Other financial asset’ within non-current assets.
Partly-owned subsidiaries and associated
undertakings companyaddresses
Registered office address
1 Suite 1804, No.99 Huichuan Road, Changning District, Shanghai City, China
2 80 Strand, London, WC2R 0RL, England
3 C T Corporation System, 4701 Cox Road, Suite 285, Glen Allen, Henrico, VA,
23060-0000, United States
4 The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle, DE, 19801, United States
5 King Fayad Road, Olaya, Riyadh, 58774, 11515, Saudi Arabia
6 C/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington,
Delaware, 19808, UnitedStates
7 SIS 1107A1112, 35 Rua Pedro Lessa, Centro, Rio de Janeiro, RJ, 20030-030, Brazil
8 Incorporating Services, Ltd. 3500 S Dupont Way, Dover, Kent, DE, 19901, United
States
9 Campbells Corporate Services Limited, Floor 4, Willow House, Cricket Square,
GrandCayman, KY1-9010, Cayman Islands
10 Suite 216, No. 127-1 Zhongguancun North Street, Haidian District, Beijing, China
11 Rua de Pequim No. 230–246 17-L, Macau Finance Centre, Macau, China
12 9 Rashdan St., Messaha Square, Dokki, Giza City, Egypt
Pearson plc Annual report and accounts 2025 Strategic report Governance report Financial statements Other information 233
Five-year summary
All figures in £ millions 2025 2024 2023 2022 2021
Sales: By operating segment
Assessment & Qualifications 1,604 1,591 1,559 1,444 1,238
Virtual Learning 511 489 616 820 713
English Language Learning 405 420 415 321 238
Enterprise Learning & Skills
1
282 271 269 252 216
Higher Education
1
775 781 806 850 805
Strategic review – – 9 154 218
Total sales 3,577 3,552 3,674 3,841 3,428
Adjusted operating profit: By operating
segment
Assessment & Qualifications 361 368 350 258 219
Virtual Learning 81 66 76 70 32
English Language Learning 50 50 47 25 15
Enterprise Learning & Skills
1
29 20 6 13 49
Higher Education
1
93 96 96 75 51
Strategic review – – (2) 15 19
Total adjusted operating profit 614 600 573 456 385
Operating margin – continuing 17.2% 16.9% 15.6% 11.9% 11.2%
Adjusted earnings
Total adjusted operating profit 614 600 573 456 385
Net finance costs (57) (45) (33) (1) (57)
Adjusted profit before tax 557 555 540 455 328
Income tax (136) (136) (124) (71) (64)
Non-controlling interest (1) (1) (2) (2) (1)
Adjusted earnings 420 418 414 382 263
Weighted average number of shares
(millions) 651.3 673.0 711.5 738.1 754.1
Adjusted earnings per share 64.5p 62.1p 58.2p 51.8p 34.9p
1. Comparative amounts for all periods presented have been restated to reflect the move between operating
segments.
All figures in £ millions 2025 2024 2023 2022 2021
Cash flow
Operating cash flow 571 662 587 401 388
Operating cash conversion 93% 110% 102% 88% 101%
Free cash flow 527 490 387 222 133
Free cash flow conversion 125% 117% 93% 58% 51%
Free cash flow per share 80.9p 72.8p 54.4p 30.0p 17.6p
Net assets 3,663 4,053 3,988 4,415 4,280
Net debt 1,069 853 744 557 350
Return on capital
Total adjusted operating profit 614 600 573 456 385
Adjusted income tax charge (136) (136) (124) (71) (64)
Return 478 464 449 385 321
Capital 4,231 4,433 4,380 4,439 4,086
Return on capital 11.3% 10.5% 10.3% 8.7% 7.9%
Dividend per share 25.2p 24.0p 22.7p 21.5p 20.5p
Pearson plc Annual report and accounts 2025 Strategic report Governance report 234Financial statements Other information
Financial key performance indicators
The following tables and narrative provide further analysis of the financial key performance
indicators which are described in the financial review of the annual report on pages 25-31, shown
within the key performance indicators on page 24 of the annual report and shown in note 2 of the
notes to the consolidated financial statements.
Adjusted performance measures
The annual report and accounts reports results and performance on a headline basis which
compares the reported results both on a statutory and ona non-GAAP (non-statutory) basis. The
Group’s adjusted performance measures are non-GAAP (non-statutory) financial measures and
are also included in the annual report as they are key financial measures used by management to
evaluate performance. The measures also enable investors to more easily, and consistently, track
the underlying operational performance of the Group and its business segments by separating
out those items of income and expenditure relating to acquisition and disposal transactions,
major reorganisation programmes and certain other items that are also not representative of
underlying performance.
The Group’s definition of adjusted performance measures may not be comparable to other
similarly titled measures reported by other companies. Areconciliation of the adjusted measures
to their corresponding statutory measures is shown within this section.
Sales
Underlying sales movements exclude the effect of exchange, the impact of portfolio changes
arising from acquisitions and disposals and the impact ofadopting new accounting standards
that are not retrospectively applied. Portfolio changes are calculated by taking account of the
additional sales (atconstant exchange rates) from acquisitions made in both the current year and
the prior year. For acquisitions made in the prior year, the additional sales excluded is calculated
as the sales made in the period of the current year that corresponds to the pre-acquisition period
in the prior year, and for current year acquisitions, the results for the current year are excluded.
Sales made by businesses disposed in either the current year or the prior year are also excluded.
Constant exchange rates are calculated by assuming the average exchange rates in the prior year
prevailed throughout the current year. These non-GAAP measures enable management and
investors to track more easily, and consistently, the underlying sales performance of the Group.
All figures in £ millions
Assessment &
Qualifications
Virtual
Learning
English
Language
Learning
Enterprise
Learning
and Skills
Higher
Education
Total
Statutory sales 2025 1,604 511 405 282 775 3,577
Statutory sales 2024 1,591 489 420 271 781 3,552
Statutory sales increase/
(decrease) 13 22 (15) 11 (6) 25
Comprising:
Portfolio changes – – – – 7 7
Exchange differences (43) (18) (20) (4) (27) (112)
Underlying increase/(decrease) 56 40 5 15 14 130
Statutory sales increase/
(decrease) 1% 4% (4)% 4% (1)% 1%
Constant exchange rate
increase/(decrease) 4% 8% 1% 6% 3% 4%
Underlying increase/(decrease) 4% 8% 1% 6% 2% 4%
Pearson plc Annual report and accounts 2025 Strategic report Governance report 235Financial statements Other information
Adjusted operating profit
Adjusted operating profit excludes the cost of major reorganisation, certain property charges,
other net gains and losses on the sale or closure of subsidiaries, joint ventures, associates and
other financial assets, and intangible charges, including impairment, relating only to goodwill and
intangible assets acquired through business combinations or relating to associates. Other net
gains and losses also includes costs related to business closures and acquisitions. Further details
are given below under ‘Adjusted earnings per share’. Underlying adjusted operating profit
movements exclude the effect of exchange, the impact of portfolio changes arising from
acquisitions and disposals and the impact of adopting new accounting standards that are not
retrospectively applied. Portfolio changes are calculated by taking account of the additional
contribution (at constant exchange rates) from acquisitions made in both the current year and the
prior year.
For acquisitions made in the prior year, the additional contribution excluded is calculated as the
operating profit made in the period of the current year that corresponds to the pre-acquisition
period in the prior year, and for current year acquisitions, the results for the current year are
excluded. Operating profit made by businesses disposed in either the current year or the prior
year is also excluded. Constant exchange rates are calculated by assuming the average
exchange rates in the prior year prevailed throughout the current year. This non-GAAP measure
enables management and investors to track more easily, and consistently, the underlying
operating profit performance of the Group.
All figures in £ millions 2025 2024 2023
Operating profit 507 541 498
Cost of major reorganisation – (2) –
Product development impairment 87 – –
Property charges (25) – 11
Other net gains and losses 3 7 16
Intangible charges 42 41 48
UK pension discretionary increase – 13 –
Adjusted operating profit 614 600 573
All figures in £ millions
Assessment &
Qualifications
Virtual
Learning
English
Language
Learning
Enterprise
Learning &
Skills
Higher
Education
Total
Adjusted operating profit
increase/(decrease) (7) 15 – 9 (3) 14
Comprising:
Exchange differences (10) (4) (8) 1 (5) (26)
Portfolio changes – – – – 2 2
Underlying increase/(decrease) 3 19 8 8 – 38
Constant exchange rate
increase/(decrease) 1% 29% 16% 40% 2% 7%
Underlying increase/(decrease) 1% 29% 16% 40% – 6%
Adjusted operating profit translated at year-end closing rates would be £9m lower (2024: £7m
higher) than the reported figure of £614m (2024: £600m) at £605m (2024: £607m).
Adjusted earnings
Adjusted earnings includes adjusted operating profit and adjusted finance and tax charges.
Adjusted earnings is included as a non-GAAP measure as it is used by management to evaluate
performance and by investors to more easily, and consistently, track the underlying operational
performance of the Group over time.
All figures in £ millions 2025 2024 2023
Profit for the year 336 435 380
Non-controlling interest (1) (1) (2)
Cost of major reorganisation – (2) –
Product development impairment 87 – –
Property charges (25) – 11
Other net gains and losses 3 7 16
Intangible charges 42 41 48
UK pension discretionary increase – 13 –
Other net finance income (7) (14) (28)
Income tax (15) (61) (11)
Adjusted earnings 420 418 414
Financial key performance indicators continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report 236Financial statements Other information
The following items are excluded from adjusted earnings:
Cost of major reorganisation – In 2025, there were no costs of major reorganisation. In 2024, there
was a release of £2m related to amounts previously accrued. In 2023, there were no costs of
major reorganisation. The costs of these reorganisation programmes are significant enough to
exclude from the adjusted operating profit measure so as to better highlight the underlying
performance (see note 4).
Product development impairment charges – In 2025, these relate to the impairment of product
development assets as a result of courseware platform convergence (see note 20). There were
no such amounts in 2024 or 2023.
Property charges – In 2025, property charges are a gain of £25m, relating to reversals of
impairments of property assets that were previously impaired through property charges.
Impairment reversals have arisen from new sublets on previously vacant space in corporate
properties. In 2024, there were no property charges. In 2023, charges of £11m related to
impairments of property assets arising from the impact of updates in 2023 to assumptions
initially made during the 2022 and 2021 reorganisation programmes.
Other net gains and losses – These represent profits and losses on the sale of subsidiaries, joint
ventures, associates and other financial assets and are excluded from adjusted operating profit
in order to show the performance of the Group on a more comparable basis year-on-year. Other
net gains and losses also includes costs related to business closures and acquisitions. Other net
gains and losses in 2025 relate to the gain on disposal of Copp Clark, a business in our Higher
Education division, a fair value gain relating to a previous disposal and costs relating to current
and prior year acquisitions and disposals. Other net gains and losses in 2024 related to costs
related to prior year acquisitions and disposals, partially offset by a gain on the partial disposal of
our investment in an associate. In 2023, they related to the gain on the disposal of the POLS
business and gains related to the release of accruals and a provision related to historical
acquisitions, offset by losses on the disposal of Pearson College and costs related to current and
previous year disposals and acquisitions.
UK pension discretionary increases – Charges in 2024 relate to one-off pension increases
awarded to certain cohorts of pensioners in response to the cost of living crisis. There were no
such awards in 2025 or 2023.
Intangible charges – These represent amortisation relating to intangibles acquired through
business combinations. These amortisation charges are excluded as they reflect past acquisition
activity and do not necessarily reflect the current year performance of the Group. Intangible
amortisation charges in 2025 were £42m compared to a charge of £41m in 2024. This is due to
increased amortisation from recent acquisitions partially offset by decreased amortisation from
assets reaching the end of their useful economic lives. In2023, intangible charges were £48m. In
all three years, there were no impairment charges.
Other net finance income/costs – These include finance costs in respect of retirement benefits,
finance costs of deferred consideration, fair value movements in relation to financial assets held
at fair value through profit and loss and foreign exchange and other gains and losses. Finance
income relating to retirement benefits is excluded as management does not believe that the
consolidated income statement presentation under IAS 19 reflects the economic substance of
the underlying assets and liabilities. Finance costs relating to acquisition transactions are
excluded as these relate to future earn-outs or acquisition expenses and are not part of the
underlying financing. Foreign exchange and other gains and losses are excluded as they
represent short-term fluctuations in market value and are subject to significant volatility. Other
gains and losses may not be realised in due course as it is normally the intention to hold the
related instruments to maturity.
All figures in £ millions 2025 2024 2023
Net finance costs (50) (31) (5)
Net finance income in respect of retirement benefits (25) (21) (26)
Interest on deferred and contingent consideration 1 2 4
Fair value movements on investments 7 11 (13)
Net foreign exchange losses/(gains) 7 3 (3)
Fair value movement on derivatives 3 (7) 10
Interest on provisions for uncertain tax positions – (2) –
Adjusted net finance costs (57) (45) (33)
Tax – Tax on the above items is excluded from adjusted earnings. Where relevant the Group also
excludes the benefit from recognising previously unrecognised pre-acquisition and capital
losses. The tax benefit from tax deductible goodwill and intangibles is added to the adjusted
income tax charge as this benefit more accurately aligns the adjusted tax charge with the
expected rate of cash tax payments.
The Group also assesses whether other significant items identified within the reconciliation to the
tax charge to profit before tax should be classified as adjusting items where not representative of
underlying performance or ongoing operations. This could include derecognition of deferred tax
assets, changes in tax rates or the effect of tax investigations.
Adjusted earnings continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report 237Financial statements Other information
The tax rate reflected in adjusted earnings is calculated as follows:
All figures in £ millions 2025 2024 2023
Profit before tax 457 510 493
Adjustments:
Cost of major reorganisation – (2) –
Product development impairment 87 – –
Property charges (25) – 11
Other net gains and losses 3 7 16
Intangible charges 42 41 48
UK Pension discretionary increases – 13 –
Other net finance income (7) (14) (28)
Adjusted profit before tax 557 555 540
Total tax charge (121) (75) (113)
Adjustments:
Tax on cost of major reorganisation – 1 –
Tax on product development impairment (22) – –
Tax on property charges 7 – (3)
Tax on other net gains and losses (1) – (10)
Tax on intangible charges (10) (10) (11)
Tax on UK pensions discretionary increases – (3) –
Tax on other net finance costs 2 5 7
Tax on goodwill and intangibles 4 4 4
Tax benefit on UK tax rate change – – 1
State Aid provision release – (63) –
Movement in provision for tax uncertainties 3 6 –
Other tax items 2 (1) 1
Adjusted tax charge (136) (136) (124)
Tax rate reflected in adjusted earnings 24.5% 24.4% 23.0%
Adjusted earnings per share
Adjusted earnings per share is calculated as adjusted earnings divided by the weighted average
number of shares in issue on an undiluted basis.
All figures in £ millions 2025 2024 2023
Adjusted operating profit 614 600 573
Adjusted net finance costs (57) (45) (33)
Adjusted profit before tax 557 555 540
Adjusted income tax (136) (136) (124)
Adjusted profit for the year 421 419 416
Non-controlling interest (1) (1) (2)
Adjusted earnings 420 418 414
Weighted average number of shares (millions) 651.3 673.0 711.5
Weighted average number of shares (millions) for diluted
earnings 660.3 684.0 717.3
Adjusted earnings per share
Basic 64.5p 62.1p 58.2p
Diluted 63.6p 61.1p 57.7p
Financial key performance indicators continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report 238Financial statements Other information
Return on capital
Return on capital (ROC) is included as a non-GAAP measure of how efficiently we are generating
returns from our asset base. ROC is calculated as adjusted operating profit less adjusted income
tax as a proportion of capital, where capital adjusts net statutory assets for net debt, retirement
benefit assets, other post-retirement medical obligations and other non-operating items.
These adjustments to net statutory assets have been made to better reflect the asset base that
generates returns.
All figures in £ millions 2025 2024
Adjusted operating profit 614 600
Adjusted income tax charge (136) (136)
Return 478 464
Net statutory assets 3,663 4,053
Adjustments for:
Net debt 1,069 853
Retirement benefit assets (518) (491)
Other post-retirement medical benefit obligation 17 19
Other non-operating assets – (1)
Capital 4,231 4,433
Return on capital 11.3% 10.5%
Operating cash flow and free cash flow
Operating cash flow is calculated as net cash generated from operations before the impact of
items excluded from the adjusted income statement plus dividends from joint ventures and
associates (less the re-capitalisation dividends from Penguin Random House); less capital
expenditure on property, plant and equipment (including additions to right-of-use assets)
and intangible software assets; plus proceeds from the sale of property, plant and equipment
(including the impacts of transfers to/from investment in finance lease receivable) and
intangible software assets; plus special pension contributions paid; and plus costs of major
reorganisation paid. When compared to operating cash flow, free cash flow includes tax paid/
received, net finance costs paid, net costs paid for major reorganisation and special pension
contributions paid.
Operating cash flow and free cash flow are included as a non-GAAP measures in order to align
the cash flows with the corresponding adjusted operating profit and adjusted earnings
measures.
All figures in £ millions 2025 2024
Net cash generated from operations 731 811
Dividends received 1 2
Purchase/disposal of PPE and software (131) (118)
Net addition of right-of-use assets (45) (46)
Net costs paid for major reorganisation – 8
Special pension contributions 2 –
Other net gains and losses 13 5
Operating cash flow 571 662
Tax paid (2) (119)
Net finance costs paid (40) (45)
Special pension contributions (2) –
Net costs paid for major reorganisation – (8)
Free cash flow 527 490
Dividends paid (including to non-controlling interests) (160) (156)
Net movement of funds from operations 367 334
Acquisitions and disposals (177) (58)
Net equity transactions (415) (351)
Other movements on financial instruments 9 (34)
Movement in net debt (216) (109)
Opening net debt (853) (744)
Closing net debt (1,069) (853)
Pearson plc Annual report and accounts 2025 Strategic report Governance report 239Financial statements Other information
Operating cash conversion, calculated as operating cash flow as a percentage of adjusted
operating profit, is also shown as a non-GAAP measure as this is used by management and
investors to measure cash generation by the Group.
All figures in £ millions 2025 2024
Adjusted operating profit 614 600
Operating cash flow 571 662
Operating cash conversion 93% 110%
Operating cash flow and total free cash flow, which are non-GAAP measures, are commonly used
by investors to measure the cash performance of the Group.
Free cash flow conversion, calculated as free cash flow as a percentage of adjusted earnings, is
also shown as a non-GAAP measure as this is used by management and investors to measure
cash generation by the Group.
All figures in £ millions 2025 2024
Adjusted earnings 420 418
Free cash flow 527 490
Free cash conversion 125% 117%
Net cash generated from operations is translated at an exchange rate approximating the rate at
the dateof cash flow. The difference between this rate and the average rate used to translate
profit gives riseto a currency adjustment in the reconciliation between net profit and net cash
generated from operations. Thisadjustment reflects the timing difference between recognition
of profit and the related cash receipts or payments.
Net debt and adjusted earnings before interest, tax, depreciation
and amortisation (EBITDA)
For information, the net debt/adjusted EBITDA ratio is shown as a non-GAAP measure as it is
commonly used by investors to measure balance sheet strength. Adjusted EBITDA is calculated
as adjusted operating profit less depreciation on property, plant and equipment, and
amortisation on intangible software assets.
All figures in £ millions 2025 2024
Adjusted operating profit 614 600
Depreciation (excluding items included in ‘cost of major
reorganisation’ and ‘property charges’) 74 76
Amortisation on intangible software assets (excluding items included in
‘cost of major reorganisation’) 112 117
Adjusted EBITDA 800 793
Cash and cash equivalents 333 543
Derivative financial instruments 13 (7)
Revolving Credit Facilities (297) –
Bonds (706) (955)
Investment in finance lease receivable 66 83
Lease liabilities (478) (517)
Net debt (1,069) (853)
Net debt/adjusted EBITDA ratio 1.3x 1.1x
Adjusted EBITDA translated at year-end closing rates would be £11m lower (2024: £10m higher)
than the reported figure of £800m (2024: £793m) at £789m (2024: £803m).
Financial key performance indicators continued
Pearson plc Annual report and accounts 2025 Strategic report Governance report 240Financial statements Other information
Cross Reference Table:
Item
Form 20-F Caption
Location in this Document
Page
Reference
Item 1 Identity of Directors, Senior
Management and Advisers
Not applicable n/a
Item 2 Offer Statistics and
Expected Timetable
Not applicable n/a
Item 3 Key Information
A. Reserved Not applicable n/a
B. Capitalisation and
indebtedness
Not applicable n/a
C. Reasons for the offer and
use of proceeds
Not applicable n/a
D. Risk factors Additional Information: Risk factors
Strategic Report: Risk management
244-250
55-69
Item 4 Information on the Company
A. History and development of
the Company
Strategic Report: At a Glance
Information on the Company
Shareholder Information
Strategic Review: Financial Review
Note 18: Borrowings
Note 19: Financial Risk Management
Note 30: Business Combinations
Note 31: Disposals
Note 34: Leases
2
250
262-263
25-31
205-206
206-209
220-221
221
223
B. Business overview Strategic Report
Note 2: Segmental Information
Additional Information: Certain
additional information on the
Company
2-69
183-185
250-252
C. Organisational structure Parent Company Note 11 230-233
Item
Form 20-F Caption
Location in this Document
Page
Reference
D. Property, plant and
equipment
Note 10: Property, plant and
Equipment and Investment Property
Additional Information: Property, plant
and equipment
Strategic Report: Sustainability
Additional Information: Risk Factors
194-195
252
.
32-54
244-250
Item 4A Unresolved staff comments None n/a
Item 5 Operating and Financial
Review and Prospects
A. Operating results Additional Information:
Operating and Financial Review
Strategic Report:
Key performance indicators
Strategic Report: Financial review
Strategic Report: Risk management
(including Viability Statement)
Financial Statements
252
.
23-24
25-31
55-69
168-233
B. Liquidity and capital
resources
Strategic Report: Financial review
Note 16: Derivatives and
Hedge Accounting
Note 18: Borrowings
Note 19: Financial Risk Management
Note 34: Leases
25-31
202-205
205-206
206-209
223
C. Research and
development, patents and
licenses etc
Not applicable n/a
D. Trend information Strategic Report: Key
performance indicators
Strategic Report: Financial review
23-24
25-31
E. Critical Accounting
Estimates
Note 1: Accounting Policies 174-182
Additional information for US listing purposes
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 241
Additional information for US listing purposes continued
Item
Form 20-F Caption
Location in this Document
Page
Reference
Item 6 Directors, Senior
Management and Employees
A. Directors and senior
management
Corporate Governance:
Board of Directors
Corporate Governance:
Pearson Executive Management
72-75
76-78
B. Compensation Directors’ Remuneration Report 117-152
C. Board practices Corporate Governance:
Board of Directors
Directors’ Remuneration Report
Corporate Governance:
Audit Committee report
72-75
117-152
102-116
D. Employees Note 5: Employee Information 190
E. Share ownership Directors’ Remuneration Report
Note 26: Share Based Payments
117-152
217
F. Disclosure of a registrant’s
action to recover erroneously
awarded compensation
None n/a
Item 7 Major Shareholders and
Related Party Transactions
A. Major shareholders Additional Disclosures 153
B. Related party transactions Note 12: Investments in Joint Ventures
and Associates
Note 35: Related Party Transactions
198
224
C. Interests of experts and
counsel
Not applicable n/a
Item 8 Financial Information
A. Consolidated statements
and other financial information
Financial Statements 168-233
B. Significant changes None n/a
C. Interests of experts and
counsel
Not applicable n/a
Item
Form 20-F Caption
Location in this Document
Page
Reference
Item 9 The Offer and Listing
A. Offer and listing details Additional Information: Listing 252
B. Plan of distribution Not applicable n/a
C. Markets Additional Information: Listing 252
D. Selling shareholders Not applicable n/a
E. Dilution Not applicable n/a
F. Expenses of the issue Not applicable n/a
Item 10 Additional Information
A. Share capital Not applicable n/a
B. Articles of association Additional Information:
Articles of Association
253-256
C. Material contracts Additional Information:
Material Contracts
256
D. Exchange controls Additional Information:
Exchange Controls
257
E. Taxation Additional Information:
Tax Considerations
257-258
F. Dividends and paying
agents
Not applicable n/a
G. Statement by experts Not applicable n/a
H. Documents on display Additional Information: Documents on
Display
258
I. Subsidiary information Parent company Note 11:
Group Companies
230-233
J. Annual report to Security
Holders
Not applicable n/a
Item 11 Quantitative and Qualitative
Disclosures about Market
Risk
Note 19: Financial Risk Management
Note 14: Classification of
Financial Instruments
Note 16: Derivative Financial
Instruments and Hedge Accounting
206-209
200-201
202-205
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 242
Item
Form 20-F Caption
Location in this Document
Page
Reference
Item 12 Description of Securities
other than Equity Securities
A. Description of debt
securities
Not applicable n/a
B. Description of warrants
and rights
Not applicable n/a
C. Description of other
securities
Not applicable n/a
D. American Depository
Shares
Additional Information: Description of
Securities Other than Equity Securities
258-259
D. 1 Name of depositary
and address of principal
executive office
Not applicable n/a
D. 2 Title of ADRs and brief
description of provisions
Not applicable n/a
D. 3 Depositary fees and
charges
Additional Information: Description of
Securities Other than Equity Securities
258-259
D. 4 Depositary payments Additional Information: Description of
Securities Other than Equity Securities
258-259
Item 13 Defaults, Dividend
Arrearages and
Delinquencies
Not applicable n/a
Item 14 Material Modifications to the
Rights of Security Holders
and Use of Proceeds
Not applicable n/a
Item 15 Controls and Procedures Additional Information: Controls and
Procedures
259-260
Item 16 Reserved
A. Audit Committee
Financial Expert
Additional Information: Audit
Committee Financial Expert
260
B. Code of Ethics Additional Information: Code of Ethics 260
C. Principal Accountant Fees Note 4: Operating Expenses
Principal accountant fees and services
189-190
260
D. Exemptions from The Listing
Standards for Audit Committees
Not applicable n/a
Item
Form 20-F Caption
Location in this Document
Page
Reference
E. Purchases of Equity
Securities by the Issuer and
Affiliated Purchasers
Additional Information: Purchases of
Equity Securities by the Issuer and
Affiliated Purchases
260-261
F. Change in Registrants
Certifying Accountant
Not applicable n/a
G. Corporate Governance Corporate Governance 70-156
H. Mine Safety Disclosures Not applicable n/a
I. Disclosure regarding
foreign jurisdiction that
prevent inspections
Not applicable n/a
J. Insider Trading Policies Additional Information: Insider Trading
Policies
261
K. Cyber security Additional Information: Cyber security;
Strategic Report: Data privacy and
cyber security
261, 39
Item 17 Financial Statements Not applicable n/a
Item 18 Financial Statements Financial Statements 168-233
Item 19 Exhibits Refer to Exhibits list immediately
following the signature page for this
document as filed with the SEC
n/a
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 243
Additional information for US listing purposes continued
Risk factors
Ownership of our ordinary shares or American Depositary Shares is subject to risk. You should
carefully consider the risk factors described below, as well as the other information included in
the rest of this document. The Group’s business, financial condition or results from operations
could be materially adversely affected by any or all of these risks, or by other risks that it presently
cannot identify. Any forward-looking statements are made subject to the Forward-looking
statement section located on page 264.
Risks relating to regulation, including Accreditation
Changes in government policy and/or regulations have the potential to affect the Group’s
business model and/or decisions across all markets.
The Group’s educational services, assessment and qualifications businesses may be affected
by shifts in government funding and regulation in any or all of the markets in which the Group
operates due to external factors beyond its control, including general economic or fiscal
conditions, changes in education funding, policy decisions, legislation, or procurement
processes. In particular, the Group is subject to the risk of potential amendments to, or
suspensions or cancellations of, high-stakes testing in a particular market, which could affect
our assessments businesses, including but not limited to our Pearson Test of English or UK &
International Qualifications businesses. For example, the UK Government has proposed the
introduction of V Levels, in addition to T Levels, as a new vocational qualification pathway, which
could negatively impact our UK qualifications business and therefore the Group’s financial
results. Changes in policy or funding could also result in the loss of schools and/or a decrease
inthe number of students engaged in our Virtual Learning business.
Typically, each year a large number of our contracts are up for renewal, including within our US
Student Assessment business. Our financial plan assumes successful renewal of these contracts
or, if any of these contracts are not renewed (as has occurred in the past and may occur in future),
the replacement of that loss through the winning of new business. The loss of any of these
contracts, whether or not as a result of changes in policy or processes described above, would
lead to lower sales and profits in the future unless replaced by commensurate new contract wins,
which could have a material impact on the financial prospects of the Group.
The performance and growth of the Group’s US educational services and assessment businesses
rely on federal and state education funding, which depends on state financial health and budget
allocations for education. Pressures on state and local funding, competition from low-cost or
disruptive new business models, and the promotion of open-source materials to cut costs could
adversely impact the Group’s sales. Additionally, changes in federal or state government
leadership, education policy priorities, state-level testing frameworks, or education policies
mayalter funding priorities and potentially decrease efficiencies, while shifts in procurement
processes, curriculum changes, and delays in textbook adoptions or testing procedures may
also affect the size of the market. Any of these factors could negatively impact the Group’s
financial results and growth prospects in the US education sector.
The Group has businesses in a variety of geographies globally and is subject to numerous
different regulatory regimes and uncertain international environments and regulatory changes
which could impact the Group’s operations and financial condition.
The Group operates in numerous countries worldwide. In some jurisdictions, the Group faces
risks related to government restrictions on market access for non-local companies and
limitations on profit repatriation. Operating across multiple geographies also exposes the
Groupto regulatory hurdles and tariffs including in respect of trade tensions, changes to
foreigntrade policies, and evolving sentiment towards multinational companies in a challenging
international political environment. The Group has a central Compliance team and a network of
local compliance representatives within the Legal function to ensure that the Group meets its
obligations. However, we are subject to evolving laws, international accords and policies or the
changing of their interpretation or application, including those on environmental sustainability,
human capital and governance topics.
The political, regulatory, economic and currency risks, along with the risk of compliance failures
(e.g., fraud, sanctions, bribery), or conflicting legislation or regulation across countries and
states, including its interpretation or application, have in the past and could in the future affect
the realisation or the results of our objectives, as well as possibly reducing investment returns
andimpacting the Group’s ability to reinvest or distribute profits.
Sanctions against specific countries or entities may require the Group to exit certain markets.
Regulatory investigations related to sanctions have in the past and could in the future be costly,
consume management resources, harm the Group’s reputation, and lead to legal and financial
consequences. We have in the past and could in the future face scrutiny from stakeholders,
including from multiple domestic or international governmental authorities who may have different
or conflicting views on our business practices and activities, which could lead to fines or other
costs, reputational damage, legal issues, enforcement actions or operational changes and which
could therefore have an adverse effect on our business, operations and financial condition.
Risks relating to Artificial Intelligence, Content and Channel
The Group could face additional cost and diversion of personnel (i) to meet any new regulation
orlaw applicable to its use of Artificial Intelligence (AI) in its products and services and/or (ii) to
protect any of its intellectual property developed using AI.
The Group has a history of utilising AI in its products and services, and incorporation is expected
only to increase as AI technologies (including generative AI) continue to develop. Our ability to
dothis successfully depends in part on the openness of the public to the use of AI in the learning
sector. If the content that AI applications assist us in producing is or is perceived or alleged to be
deficient or inaccurate, our reputation may be adversely affected, and/or the effectiveness of
the Group’s products may be undermined.
In 2025, the Group progressed the development of AI features in many products, for example,
the implementation of AI for personalised lessons, as exemplified by Digital Language Tutor and
AI Study Tools. Although these developments have shown encouraging signs, an inability to
sustain the positive momentum would result in lower sales and profit than anticipated. In addition,
if our competitors incorporate AI into their products more quickly or more successfully than we
do, our ability to compete effectively could be impaired.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 244
The increasing interest in AI by governments and regulators around the world and the different
approaches they are taking continue to bring a level of regulatory uncertainty which may increase
costs and liabilities in a manner that is beyond the Group’s control and could result in conflicting
legal requirements, potentially further increasing costs and/or adversely impacting the Group’s
ability to operate.
In addition, there remains uncertainty and potential inconsistency regarding legal protections
that are afforded to the Group’s intellectual property developed (in whole or in part) with the use
of AI (or software including any AI), as laws and regulations evolve and develop.
If the Group fails to successfully invest in and deliver the right products and services or fails to
respond to government concerns and/or competitive threats, its sales and profits could be
adversely impacted.
A common trend facing all the Group’s businesses is the digitisation of content and the
proliferation of distribution channels, either over the internet or via other electronic means,
replacing traditional print formats. The digital migration has led to changes in consumers’
perception of value and the publisher’s position between consumers, retailers, and authors,
andhas required the Group to make changes in its product and content distribution.
A proliferation of available supply routes for content, in addition to buying or subscribing to the
Group’s content, means that the Group may not fully realise a return for its investment in
developing and distributing this content. Alternatives such as second-hand and rental copies,
open educational resources, online discounters, file sharing and use of pirated copies all offer
either lower or no financial returns to the Group and may reduce demand for the Group’s
products or place downward pressure on pricing.
Where the purchaser is a school or institution, they will typically use educational funding to
purchase our materials or assessments. However, there are multiple competing demands for
educational funds and there is no guarantee that new courseware or testing or training
programmes will be funded, or that the Group will win or retain this business.
If the Group does not adapt rapidly to such and other market trends, it may lose business to
faster moving or more agile competitors, who increasingly are non-traditional competitors that
may be more difficult to identify or anticipate. The Group may be required to invest significant
resources to further adapt to the changing competitive environment, which requires continued
development of both content and methods of delivery to be able to provide differentiated
products and services and may result in competitive disadvantage and missed opportunity for
sales and growth if such investments are not successful or do not generate an adequate return.
An example of this is where the Group’s products and services may potentially face competition
from those developed by non-traditional competitors using advanced generative AI tools.
Generative AI tools may enable the rapid creation and distribution of content at lower cost and
could disrupt the markets in which the Group operates. If the Group does not successfully adapt to
these technological developments, including through appropriate investment and integration into
its offerings, its businesses, financial results, and competitive position could be adversely affected.
Failure to use the Group’s data effectively to enhance the quality and scope of current products
and services in order to improve learning outcomes could adversely affect the Group’s business.
The Group seeks to maximise the use of data to enhance the quality and scope of current
products and services to improve learning outcomes while managing associated risks.
TheGroup’s ability to continue to do so may be subject to factors beyond the Group’s control.
Inaddition, the lack of availability of timely, complete, and accurate data, limits informed
decision-making and increases the risk of non-compliance with legal, regulatory, and reporting
requirements. Business change and transformation success is dependent on migration of a
significant number of datasets and our inability to effectively accomplish this could adversely
affect the Group’s results.
If the Group does not adequately protect its intellectual property and proprietary rights, its
competitive position and results may be adversely affected and its ability to grow restricted.
Some of the Group’s products and services comprise intellectual property delivered through a
variety of print and digital media, online software applications and platforms. The Group relies on
trademark, patent, copyright and other intellectual property laws to establish and protect its
proprietary rights in these products and services. As discussed above, the evolving legal and
regulatory framework relating to Artificial Intelligence, and the applicability and interpretation of
existing intellectual property laws in this context, continue to create uncertainty. The Group also
faces uncertainty regarding its ability to adequately protect its content from its unauthorised use
in training Large Language Models and other AI models, including those underlying generative
Artificial Intelligence tools.
Failure, or an inability, to adequately manage, procure, register or protect intellectual property
rights (including trademarks, patents, trade secrets and copyright) in the Group’s brands,
content and technology, may prevent the Group from enforcing its rights and increase the risk of
infringement by third parties, including through print and digital counterfeiting and digital piracy,
which could reduce sales and erode margins.
The Group’s intellectual property rights (IPR) in brands and content, historically its core assets,
aregenerally well established in key markets. As technology and digital delivery of content have
become an increasingly critical component of the Group’s business strategy, the Group has
grown its patent portfolio to expand its protection of high-value technology in the US and key
international markets.
Online copying and circumvention of security measures have become increasingly sophisticated
and difficult to prevent. Technological advancements have made the unauthorised copying and
widespread distribution of unlicensed content more accessible and scalable, including through
the use of generative AI. At the same time, detecting unauthorised use of our intellectual property
and enforcing our IPR has become more difficult due to the growing volume, speed, and
technical sophistication of such activities. Notably, in recent years ‘digital counterfeit’ websites
have offered or attempted to offer unprotected PDF files of many of Pearson’s titles, at scale,
using modern and sophisticated e-commerce methods, with a professional or legitimate
appearance. Additionally, such websites may have acted as potential sources of data for Large
Language Models. From an IPR perspective, increasing the Group’s digital business continues to
expose it to evolving trademark, copyright and patent infringement risks.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 245
Additional information for US listing purposes continued
The Group’s forward-looking IPR strategy seeks to maintain a broad portfolio of IPR in key
markets. However, the Group also operates in jurisdictions where its IPR efforts are more limited
or legal protections are uncertain, which could adversely affect future growth.
Where the Group has registered or otherwise established its IPR, it cannot guarantee that such
rights will provide competitive advantages due to: the challenges and costs of monitoring and
enforcement in jurisdictions where competition may be intense; the limited and/or ineffective
IPR protection and enforcement mechanisms available to it in many countries; the risk that its IPR
may lapse, be invalidated, circumvented, challenged, or abandoned, or that the Group may
otherwise lose the ability to assert such rights against third parties. The loss or diminution in value
of these proprietary rights or the Group’s intellectual property could have a material adverse
effect on the Group’s business and financial performance.
Risks relating to Capability
The Group’s strategy involves significant ongoing change, including moving into new markets.
This increases the risk of failure to realise anticipated benefits or of costs being higher than
anticipated, or that the Group’s business as usual activities are adversely impacted.
The Group’s strategy aims, among other things, to achieve significant growth in markets in which
Pearson has less experience, including enterprise sales, and such anticipated growth may not be
realised. The Group’s financial plan assumes that the costs associated with such new market
strategies will be successfully managed in all business units, but should this cost management
not be successful, the Group is likely to report lower than anticipated profits.
If the Group fails to attract, retain and develop appropriately skilled employees, it may limit its
ability to achieve its strategic and operational goals and its business may be harmed.
The Group’s success depends on the skill, experience and engagement of its employees.
Theirexpertise has allowed the Group to demonstrate agility, notably in how the Group has been
able to develop and deploy beta tests of products using large language models and AI tools.
Training and development of staff is a focus area for managers throughout the organisation,
butthere is no guarantee that workers will continue to have the required skills prospectively.
The Group has a key dependency on the Chief Executive and certain other key employees. If it
isunable to attract, retain and develop sufficiently experienced and capable staff, especially in
technology, product development, sales and leadership, its business and financial results may
suffer. When talented employees leave, the Group may have difficulty replacing those skills, and
its business may suffer. There can be no assurance that the Group will be able to successfully
attract and retain the skills that it needs.
If the Group is unable to successfully execute, scale, or derive the expected benefits from its
large-scale strategic partnerships, including with major technology or platform providers, its
ability to achieve its strategic and operational objectives could be adversely affected and its
business, financial results, and growth prospects may be harmed.
The Group’s success with these partnerships depends on a number of factors, including, but not
limited to, the availability and retention of appropriately skilled personnel, the adequacy of its
operational capacity, effective coordination across organisations, and the implementation of
appropriate governance and oversight frameworks. These partnerships are often complex,
involve significant integration efforts, and may require the Group to align its product
development, go-to-market strategies, and operational processes with those of its partners.
In addition, the Group has limited control over its partners’ business decisions, strategic
priorities, resource allocation and technology roadmaps. Changes in a partner’s strategy,
commercial terms, technical requirements or level of support, or a partner’s failure to prioritise
orcontinue its relationship with the Group, could delay or limit the Group’s ability to achieve key
milestones, including revenue growth and commercialisation objectives. These partners may
also enter into or maintain relationships with the Group’s competitors. If the Group is unable to
effectively manage these risks or successfully execute these partnerships at scale, its financial
performance could be adversely affected.
All the Group’s businesses depend on information technology (IT) systems and continual
technological change. Failure to maintain and support customer-facing services, systems, and
platforms, including addressing quality issues and execution on time of new products and
enhancements, could negatively impact the Group’s sales and reputation.
All the Group’s businesses, to a greater or lesser extent, are dependent on IT. It either provides
software and/or internet services to its customers or uses complex IT systems and products to
support its business activities, including customer-facing systems, back-office processing and
infrastructure. The Group faces several technological risks associated with software product
development (including risks associated with the use of AI in the Group’s products and services)
and service delivery, information technology security (including viruses and cyber-attacks),
e-commerce, enterprise resource planning system implementation and upgrades. Although
plans and procedures are in place to continue to reduce and manage such risks, as well as
training and security measures, with further progress made during 2025 in this area, from time to
time the Group has experienced and could in future experience an adverse impact or disruption
to the Group services, including by attacks on its systems by unauthorised parties. To date,
suchimpacts and disruptions have not resulted in any material adverse effect, but the Group’s
businesses could be adversely affected if its systems and infrastructure experience a significant
failure or interruption.
Operational disruption to its business, including that caused by third-party providers and
partners, a major disaster, and/or external threats, could restrict the Group’s ability to supply
products and services to its customers.
Across all its businesses, the Group manages complex operational and logistical arrangements
including, but not limited to, distribution centres, data centres, cloud computing, and educational
and office facilities, as well as relationships with third-party print sites and with other third-party
partners. It has outsourced some support functions, including elements of information
technology, warehousing and logistics, to third-party providers, and it has also partnered with
third parties including in relation to joint go-to-market models and other areas of work.
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The failure of the partnerships, or of third parties to whom it has outsourced business functions or
who manage directly or indirectly the Group’s information and operations, could adversely affect
its reputation or financial condition. Failure to recover from a major disaster, (e.g., fire, flood, etc.)
at a key facility and/or a major failure of a key facility, system or platform, such as a data centre
outage or cloud computing failure or the disruption of supply from a key third-party vendor or
partner (e.g. due to bankruptcy) could restrict the Group’s ability to service its customers and
meet the terms of its contractual relationships with both government agencies and commercial
customers. Penalty clauses and/or the failure to retain these contracts at the end of the contract
term could adversely impact future sales and/or operations.
Risks relating to the Competitive Marketplace
Global economic strains, increased regulation, policies negatively impacting immigration and
other macro market factors may adversely impact the Group’s financial performance.
With continued pressure and uncertainty in worldwide economies, particularly in the Group’s
major markets in the US and UK, there is a risk of a weakening in trading conditions, which could
adversely impact the Group’s future financial performance. The effect of any deterioration in the
global economy may vary across different businesses and will depend on the depth, length and
severity of any economic downturn. The education market can be affected by cyclical factors
which, although they can have a positive impact for some of the Group’s businesses, could for
others lead to a reduction in demand for the Group’s products and services. Similarly, our
Pearson Test of English product may experience a reduction in demand due to the impact of
increased regulations and policies that result in decreased levels of international study,
testing,and immigration.
Increased competitive pressure, reduced demand due to changing learning preferences,
structural market headwinds due to demographic decline, and limits on international study,
mayadversely impact the Group’s financial performance and reduce the expected return
oninvestment.
The Group competes in a highly competitive market that is subject to rapid change in some
areas. The Group also faces competitive threats both from large media players and from smaller
businesses, online and mobile portals and operators in the digital arena that provide alternative
sources of content. The content space continues to face the risk of price compression, driven
bythe growing prevalence of open educational resources, particularly those enhanced by large
language models and generative AI technologies. Alternative distribution channels, such as
digital formats, the internet, online retailers, and emerging delivery platforms, pose both threats
to and opportunities for traditional publishing business models, potentially impacting both sales
volumes and pricing.
In addition, new competitive entrants, increased price competition or shifts in learners away from
educational institutions (as seen in certain prior years in reduced higher education enrolments),
as well as demographic decline and limits on international study, may lead to lower profitability
and cash flow performance. The level of competition is placing financial strain on some of our
Higher Education businesses’ channel partners; the failure of one of these companies would risk
the loss of any outstanding debtor balances.
In our Virtual Learning business, we have seen strong enrolment growth for the 2025/2026
academic year as well as operational improvements and have expanded academic offerings
including career programming. Notwithstanding the above, there is no guarantee that these
measures will be sufficient in the future to prevent loss of sales and profit in any of those
businesses, which could negatively impact the Group’s financial performance and prospects.
The Group’s investment in new markets may deliver returns that are lower than anticipated.
The Group has invested in, and has plans to continue to invest in, new markets such as workforce
and enterprise learning experiences, in which the Group has less experience, and which are very
competitive markets. Failure to achieve our planned outcomes may lead to lower than expected
sales and profitability.
A significant deterioration in the Group’s profitability and/or cash flows caused by prolonged
economic instability or recession could reduce its liquidity and/or impair its financial ratios
andtrigger a need to raise additional funds from the capital markets and/or renegotiate its
banking covenants.
To the extent that worldwide economic conditions materially deteriorate, the Group’s sales,
profitability and cash flows could be significantly reduced as customers could be unable to
purchase products and services in the expected quantities and/or pay for them within normal
agreed terms.
Disruption in capital markets or potential concerns about the Group’s credit rating, for instance
manifested in downgrades or negative outlooks by the credit rating agencies, may mean that
thiscapital may not be available on favourable terms or may not be available at all.
Risks relating to Customer Expectations
Failure to meet our customers’ rapidly changing expectations for our products and services or to
anticipate new customer demands could result in reduced market share and profitability, as well
as brand erosion.
We continue to adjust our business model in an effort to keep a pace with increasing end user
demands. The Group may not be able to adapt, change and succeed in a rapidly changing and
uncertain environment, resulting in competitive disadvantage, higher costs and brand erosion.
This could result from failing to identify changes in learner preferences or from failing to create
products and services which meet these revised expectations.
With the launch of new products, we risk failing to meet customer experience expectations,
which increasingly vary from country to country, with respect to how the products and services
are delivered e.g. quality and timeliness, impacting the customer’s brand loyalty and propensity
to purchase, resulting in customer complaints, less favourable social media sentiment, bad
reviews, low recommendations, and/or customer attrition.
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There is also the risk that our technology and data dependent products and services do not
meetthe accessibility requirements of customers and prospective customers, which could
result in increased costs, restrictions, fines and/or legal claims.
The Group’s ability to safeguard data while meeting increasing customer requirements
fortransparency regarding data use and protection could adversely affect its business
andoperations.
Safeguarding data, including customer and other sensitive information, is critical to the Group’s
business. At the same time, customers are increasingly requiring more detailed information
regarding the Group’s data governance practices, including how data is collected, used,
controlled, protected, and shared, as a condition to entering into or maintaining commercial
relationships. Responding to these requests often requires providing detailed information
regarding the Group’s data practices, which may involve operational complexity, additional
compliance costs, and the allocation of significant management and technical resources.
In some cases, the level of transparency requested by customers may create tension between
satisfying customer requirements and protecting the Group’s confidential information,
intellectual property, security protocols, and strategic business plans. If the Group is unable
tomeet customer requirements regarding data use and protection, or if meeting those
requirements requires disclosures or controls that materially impair the protection of the
Group’sdata, intellectual property, or business plans, the Group could lose customers, fail to
secure new business, or incur increased compliance, operational or contractual costs. Any
suchoutcome could adversely affect the Group’s business, financial condition, results of
operations, and growth prospects.
Risks relating to the Group’s Portfolio of Businesses
The Group’s failure to generate anticipated sales growth, synergies and/or cost savings from
acquisitions, mergers and other business combinations, could lead to goodwill and intangible
asset impairments.
The Group periodically acquires and disposes of businesses to achieve its strategic objectives,
and will continue to consider both as a means to pursue its strategic priorities. In 2025, the Group
announced the acquisition of eDynamic Learning, a leading Career and Technical Education (CTE)
curriculum solutions provider, enabling us to broaden capabilities and scale our position in the
fast-growing Early Careers space. However, acquisitions may involve significant risks and
uncertainties, including: difficulties in integrating acquired businesses to realise anticipated sales
growth, synergies and/or cost savings; diversion of management attention from other business
concerns or resources; and diversion of resources that are needed in other parts of our business.
If these risks are not managed, acquisitions could result in goodwill and intangible asset
impairments or detriment to our existing businesses.
Divestitures also involve risks and uncertainties that could adversely affect our business, results
of operations and financial condition including, among others, the inability to find potential
buyers on favourable terms, disruption to our business and/or diversion of management
attention from other business concerns, loss of key employees, and possible retention of
certainliabilities related to the divested business.
Risks relating to the Group’s Responsibility & Reputation
The Group’s business depends on a strong brand, and any failure to maintain, protect and
enhance its brand would hurt its ability to retain or expand its business.
Protecting the Group’s brands and reputation is critical to maintaining and expanding the
Group’s business and will depend largely on its ability to maintain its customers’ trust in its
solutions and in the quality and integrity of its products and services, including how it protects
thedata and privacy of customers and users. During 2025, the Group strengthened capabilities
to support business growth by establishing a unified marketing organisation, enhancing both
strategic alignment and operational efficiency. The Group must also navigate the increasing
divergence of stakeholder perspectives in some of our largest markets and ensure that our
brandcontinues to reflect shifting views on certain matters, while maintaining our key values
andobjectives. Beyond protection, strengthening the Pearson brand will enable the Group to
engage with governments, administrators, teachers, learners, and influencers more effectively.
Ifthe Group does not successfully maintain a strong brand, its business could be harmed.
Security breaches involving our information technology systems could harm our ability to run our
business and expose us to potential liability and loss of sales.
While we believe the monitoring and security measures we have in place are robust, the Group
still faces some risks from malicious attacks on its systems including cyber security incidents that
may result from evolving threat vectors and attack techniques. These attacks have, in the past
led, and could in the future, lead to temporary loss of system availability or breaches of sensitive
information. For example, a number of companies have experienced high-profile data breaches
and incidents of fraud perpetrated through the use of deep fakes and other social engineering
techniques. Such incidents have previously impacted our customer experience and the Group’s
reputation and could result in financial loss. Despite the controls and processes in place,
unauthorised disclosures of personal information have occurred and may happen again,
including due to software malfunctions affecting IT controls or vulnerabilities introduced
throughthird-party systems or service providers.
Information security and cyber risk are constantly evolving, influenced by factors such as
increasing customer demand for strong security, compliance requirements, the digital
revolution, greater use of the cloud, larger data volumes, and more sophisticated attack
strategies, which may include the use of generative AI in an effort to defeat security measures.
The Group manages large volumes of personal data, including that of employees, customers,
students, and citizens, as well as other sensitive business-critical data like financial information
and intellectual property. Despite our security measures, threat actors, including individuals,
criminal organisations and state-sponsored operatives, have occasionally gained unauthorised
access to the Group’s data and may do so in the future, including through incidents affecting
third-party vendors or cloud service providers.
Any perceived or actual unauthorised disclosure of personal data or confidential information,
whether through a breach of the Group’s network, a third-party partner, unauthorised access,
employee theft, misuse, or error, could harm the Group’s reputation, affect its ability to attract and
retain customers, disrupt business operations, or lead to regulatory investigations and/or claims or
litigation. Additionally, the Group could incur significant costs in complying with relevant laws and
regulations regarding the protection of personal data and confidential information, payments due
to cyber extortion, remediation, notification, or responding to regulatory investigations.
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Changes to data privacy legislation must also be monitored and acted upon to ensure the
Groupremains in compliance across different markets, many of which are taking increasingly
divergent approaches to the protection of personal information in the age of AI. This will require
the Group to adapt further to accommodate jurisdictional variations, including by developing our
products in a more flexible way to meet such requirements, which may result in additional cost
and/or investments.
Countries where the Group operates or serves customers continue to adopt data protection
legislation, with enforcement increasingly emphasising transparency and customer choice. This
includes requirements relating to AI-driven personalised services and data breach management,
reflecting customers’ growing awareness and sophistication regarding data protection.
Failure to provide the appropriate level of transparency and control in the Group’s products
could increase the regulatory, commercial and/or reputational risks that the Group faces with
anyor all of its various stakeholders.
A control breakdown or service failure in the Group’s testing businesses could result in financial
loss and reputational damage.
The Group’s testing businesses, including those in Assessment & Qualifications, Enterprise
Learning & Skills and English Language Learning, involve complex contractual relationships with
both government agencies and commercial customers for the provision of various testing
services. The Group’s financial results, growth prospects and/or reputation may be adversely
affected if these contracts and relationships are poorly managed.
There are inherent risks associated with the Group’s testing businesses, both in the US and the
UK. A service failure caused by a breakdown in testing and assessment processes could lead to a
mis-grading of student tests and/or late delivery of test results to students and their schools. The
failure to meet expected service standards and/or a late or erroneous delivery of qualification
results have in the past and/or could in the future leave the Group subject to regulatory sanctions
(including fines), legal claims, penalty charges under contracts, non-renewal of contracts and/or
suspension or withdrawal of its accreditation to conduct tests. It is possible that any such events
described above would result in adverse publicity, which may affect the Group’s ability to retain
existing contracts and/or obtain new customers.
Risks associated with identity verification and related data collection could lead to claims or
penalties.
The Group is often contractually required to take measures to validate the identity of learners,
especially those completing assessments. In certain jurisdictions, companies, including Pearson,
have faced legal claims for the collection of or use of information obtained, particularly in relation
to biometric information, which have resulted and could in the future result in settlements. The
Group takes steps to comply with evolving legal requirements but there is no guarantee that its
efforts will be sufficient to protect the Group from all potential issues, which could result in
potential fines, penalties, judgments or settlements unfavourable to the Group, especially if not
covered by the Group’s insurance cover.
Failure to effectively manage risks associated with compliance with global and local anti-bribery
and corruption (ABC) legislation could result in costly legal investigations and/or adversely
impact the Group’s reputation.
The Group is committed to an effective compliance programme in keeping with changing
regulatory expectations, and it is also committed to conducting business in a legal and ethical
manner in compliance with local and international statutory requirements and standards
applicable to its business. Despite those commitments, there is a risk that the Group’s
management, employees or representatives may take actions that violate applicable laws and
regulations, including those regarding accurate keeping of books and records or prohibiting the
making of improper payments for the purposes of obtaining or keeping business, including laws
such as the US Foreign Corrupt Practices Act, the UK Bribery Act, the UK Economic Crime and
Corporate Transparency Act and other applicable anti-fraud legislation. Any regulatory inquiry or
investigations could be costly, require a significant amount of management’s time and attention,
adversely impact the Group’s reputation, or lead to litigation and financial impacts.
Failure to comply with antitrust and competition legislation and/or legal or regulatory proceedings
could result in substantial financial cost and/or adversely impact the Group’s reputation.
The Group is subject to global and local antitrust and competition law. Although the Group has
policies in place and is committed to conducting business in compliance with local and
international laws, there is a risk that management, employees or representatives may act in a way
that violates applicable antitrust or competition laws. Further, the Group and its subsidiaries have
been and may in the future be subject to legal and regulatory investigation and proceedings in
the countries in which the Group operates. These proceedings could result in greater scrutiny of
the Group’s operations in other countries for anti-competitive behaviour and, in the worst case,
result in substantial financial penalties. Any such circumstances could also have an adverse
impact on the Group’s reputation.
Failure to adequately protect the health, safety and wellbeing of the Group’s employees,
learners and other stakeholders could adversely impact the Group’s reputation, profitability, and
future growth.
Although the Group has invested in global policies, procedures and controls to safeguard the
health, safety and wellbeing of its employees, learners and other stakeholders, accidents or
incidents have occurred and could still occur due to known or unforeseen risks, causing injury or
harm to individuals and impacting the Group’s business operations. This has the potential to lead
to legal impact, including criminal and civil litigation, reputational impact and/or business disruption
which in turn could lead to operational loss for, and reduction in the profitability of, the Group.
Failure to ensure security for the Group’s staff, learners, and assets, due to increasing numbers
of, and variety of, local and global threats, could impact the Group’s operations, financial
performance and reputation.
Pearson is a global business with locations in diverse, sometimes high-risk, locations worldwide.
Although it has protective measures in place to secure its staff, learners and assets, the Group
could still be impacted by external threats, such as localised incidents, terrorist attacks, strikes or
extreme weather. Future occurrences could cause harm to individuals and/or disrupt business
operations. These have the potential to lead to operational loss, a reduction in profitability and
impact on the Group’s global reputation.
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Other Significant Near-term and Emerging Risks
Sustainability risks may adversely impact the Group’s business, if not managed appropriately.
The Group considers sustainability risks no differently to the way it manages any other business
risk. Expectations around climate commitments and measurements change on a regular basis.
Afailure to comply with relevant standards, or other sustainability-related laws or regulations,
whether in the UK or elsewhere, could adversely affect the Group’s reputation and have a
negative impact on its relations with employees, customers and/or business partners. Costs
associated with climate-transition which cannot be fully managed by decarbonisation activities
may lead to decreased margins.
A lack of sufficient capital resources could adversely impact the Group’s ability to operate.
Financial crises impact financial markets periodically, which could result in constrained capital
markets, bank failures and loss of capital for the Group, or an inability to access debt capital
markets as planned.
High levels of global inflation could increase costs and adversely impact the Group’s profits and
financial performance.
High ongoing global inflation factors have increased and could further increase the cost of
production for Pearson, particularly through wage inflation. There is no guarantee that the Group
would be able to continue to manage increased costs or generate sales successfully to mitigate
the effects of inflation, which could lead to reduced earnings and ability to invest in future growth.
Business efficiency and transformation initiatives may adversely affect the Group’s financial
performance and ability to execute its strategy if not successfully implemented.
As part of its operating plan, the Group is undertaking a number of business efficiency and
transformation initiatives over the medium to long term to support its strategic and growth
objectives. The Group’s financial performance and ability to fund future investment depend,
inpart, on the timely and effective execution of these initiatives and the realisation of
anticipatedbenefits.
These initiatives are complex and may involve changes to business processes, systems,
organisational structures, and cost bases, as well as upfront expenditures. There can be no
assurance that the Group will implement these initiatives within expected timeframes or achieve
the anticipated efficiencies, cost savings, or performance improvements. Delays, execution
challenges, or unanticipated costs could adversely affect the Group’s financial performance
andits ability to execute its strategic plans.
Geopolitical conflict and instability could adversely affect the Group’s operations and financial
performance.
The Group has staff and offices globally, which could be impacted by geopolitical conflicts,
military actions, sanctions, blockades, or other geopolitical instability as a result of geopolitical
issues. Some of the Group’s operations and development activities are located in regions that
may be subject to heightened geopolitical risk, and any disruption to personnel, facilities, or
infrastructure in such regions could adversely affect product development, innovation timelines,
service quality, and business continuity, which in turn could negatively impact the Group’s
operations, sales, and financial performance.
Certain additional information on the Company
Information on the Company
Pearson was incorporated and registered in 1897 under the laws of England and Wales as a
limited company and re-registered under the UK Companies Act as a public limited company in
1981. The Group conducts its operations primarily through its subsidiaries and other affiliates.
Its principal executive offices are located at 80 Strand, London WC2R 0RL, United Kingdom
(telephone: +44 20 7010 2000) and its website address is https://plc.pearson.com/.
TheCompany is registered in England and Wales under the company number 00053723.
The SEC maintains an Internet site that contains reports, proxy and information statements,
andother information regarding issuers that file electronically with the SEC. The address of
thatsite is http://www.sec.gov.
Operating cycles
The Group determines a normal operating cycle separately for each entity/cash generating unit
with distinct economic characteristics. The ‘normal operating cycle’ for each of the Group’s
businesses is primarily based on the expected period over which content or services will
generate cash flows. The Higher Education courseware market is primarily driven by an adoption
cycle, with colleges and professors typically refreshing their courses and selecting revised
programs on a regular basis, often in line with the release of new content or new technology
offerings. The Company renews its product development assets to reflect new content and
capabilities which enhance the attractiveness of its offering to both educators and learners.
Analysis of historical data shows that the typical life cycle of Higher Education content is up to
fiveyears but varies by product. In addition to content, the Group also develops technology
platforms for products and the life cycle for these platforms can be in excess of the five years
cycle for content. Again, the operating cycle for content and platforms mirrors the market cycle.
Historically for a major content refresh a development phase of typically 12 to 18 months for
Higher Education precedes the period during which the Company receives and delivers against
orders for the products it has developed for the programme.
The operating cycles in respect of the Group’s Professional and Clinical content are more
specialised in nature as they relate to educational or heavy reference products released into
smaller markets (e.g. the financial training and IT sectors). Nevertheless, in these markets, there is
still a regular cycle of product renewal, in line with demand which management monitor. Typically,
the life cycle is five years for Professional content and seven years for Clinical content. Elsewhere
in the Group, operating cycles are typically less than one year.
Competition
The Group’s businesses operate in highly competitive markets. The Group faces competitive
threats both from large media players and from smaller businesses, online and mobile portals and
operators in the digital arena that provide alternative sources of content. Alternative distribution
channels, e.g. digital format, the internet, online retailers, and growing delivery platforms (e.g.
e-readers or tablets), pose both threats and opportunities to traditional publishing business
models, potentially impacting both sales volumes and pricing.
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In Assessment & Qualifications, the Group competes with other companies offering test
development and administration including Cambium, Data Recognition Corp (DRC), Educational
Testing Service (ETS), and NWEA. Pearson Professional Assessments competes with companies
such as Prometric, PSI and Meazure Learning, as well as a number of other modular players. The
Clinical Assessment business competes with companies such as MHS and WPS. The UK &
International Qualifications business competes with companies such as AQA, Cambridge
Assessment and OCR, as well as a number of specialised players.
In Virtual Learning, the Group competes with companies such as Stride in virtual schools, alongside
players that specialise in a particular academic discipline or focus on a learning technology.
In English Language Learning, the Group competes with Oxford University Press, Macmillan and
other publishers within its Institutional segment. In Pearson Test of English, the Group competes
with alternative tests including iELTS and TOEFL. In the online language learning market, the
Group competes with businesses such as Duolingo, Babbel and Busuu, as well as a number of
smaller players.
In Enterprise Learning & Skills, the Vocational Qualifications business competes with companies
such as City & Guilds, alongside other niche and local market providers. The Group’s GED
business competes with companies such as HiSET in high school equivalency. In addition, the
business of content/courseware creation for enterprises competes with providers such as
Skillsoft, and the enterprise data, technology, assessment and learning businesses compete
withlearning platforms such as Guild in education-as-a-benefit, credential platforms such as
Accredible, talent management platforms such as Eightfold.ai, data services such as Emsi, and
skills and ability testing businesses such as SHL.
In Higher Education, the Group competes with other publishers and creators of educational
materials and services. These companies include publishers such as Cengage Learning and
McGraw-Hill Education, as well as non-mainstream publishers.
Competition is based on the ability to deliver quality products and services that address the
specified curriculum needs and appeal to the student, organisations, school boards, educators,
employers and government officials making purchasing decisions.
Intellectual property
The Group’s principal intellectual property assets consist of its:
• trademarks and other rights via its brands (including corporate and business unit brands and
imprints, as well as product and service brands);
• copyrights for its textbook and related educational content and software code; and
• patents and trade secrets related to the innovative methods deployed in its key technologies.
The Group believes it has taken reasonable legal steps to protect its key brands in its major
markets and copyright in its content and has taken appropriate steps to develop a
comprehensive patent programme to ensure appropriate protection of emerging inventions that
are critical to its new business strategies.
Licenses, patents and contracts
The Group is not dependent upon any particular licenses, patents or new manufacturing
processes that are material to its business or profitability. Notwithstanding the foregoing, the
Group’s education business is dependent upon licensed rights since most textbooks and digital
learning tools include content and/or software that is licensed to it by third parties (or assigned
subject to royalty arrangements). In addition, some software products in various business lines
rely upon patents licensed from third parties.
The Group is not materially dependent upon any particular contracts with suppliers or customers,
including contracts of an industrial, commercial or financial nature. The Group’s sales are
diversified, and no individual customer comprised more than 5% of sales in 2025.
Raw materials
Paper remains the principal raw material used by the Group although its use is declining given the
shift to digital products. The bulk of the paper used by Pearson is supplied by its printers. The
Group has not experienced and does not anticipate difficulty in obtaining adequate supplies of
paper for its operations, with sourcing available from numerous suppliers. While prices fluctuate
depending upon local market conditions, the Group has not experienced extensive volatility in
fulfilling paper requirements. In the event of a sharp increase in paper prices, including those
driven by tariffs, the Group has a number of alternatives to minimise the impact on its operating
margins, which include modifying the grades of paper used in production.
Government regulation
The manufacture of certain products in various markets is subject to governmental regulation
relating to the discharge of materials into the environment. Operations are also subject to the
risks and uncertainties attendant to doing business in numerous countries. Some of the countries
in which the Group conducts these operations maintain controls on the repatriation of earnings
and capital and restrict the means available for hedging potential currency fluctuation risks.
The operations that are affected by these controls, however, are not material. Accordingly, these
controls have not significantly affected the Group’s international operations. Regulatory
authorities may have enforcement powers that could have an impact. The Group believes,
however, that in light of the nature of its business the risk of these sanctions does not represent a
material threat.
Legal proceedings
The Group and its subsidiaries are from time to time the subject of legal proceedings incidental
to the nature of its and their operations, including private litigation or arbitrations, governmental
proceedings and investigations by regulatory bodies.
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Additional information for US listing purposes continued
Property, plant and equipment
The Group’s headquarters are located at leasehold premises in London, England. As at 31
December 2025, it owned or leased approximately 700 properties, including approximately 535
testing/teaching centres in over 55 countries worldwide, the majority of which are located in the
United Kingdom and the United States. The other properties owned and leased by the Group
consist mainly of offices and distribution centres. In some cases properties leased by the Group
are then sublet to third parties.
The vast majority of printing is carried out by third-party suppliers. The Group operates a small
digital print operation as part of its Pearson Assessment & Testing businesses which provides
short-run and print-on-demand products, typically custom client applications.
The Group owns the following principal properties at 31 December 2025:
General use of property Location Area in square feet
Warehouse/office Cedar Rapids, Iowa, USA 205,000
Testing Owatonna, Minnesota, USA 126,450
The Group leased the following principal properties at 31 December 2025:
General use of property Location Area in square feet
Office Hudson, New York, USA* 313,285
Office Westminster, London, UK* 274,488
Office Hoboken, New Jersey, USA* 216,273
Office Bloomington, Minnesota, USA* 147,159
Warehouse/office Cedar Rapids, Iowa, USA* 119,682
* Properties have either been fully or partially sublet or are being marketed for sublet.
Off-balance sheet arrangements
The Group does not have any off-balance sheet arrangements, as defined by the SEC for the
purposes of the Form 20-F, that have or are reasonably likely to have a material current or future
effect on the Group’s financial position or results of operations.
Operating and financial review
The financial review for the year ended 31 December 2025 compared to the year ended 31
December 2024 can be found on pages 25-31 of the Strategic report. The financial review for the
year ended 31 December 2024 compared to the year ended 31 December 2023 can be found on
pages 26-32 of our 2024 Annual Report and Accounts on Form 20-F filed with the United States
Securities and Exchange Commission on 14 March 2025.
Directors, senior management and employees
Board practices
As at 28 February 2026, the Group’s Board comprises the Chair, two Executive Directors and
eightNon-Executive Directors. The Articles of Association (as defined below) provide that all the
Directors at the date of the notice convening the Annual General Meeting (AGM) shall retire from
office at the meeting. A retiring Director shall, if willing to act, be eligible for re-appointment. If they
are not re-appointed, they shall retain office until the meeting appoints someone in their place, or if
it does not do so, until the end of the meeting or, if the meeting is adjourned, the end of the
adjourned meeting. The Articles of Association also provide that every Director appointed by the
Board be subject to re-appointment by shareholders at the next AGM following their appointment.
Pearson is listed on the New York Stock Exchange (NYSE). As a listed non-US issuer, the Group is
not required to comply with some of the NYSE’s corporate governance rules, but must disclose
on its website any significant ways in which its corporate governance practices differ from those
followed by US companies under the NYSE listing standards. At this time, the Group believes that
it is in compliance in all material respects with all the NYSE rules except that the Nomination &
Governance Committee is not composed entirely of independent Directors as the Chair, who is
not considered independent under NYSE rules, is a member of this Committee in addition to
independent Directors.
Employees
Through its subsidiaries, the Group has entered into collective bargaining agreements with
employees in various locations. The Group’s management has no reason to believe that it would
not be able to renegotiate any such agreements on satisfactory terms. The Group encourages
employees to contribute actively to the business in the context of their particular job roles and
believes that the relations with its employees are generally good.
Significant changes
Other than those events described in note 36 in the consolidated financial statements, and
seasonal fluctuations in borrowings, there has been no significant change to the Group’s financial
condition or results of operations since 31 December 2025. The Group’s borrowings fluctuate by
season due to the effect of the school year on working capital requirements. Assuming no share
buyback programmes, acquisitions or disposals, the maximum level of net debt normally occurs
in the third quarter, and the minimum level of net debt normally occurs in December.
Listing
The principal trading market for the Group’s ordinary shares is the London Stock Exchange, on
which they trade under the symbol ‘PSON’. Its ordinary shares also trade in the United States in
the form of ADSs evidenced by ADRs under a sponsored ADR facility with JPMorgan Chase Bank,
as depositary. The Group established this facility in March 1995 and amended it in August 2014 in
connection with its NYSE listing, and in January 2025 in connection with the appointment of
JPMorgan Chase Bank as depositary thereunder. Each ADS represents one ordinary share.
The ADSs trade on the NYSE under the symbol ‘PSO’.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 252
Articles of Association
The Group summarises below the material provisions of its articles of association, as amended
(the ‘Articles of Association’), which have been filed as an exhibit to this annual report on Form
20-F for the year ended 31 December 2025. The summary below is qualified entirely by reference
to the Articles of Association. In conformity with the UK Companies Act 2006 (the Act), the Group
has multiple business objectives and purposes and is authorised to do such things as the Board
may consider fit to further its interests or incidental or conducive to the attainment of its
objectives and purposes.
Directors’ powers
The Group’s business shall be managed by the Board of Directors and the Board may exercise all
such of its powers as are not required by law or by the Articles of Association or by any directions
given by the Company by special resolution, to be exercised in a general meeting.
Interested Directors
For the purposes of section 175 of the Act, the Board may authorise any matter proposed to it
which would, if not so authorised, involve a breach of duty by a Director under that section,
including, without limitation, any matter which relates to a situation in which a Director has, or can
have, an interest which conflicts, or possibly may conflict, with the interests of the Company.
Anysuch authorisation will be effective only if:
a. any requirement as to quorum at the meeting at which the matter is considered is met without
counting the Director in question or any other interested Director; and
b. the matter was agreed to without their voting or would have been agreed to if their votes had
not been counted.
The Board may (whether at the time of the giving of the authorisation or subsequently) make any
such authorisation subject to any limits or conditions it expressly imposes but such authorisation
is otherwise given to the fullest extent permitted. The Board may vary or terminate any such
authorisation at any time.
Provided that he or she has disclosed to the Board the nature and extent of his or her interest (or
else that the Director is not aware of the interest or not aware of the transaction or arrangement in
question, or else that the interest cannot be reasonably regarded to give rise to a conflict of
interest), a Director notwithstanding his or her office:
a. may be a party to, or otherwise interested in, any transaction or arrangement with the
Company or in which the Company is otherwise (directly or indirectly) interested;
b. may act by himself or herself or his or her firm in a professional capacity for the Company
(otherwise than as auditor) and he or she or his or her firm shall be entitled to remuneration for
professional services as if he or she were not a Director;
c. may be a Director or other officer of, or employed by, or a party to a transaction or
arrangement with, or otherwise interested in, any body corporate in which the Company is
otherwise (directly or indirectly) interested.
A Director shall not, by reason of his or her office, be accountable to the Company for any
remuneration or other benefit which he or she derives from any office or employment or from any
transaction or arrangement or from any interest in any body corporate:
a. the acceptance, entry into or existence of which has been approved by the Board (subject, in
any such case, to any limits or conditions to which such approval was subject); or
b. which he or she is permitted to hold or enter into by virtue of paragraph (a), (b) or (c) above;
nor shall the receipt of any such remuneration or other benefit constitute a breach of his or her
duty under section 176 of the Act. A Director shall be under no duty to the Company with respect
to any information which he or she obtains or has obtained otherwise than as a Director of the
Company and in respect of which he or she owes a duty of confidentiality to another person.
However, to the extent that his or her relationship with that other person gives rise to a conflict of
interest or possible conflict of interest, the preceding sentence only applies if the existence of
such relationship has been approved by the Board. In such circumstances, the Director shall not
be in breach of the general duties he or she owes to the Company by virtue of sections 171 to 177
of the Act because he or she fails:
a. to disclose any such information to the Board or to any Director or other officer or employee
of the Company; and/or
b. to use or apply any such information in performing his or her duties as a Director of the
Company.
Where the existence of a Director’s relationship with another person has been approved by the
Board and his or her relationship with that person gives rise to a conflict of interest or possible
conflict of interest, the Director shall not be in breach of the general duties he or she owes to the
Company by virtue of sections 171 to 177 of the Act because he or she:
a. absents himself or herself from meetings of the Board at which any matter relating to the
conflict of interest or possible conflict of interest will or may be discussed or from the
discussion of any such matter at a meeting or otherwise; and/or
b. makes arrangements not to receive documents and information relating to any matter which
gives rise to the conflict of interest or possible conflict of interest sent or supplied by the
Company and/or for such documents and information to be received and read by a
professional adviser, for so long as he or she reasonably believes such conflict of interest or
possible conflict of interest subsists.
Except as stated below, a Director shall not vote in respect of any contract or arrangement or any
other proposal whatsoever in which he or she has an interest which is, to his or her knowledge, a
material interest, otherwise than by virtue of his or her interests in shares or debentures or other
securities of or otherwise in or through the Company. A Director shall not be counted in the quorum
at a meeting of the Board in relation to any resolution on which he or she is debarred from voting.
Notwithstanding the foregoing, a Director will be entitled to vote, and be counted in the quorum,
on any resolution concerning any of the following matters:
• the giving of any guarantee, security or indemnity in respect of money lent or obligations
incurred by him or her or by any other person at the request of or for the benefit of the
Company or any of its subsidiaries;
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Additional information for US listing purposes continued
• the giving of any guarantee, security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which he himself or she herself has
assumed responsibility in whole or in part and whether alone or jointly with others under a
guarantee or indemnity or by the giving of security;
• any proposal relating to the Company or any of its subsidiary undertakings where it is offering
securities in which offer a Director is or may be entitled to participate as a holder of securities
or in the underwriting or sub-underwriting of which a Director is to participate;
• any proposal relating to another Company in which he or she and any persons connected with
him or her do not to his or her knowledge hold an interest in shares (as that term is used in
sections 820 to 825 of the Act) representing one percent or more of either any class of the
equity share capital, or the voting rights, in such Company;
• any proposal relating to an arrangement for the benefit of the employees of the Company or
any of its subsidiary undertakings which does not award him or her any privilege or benefit not
generally awarded to the employees to whom such arrangement relates; and
• any proposal concerning insurance that the Company proposes to maintain or purchase for
the benefit of Directors or for the benefit of persons, including Directors.
Where proposals are under consideration concerning the appointment of two or more Directors
to offices or employment with us or any Company in which the Group is interested, these
proposals may be divided and considered separately and each of these Directors, if not
prohibited from voting under the provisions of the eighth paragraph before this one, will be
entitled to vote and be counted in the quorum with respect to each resolution except that
concerning his or her own appointment.
Retirement and re-appointment of Directors
At every AGM, all the Directors at the date of the notice convening the AGM shall retire from
office. A retiring Director shall, if willing to act, be eligible for re-appointment. If he or she is not
re-appointed, he or she shall retain office until the meeting appoints someone in his or her place,
or if it does not do so, until the end of the meeting, or until the end of the adjourned meeting if the
meeting is adjourned.
Where a Director has been reappointed after notice of the AGM has been given, that Director
shall retire at the next AGM of which notice is first given after his or her appointment as Director.
Ifthere is an insufficient number of appointed or re-appointed Directors at any of the Company’s
AGMs rendering the Board inquorate, all Directors shall be automatically re-appointed only for
the purposes of filling vacancies and convening general meetings of the Company and to
perform such duties as are appropriate to maintain the Company as a going concern and to
enable it to comply with its legal and regulatory obligations. The Directors are required to
convene a further general meeting of the Company as soon as reasonably practicable to allow
new Directors to be appointed, and such Directors who were not appointed at the original
general meeting shall subsequently retire.
Borrowing powers
The Board of Directors may exercise all powers to borrow money and to mortgage or charge
theGroup’s undertaking, property and uncalled capital and to issue debentures and other
securities, whether outright or as collateral security for any of its or any third party’s debts,
liabilities or obligations.
The Board of Directors must restrict the borrowings in order to secure that the aggregate
amountof undischarged monies borrowed by the Group (and any of its subsidiaries), but
excluding any intra-group debts, shall not at any time (without the previous sanction of the
Company in the form of an ordinary resolution) exceed a sum equal to twice the aggregate
oftheadjusted capital and reserves.
Other provisions relating to Directors
Under the Articles of Association, Directors are paid out of the Group’s funds for their services
asit may from time to time determine by ordinary resolution and, in the case of Non-Executive
Directors, up to an aggregate of £1,000,000 per year or such other amounts as resolved by the
shareholders at a general meeting. Any Director who is not an Executive Director and who
performs special services which in the opinion of the Board are outside the scope of the ordinary
duties of a Director, may be paid such extra remuneration by way of additional fee, salary,
commission or otherwise as the Board may determine in accordance with the Group’s
remuneration policy. Under the Articles of Association, Directors currently are not required
tohold any share qualification. However, the remuneration policy mandates a shareholding
guideline for Executive Directors which they are expected to build towards over a
specifiedperiod.
General meetings
Pursuant to the Act, the Company must hold an AGM (within six months beginning with the day
following its accounting reference date) at a place and time determined by the Board. The
following matters are usually considered at an AGM:
• approval of final dividend;
• consideration of the Company’s annual accounts together with associated reports of the
Board of Directors and auditors;
• appointment or re-appointment of Directors;
• appointment or re-appointment of the auditors, and authorisation for the Audit Committee to
determine and fix the remuneration of the auditors; and
• renewal, limitation, extension, variation or grant of any authority to the Board in relation to the
allotment and repurchase of securities.
The Board may call a general meeting whenever it thinks fit. If at any time there are not within the
United Kingdom sufficient Directors capable of acting to form a quorum, any Director or any two
members may convene a general meeting in the same manner as nearly as possible as that in
which meetings may be convened by the Board.
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No business shall be dealt with at any general meeting unless a quorum is present when the
meeting proceeds to business. Three members present in person or by proxy and entitled to
voteshall be a quorum for all purposes. A corporation being a member shall be deemed to be
personally present if represented by its duly authorised representative.
If a quorum for a meeting convened at the request of shareholders is not present within 15
minutes of the appointed time (or if during a meeting such a quorum ceases to be present), the
meeting will be dissolved. In any other case, the general meeting will be adjourned to such
timeand with such means of attendance and participation as the Chair of the meeting may
determine. If at that rescheduled meeting a quorum is not present within fifteen minutes from
thetime appointed for holding the meeting, the shareholders present in person or by proxy
willbe a quorum.
The Chair or, in his or her absence, the Deputy Chair or any other Director nominated by the Board,
will preside as Chair at every general meeting. If no Director is present at the general meeting or
no Director consents to act as Chair, the shareholders present shall elect one of their number to
be Chair of the meeting.
The Board may resolve to enable persons entitled to attend and participate in a general meeting
to do so by simultaneous attendance and participation by means of electronic facility or facilities
and determine the means, or all different means, of attendance and participation used in relation
to a general meeting. The members present in person or by proxy by means of electronic facility
or facilities shall be counted in the quorum for, and entitled to participate in the general meeting
in question. That meeting shall be duly constituted and its proceedings valid if the Chair of the
meeting is satisfied that adequate facilities are available throughout the meeting to ensure that
members attending the meeting by all means (including by means of electronic facility or
facilities) are able to:
a. participate in the business for which the meeting has been convened;
b. hear all persons who speak at the meeting; and
c. be heard by all persons present at the meeting.
A member seeking to be present in person or by proxy at a general meeting by means of
electronic facility or facilities is responsible for ensuring they have access to and can use the
facility or facilities. The meeting shall be duly constituted and its proceedings valid
notwithstanding the inability of the member to gain access to use the facility or facilities, or the
loss of access to or use of the facility or facilities during the meeting.
Share certificates
Every person whose name is entered as a member in the Company’s Register of Members shall
be entitled to one certificate in respect of each class of shares held (the law regarding this does
not apply to stock exchange nominees). Subject to the terms of issue of the shares, certificates
are issued following allotment or receipt of the relevant transfer by the Group’s registrar,
Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY,
UnitedKingdom.
Share capital
Any share may be issued with such preferred, deferred or other special rights or other restrictions
as may be determined by way of a shareholders’ vote in a general meeting. Subject to the Act, any
shares may be issued which are to be redeemed or are liable to be redeemed at the option of the
Company or the shareholders.
There are no provisions in the Articles of Association which discriminate against any existing or
prospective shareholder as a result of such shareholder owning a substantial number of shares.
Subject to the terms of the shares which have been issued, the Directors may from time to time
make calls upon the shareholders in respect of any moneys unpaid on their shares, provided
that(subject to the terms of the shares so issued) no call on any share shall be payable at less than
14 clear days from the last call. The Directors may, if they see fit, receive from any shareholder
willing to advance the same, all and any part of the moneys uncalled and unpaid upon any shares
held by him or her.
Changes in capital
The Group may, from time to time by ordinary resolution subject to the Act:
• consolidate and divide all or any of its share capital into shares of a larger nominal amount than
its existing shares; or
• sub-divide all of or any of its existing shares into shares of smaller nominal amounts.
The Group may, from time to time, increase its share capital by allotting new shares in accordance
with the prescribed threshold authorised by shareholders at the last AGM and subject to the
consents and procedures required by the Act. The Group may also, by special resolution, reduce
its share capital.
Voting rights
Every holder of ordinary shares present in person or by proxy at a meeting of shareholders has
one vote on a vote taken by a show of hands. On a poll, every holder of ordinary shares who is
present in person or by proxy has one vote for every 25 pence of nominal share capital (being one
ordinary share) of which he or she is the holder. Voting at any meeting of shareholders is usually on
a poll rather than by show of hands. Voting on a poll is more transparent and equitable because it
includes the votes of all shareholders, including those cast by proxies, rather than just the votes of
those shareholders who attend the meeting. A poll may also be demanded by:
• the Chair of the meeting;
• at least three shareholders present in person or by proxy and entitled to vote;
• any shareholder or shareholders present in person or by proxy representing not less than
one-tenth of the total voting rights of all shareholders having the right to vote at the meeting;
or
• any shareholder or shareholders present in person or by proxy holding shares conferring a
right to vote at the meeting being shares on which the aggregate sum paid up is equal to not
less than one-tenth of the total sum paid up on all shares conferring that right.
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Additional information for US listing purposes continued
Dividends
Holders of ordinary shares are entitled to receive dividends out of Group profits that are available
by law for distribution, as the Group may declare by ordinary resolution, subject to the terms of
issue thereof.
However, no dividends may be declared in excess of an amount recommended by the Board of
Directors. The Board may pay interim dividends on the shares of any class as it deems fit. It may
invest or otherwise use all dividends left unclaimed for six months after having been declared for
its benefit, until claimed. All dividends unclaimed for a period of eight years after having been
declared will be forfeited and revert to the Group.
The Directors may, with the sanction of an ordinary resolution of the shareholders, offer any
holders of ordinary shares the right to elect to receive ordinary shares credited as fully paid, in
whole or in part, instead of cash in respect of such dividend.
The Directors may deduct from any dividend payable to any shareholder all sums of money (if any)
presently payable by that shareholder to the Group on account of calls or otherwise in relation to
its shares.
Dividends may be paid by such method or combination of methods as the Board, in its absolute
discretion, may decide. Different methods of payment may apply to different holders or groups
of holders.
Liquidation rights
In the event of the Group’s liquidation, after payment of all liabilities, its remaining assets would
be used to repay the holders of ordinary shares the amount they paid for their ordinary shares.
Any balance would be divided among the holders of ordinary shares in proportion to the nominal
amount of the ordinary shares held by them.
Other provisions of the Articles of Association
Whenever the Group’s capital is divided into different classes of shares, the special rights
attached to any class may, unless otherwise provided by the terms of the issue of the shares of
that class, be varied or abrogated, either with the written consent of the holders of 75% of the
issued shares of theclass (excluding any issued as treasury shares) or with the sanction of a
special resolution passed at a separate meeting of these holders. Conditions set out in the
Articles of Association with respect to the variation of rights are subject to the provisions of the
Act. In the event that a shareholder or other person appearing to the Board of Directors to be
interested in ordinary shares fails to comply with a notice requiring him or her to provide
information with respect to their interest in voting shares pursuant to section 793 of the Act, the
Board may serve that shareholder with a notice ofdefault. After service of a default notice, that
shareholder shall not be entitled to attend or vote atany general meeting or at a separate
meeting of holders of a class of shares or on a poll until heor she has complied in full with the
Group’s information request.
If the shares described in the default notice represent at least a quarter of 1% in nominal value of the
issued ordinary shares, then the default notice may additionally direct that in respect of those shares:
• the Group will not pay dividends (or issue shares in lieu of dividends); and
• the Group will not register transfers of shares unless (i) the shareholder is not itself in default as
regards supplying the information requested and the transfer, when presented for registration,
is accompanied by a certificate from the shareholder in such form as the Board of Directors may
require to the effect that, after due and careful inquiry, the shareholder is satisfied that no
person in default is interested in any of the ordinary shares which are being transferred; (ii) the
transfer is an approved transfer, as defined in the Articles of Association; or (iii) the registration of
the transfer is required by the Uncertificated Securities Regulations 2001.
No provision of the Articles of Association expressly governs the ordinary share ownership
thresholdabove which shareholder ownership must be disclosed. Under the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority, any person who acquires,
either alone or, in specified circumstances, with others an interest in the Company’s voting share
capital equal to or in excess of 3% comes under an obligation to disclose prescribed particulars
to the Company in respect of those ordinary shares. A disclosure obligation also arises where a
person’s notifiable interests fall below 3%, or where, at or above 3%, the percentage of the
Company’s voting share capital in which a person has a notifiable interest reaches, exceeds or
falls below 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, and each 1% threshold thereafter up to 100%.
Limitations affecting holders of ordinary shares or ADSs
Under English law and Articles of Association, persons who are neither UK residents nor UK
nationals may freely hold, vote and transfer ordinary shares in the same manner as UK residents or
nationals.
Material contracts
The Group is not currently party to any contracts outside the ordinary course of business, other
than the Trust Deed entered into with respect to the (i) £350.0 million aggregate principal amount
of 3.750% guaranteed notes due 2030 and (ii) £350.0 million aggregate principal amount of
5.375% guaranteed notes due 2034, in each case issued by a subsidiary of, and guaranteed by,
Pearson, which are filed as Exhibit 2.1 and Exhibit 2.2 to the annual report on Form 20-F for the
year ended 31 December 2025, respectively.
Executive employment contracts
The Group has entered into agreements with each of its Executive Directors pursuant to which
such Executive Director is employed by the Group. These agreements describe the duties of
such Executive Director and the compensation to be paid by us.
It is the Group’s policy that it may terminate the Executive Directors’ service agreements by
giving no more than 12 months’ notice. As an alternative, the Group may at its discretion pay in
lieu of that notice. Payment-in-lieu of notice may be made in equal monthly instalments from the
date of termination to the end of any unexpired notice period. In the case of Executive Directors,
payment-in-lieu of notice in instalments may also be subject to mitigation and reduced, taking
into account earnings from alternative employment. For Executive Directors, pay in lieu of notice
comprises 100% of the annual salary at the date of termination and the annual cost to the
Company of providing pension and all other benefits. The Group may, depending on the
circumstances of thetermination, determine that it will not pay the Director in lieu of notice and
may instead terminate a Director’s contract in breach and make a damages payment, taking into
account as appropriate the Director’s ability to mitigate their loss.
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Exchange controls
There are no UK Government laws, decrees, regulations or other legislation which restrict or which
may affect the import or export of capital, including the availability of cash and cash equivalents
for use by us or the remittance of dividends, interest or other payments to non-resident holders
of the Group’s securities, except as otherwise described under ‘Tax Considerations’ below.
Tax considerations
The following is a discussion of the material US federal income tax considerations and UK tax
considerations arising from the acquisition, ownership and disposition of ordinary shares and
ADSs by a US holder. A US holder is:
• an individual citizen or resident of the US, or
• a corporation created or organised in or under the laws of the US or any of its political
subdivisions, or
• an estate or trust the income of which is subject to US federal income taxation regardless
ofitssource.
This discussion deals only with ordinary shares and ADSs that are held as capital assets by a US
holder, and does not address tax considerations applicable to US holders that may be subject to
special tax rules, such as:
• dealers or traders in securities or currencies,
• financial institutions or other US holders that treat income in respect of the ordinary shares or
ADSs as financial services income,
• insurance companies,
• tax-exempt entities,
• persons acquiring shares or ADSs in connection with employment,
• US holders that hold the ordinary shares or ADSs as a part of a straddle or conversion
transaction or other arrangement involving more than one position,
• US holders that own, or are deemed for US tax purposes to own, 10% or more of the total
combined voting power of all classes of the Group’s voting stock,
• US holders that have a principal place of business or ‘tax home’ outside the United States, or
• US holders whose ‘functional currency’ is not the US dollar.
For US federal income tax purposes, holders of ADSs will be treated as the owners of the ordinary
shares represented by those ADSs. In practice, HM Revenue & Customs (HMRC) will also regard
holders of ADSs as the beneficial owners of the ordinary shares represented by those ADSs,
although case law has cast some doubt on this. The discussion below assumes that HMRC’s
position is followed.
In addition, the following discussion assumes that JPMorgan Chase Bank will perform its
obligations as depositary in accordance with the terms of the depositary agreement and any
related agreements.
Because US and UK tax consequences may differ from one holder to the next, the discussion set
out below does not purport to describe all of the tax considerations that may be relevant to you
and your particular situation. Accordingly, you are advised to consult your own tax adviser as to
the US federal, state and local, UK and other, including foreign, tax consequences of investing in
the ordinary shares or ADSs. Except where otherwise indicated, the statements of US and UK tax
law set out below are based on the laws, interpretations and tax authority practice in force or
applicable as of 28 February 2026 and are subject to any changes occurring after that date,
possibly with retroactive effect.
UK income taxation of distributions
The UK does not impose dividend withholding tax on dividends paid by the Company.
A US holder that is not resident in the UK for UK tax purposes and does not carry on a trade,
profession or vocation in the UK through a branch or agency (or in the case of a company a
permanent establishment) to which the ordinary shares or ADSs are attributable will not
generallybe liable to pay UK tax on dividends paid by the Company.
US income taxation of distributions
Distributions that the Group makes with respect to the ordinary shares or ADSs, other than
distributions in liquidation and distributions in redemption of stock that are treated as exchanges,
will be taxed to US holders as ordinary dividend income to the extent that the distributions do
notexceed the Group’s current and accumulated earnings and profits. The amount of any
distribution will equal the amount of the cash distribution. Distributions, if any, in excess of the
Group’s current and accumulated earnings and profits will constitute a non-taxable return of
capital to a US holder and will be applied against and reduce the US holder’s tax basis in its
ordinary shares or ADSs. To the extent that these distributions exceed the tax basis of the US
holder in its ordinary shares or ADSs, the excess generally will be treated as capital gain.
Dividends that the Group pays will not be eligible for the dividends received deduction generally
allowed to US corporations under Section 243 of the Code.
In the case of distributions in pounds sterling, the amount of the distributions generally will equal
the US dollar value of the pounds sterling distributed, determined by reference to the spot
currency exchange rate on the date of receipt of the distribution by the US holder in the case of
shares or by JPMorgan Chase Bank in the case of ADSs, regardless of whether the US holder
reports income on a cash basis or an accrual basis. The US holder will realise separate foreign
currency gain or loss only to the extent that this gain or loss arises on the actual disposition of
pounds sterling received. For US holders claiming tax credits on a cash basis, taxes withheld from
the distribution are translated into US dollars at the spot rate on the date of the distribution; for US
holders claiming tax credits on an accrual basis, taxes withheld from the distribution are
translated into US dollars at the average rate for the taxable year.
A distribution by the Company to non-corporate shareholders will be taxed as net capital gain at
a maximum rate of 20%, provided certain holding periods are met, to the extent such distribution
is treated as a dividend under US federal income tax principles. In addition, a 3.8% Medicare tax
will generally be imposed on the net investment income, which generally would include
distributions treated as dividends under US federal income tax principles, of non-corporate
taxpayers whose adjusted gross income exceeds a threshold amount.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 257
Additional information for US listing purposes continued
UK taxation of capital gains
A US holder that is not resident in the UK for UK tax purposes and does not carry on a trade,
profession or vocation in the UK through a branch or agency (or in the case of a company a
permanent establishment) to which the ordinary shares or ADSs are attributable will not generally
be liable for UK taxation on capital gains or eligible for relief for allowable losses, realised on the
sale or other disposal of the ordinary shares or ADSs.
A US holder who is an individual who has been resident for tax purposes in the UK but who ceases
to be so resident or becomes regarded as resident outside the UK for the purposes of any
double tax treaty (‘Treaty Non-resident’) and continues to not be resident in the UK, or continues
to be Treaty Non-resident, for a period of five years or less and who disposes of his ordinary
shares or ADSs during that period may also be liable on his return to the UK to UK tax on capital
gains, subject to any available exemption or relief, even though he or she is not resident in the UK,
or is Treaty Non-resident, at the time of the disposal.
US income taxation of capital gains
Upon a sale or exchange of ordinary shares or ADSs to a person other than Pearson, a US holder
will recognise gain or loss in an amount equal to the difference between the amount realised on
the sale or exchange and the US holder’s adjusted tax basis in the ordinary shares or ADSs. Any
gain or loss recognised will be capital gain or loss and will be long-term capital gain or loss if the
US holder has held the ordinary shares or ADSs for more than one year. Long-term capital gain of
a non-corporate US holder is generally taxed at a maximum rate of 20%. In addition, a 3.8%
Medicare tax will generally be imposed on the net investment income, which generally would
include capital gains, of non-corporate taxpayers whose adjusted gross income exceeds a
threshold amount.
The gain or loss realised by a US holder on the sale or exchange of ordinary shares or ADSs
generally will be treated as US-source gain or loss for US foreign tax credit purposes.
Estate and gift tax
The current Estate and Gift Tax Convention (referred to in this paragraph as the ‘Convention’),
between the US and the UK generally relieves from UK inheritance tax (the equivalent of US estate
and gift tax) the transfer of ordinary shares or of ADSs where the transferor is domiciled in the US
for the purposes of the Convention. This relief will not apply if the ordinary shares or ADSs are part
of the business property of an individual’s permanent establishment in the UK or pertain to the
fixed base in the UK of a person providing independent personal services. If no relief is given
under the Convention, inheritance tax may be charged on death and also on the amount by which
the value of an individual’s estate is reduced as a result of any transfer made by way of gift or
other gratuitous or undervalue transfer, in general within seven years of death, and in certain other
circumstances. In the unusual case where ordinary shares or ADSs are subject to both UK
inheritance tax and US estate or gift tax, the Convention generally provides for tax paid in the UK
to be credited against tax payable in the US or for tax paid in the US to be credited against tax
payable in the UK based on priority rules set forth in the Convention.
Stamp duty
No stamp duty or stamp duty reserve tax (SDRT) will generally be payable in the UK on the
purchase or transfer of an ADS, provided that the ADS, and any separate instrument or written
agreement of transfer, remain at all times outside the UK and that the instrument or written
agreement of transfer is not executed in the UK.
There is, however, a charge to SDRT or stamp duty at the rate of 1.5% of the amount or value of the
consideration or, in some circumstances, the value of the ordinary shares (rounded up to the next
multiple of £5 in the case of stamp duty), where ordinary shares are transferred to a person whose
business is or includes issuing depositary receipts (or to a nominee or agent for such a person), or
to a person whose business is or includes the provision of clearance services (or to a nominee or
agent for such a person). Such 1.5% charge is subject to exceptions, including for (i) transfers
which are made in the course of ‘capital-raising arrangements’ (as defined in sections 72ZA and
97AB of the Finance Act 1986), and (ii) transfers which are made in the course of ‘qualifying listing
arrangements’ (as defined in sections 72ZB and 97AC of the Finance Act 1986) and which do not
affect the beneficial ownership of the ordinary shares in question. Specific professional advice
should be sought in any case where the 1.5% SDRT or stamp duty charge may be applicable.
A transfer for value of the underlying ordinary shares will generally be subject to either stamp duty
or SDRT, normally at the rate of 0.5% of the amount or value of the consideration (rounded up to
the next multiple of £5 in the case of stamp duty). A transfer of ordinary shares from a nominee to
its beneficial owner, including the transfer of underlying ordinary shares from the depositary to an
ADS holder, under which no beneficial interest passes will not be subject to stamp duty or SDRT.
Close company status
The Group believes that the close company provisions of the UK Corporation Tax Act 2010 do
notapply to it.
Documents on display
Copies of the Group’s Memorandum and Articles of Association are filed as exhibits to its annual
report on Form 20-F for the year ended 31 December 2025. We also file reports and other
information with the SEC. These materials, including this annual report and the accompanying
exhibits, are available on the Investors page of the Company’s website at pearsonplc.com
(thecontents of which are not incorporated by reference herein). In addition, shareholders may
request a copy of certain documents referred to in this annual report by writing to us at the
following address: Pearson plc, c/o the Company Secretary, 80 Strand, London WC2R 0RL.
Description of securities other than equity securities
American Depositary Shares
The Group’s ordinary shares trade in the form of ADSs evidenced by ADRs under a
sponsoredADR facility with JPMorgan Chase Bank N.A. as depositary. Each ADS represents
oneordinary share.
The principal executive office of JPMorgan Chase Bank is located at 270 Park Avenue, Floor 8,
New York, New York 10017.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 258
Fees paid by ADR holders
The depositary collects its fees for delivery and surrender of ADSs directly from investors
depositing shares or surrendering ADSs for the purpose of withdrawal, or from intermediaries
acting for them. The depositary collects fees for making distributions to investors by deducting
those fees from the amounts distributed or by selling a portion of distributable property to pay
the fees. The depositary may collect its annual fee for depositary services by deductions from
cash distributions or by directly billing investors or by charging the book-entry system accounts
of participants acting for them. The depositary may generally refuse to provide fee-attracting
services until its fees for those services are paid.
The following table summarises various fees currently charged by JPMorgan Chase Bank N.A.:
Person depositing or withdrawing shares must pay to
the depositary:
For:
$5.00 (or less) per 100 ADSs (or portion of
100 ADSs)
• Issuance of ADSs, including issuances resulting from
a distribution of shares or rights or other property
• Cancellation of ADSs for the purpose of withdrawal,
including if the deposit agreement terminates
$.05 (or less) per ADS • Any cash distribution to ADS registered holders
A fee equivalent to the fee that would be
payable if securities distributed had been
shares and the shares had been
deposited for issuance of ADSs
• Distribution of securities by the depositary to
ADS registered holders of deposited securities
$.05 (or less) per ADS per calendar year • Depositary services
Registration of transfer fees • Transfer and registration of shares on the share
register to or from the name of the depositary or
its agent when shares are deposited or
withdrawn
Expenses of the depositary • Cable, telex and facsimile transmissions (when
expressly provided in the deposit agreement)
• Converting foreign currency to US dollars
Taxes and other governmental charges the
depositary or the custodian have to pay on
any ADS or share underlying an ADS, for
example, stock transfer taxes, stamp duty
or withholding taxes
• As necessary
Any charges incurred by the depositary or
its agents for servicing the deposited
securities
• As necessary
Fees incurred in past annual period and fees to be paid in the future
The depositary reimburses the Company for certain expenses it incurs in relation to the ADS
programme. The depositary provides the Company with a set amount or a portion of the
depositary fees charged in respect of the ADS programme pursuant to arrangements agreed
between the Company and the depositary. Such payments support the establishment and
ongoing maintenance of the ADS programme. The amount and terms of the reimbursement are
agreed between the Company and the depositary. The Company received $47,173.94 as
reimbursement from the depositary, JPMorgan Chase Bank N.A., for 2025.
Controls and procedures
Disclosure controls and procedures
An evaluation of the effectiveness of the Group’s disclosure controls and procedures as of
31 December 2025 was carried out by management, under the supervision and with the
participation of the Chief Executive Officer and Chief Financial Officer. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) were effective as at 31 December 2025 at a reasonable
assurance level. Acontrols system, no matter how well designed and operated, cannot provide
absolute assurance toachieve its objectives.
Management’s annual report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company. Internal control over financial reporting is a process
designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer,
or persons performing similar functions, and effected by the Company’s Board of Directors,
management and other personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Management has assessed the
effectiveness of internal control over financial reporting as of 31 December 2025 based on the
framework in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation,
management has concluded that the Company’s internal control over financial reporting was
effective as of 31 December 2025 based on criteria in Internal Control – Integrated Framework
(2013) issued by the COSO.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 259
Additional information for US listing purposes continued
Ernst & Young LLP, an independent registered public accounting firm, has audited the
effectiveness of the Company’s internal control over financial reporting as of 31 December 2025,
as stated in their report.
Change in internal control over financial reporting
There have been no significant changes in our internal control over financial reporting during the
year ended 31 December 2025 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Audit Committee financial expert
The members of the Board of Directors of Pearson plc have determined that Graeme Pitkethly
isan Audit Committee financial expert within the meaning of the applicable rules and regulations
of the SEC.
Code of ethics
Pearson has adopted a code of ethics (the Pearson Code of Conduct) which applies to all
employees including the Chief Executive Officer and Chief Financial Officer and other
seniorfinancial management. This code of ethics is available on the Group’s website
(www.pearson.com/corporate/code-of-conduct.html). The information on this website is
notincorporated by reference into this report.
Principal accountant fees and services
In line with best practice, the Group’s relationship with Ernst & Young LLP (EY) is governed by its
external auditor policy, which is reviewed and approved annually by the Audit Committee. The
policy establishes procedures to ensure the auditors’ independence is not compromised as well
as defining those non-audit services that EY may or may not provide to Pearson. These allowable
services are in accordance with relevant UK and US legislation.
The Audit Committee approves all audit and non-audit services provided by EY, unless clearly
trivial. Where appropriate, services will be tendered prior to awarding this work to the auditor.
No fees were incurred in relation to taxation, including tax compliance, tax advice and tax planning.
Purchases of equity securities by the issuer and affiliated purchases
Period
Total number of
shares
purchased
Average price
paid per share
Total number of
units purchased
as part of
publicly
announced plans
or programmes
Approximate
maximum value of
shares that may
yet be purchased
under the plans or
programmes
1 March 2023 – 31 March 2023 1,757,098 £8.54 – £301m
1 May 2023 – 31 May 2023 1,191,462 £8.39 – £301m
1 September 2023 – 30 September 2023 2,459,066 £8.69 2,459,066 £280m
1 October 2023 – 31 October 2023 11,239,824 £9.03 11,239,824 £178m
1 November 2023 – 30 November 2023 3,108,579 £9.48 3,108,579 £149m
1 December 2023 – 31 December 2023 4,479,186 £9.44 3,436,047 £117m
1 January 2024 – 31 January 2024 4,522,458 £10.48 4,522,458 £69m
1 February 2024 – 29 February 2024 5,115,720 £9.56 5,115,720 £20m
1 March 2024 – 31 March 2024 4,622,468 £10.22 4,622,468 £173m
1 April 2024 – 30 April 2024 9,172,818 £10.10 6,810,586 £105m
1 May 2024 – 31 May 2024 6,472,448 £9.71 6,472,448 £42m
1 June 2024 – 30 June 2024 811,773 £9.62 241,083 £39m
1 July 2024 – 31 July 2024 2,128,176 £10.08 2,128,176 £18m
1 August 2024 – 31 August 2024 1,706,435 £10.46 1,706,435 –
1 November 2024 – 30 November 2024 330,409 £12.11 – –
1 January 2025 – 31 January 2025 633,137 £13.11 – –
1 March 2025 – 31 March 2025 2,102,011 £12.27 732,024 £166m
1 April 2025 – 30 April 2025 6,217,360 £11.96 4,172,036 £117m
1 May 2025 – 31 May 2025 3,430,602 £11.84 2,370,055 £89m
1 June 2025 – 30 June 2025 6,364,919 £11.16 6,364,919 £18m
1 July 2025 – 31 July 2025 4,394,560 £10.59 4,394,560 £146m
1 August 2025 – 31 August 2025 3,022,585 £10.79 3,022,585 £114m
1 September 2025 – 30 September 2025 4,706,588 £10.57 4,706,588 £64m
1 October 2025 – 31 October 2025 1,685,784 £10.58 1,685,784 £46m
1 November 2025 – 30 November 2025 4,448,446 £10.40 4,448,446 –
On 27 February 2025, the Board approved a £350m share buyback programme in order to return
capital to shareholders, with the first tranche of £175m starting in March 2025, and the remaining
tranche of £175m starting in July 2025. During 2025, approximately 32m (2024: 32m) shares were
bought back and cancelled at a cost of £352m (2024: £318m). The nominal value of these shares,
£8m (2024: £8m), was transferred to the capital redemption reserve, and the remainder of the
purchase price was recorded within retained earnings. At 31 December 2025, no further liability
remained (2024: £nil) for any shares contracted to be repurchased but where the repurchases are
still outstanding.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 260
On 20 September 2023, the Board approved a £300m share buyback programme in order
toreturn capital to shareholders, with a £200m extension being announced by the Group
on1March2024. This programme and the extension completed in 2024. During 2024,
approximately32m (2023: 20m) shares were bought back and cancelled at a cost of £318m
(2023: £186m). The nominal value of these shares, £8m (2023: £5m), was transferred to the
capitalredemption reserve, and the remainder of the cost was recorded within retained
earnings.At 31 December 2024, no further liability remained (2023: £118m) for any shares
contracted to be repurchased but where the repurchases are still outstanding.
Shares were also purchased and held in Trust for the satisfaction of employee share schemes.
Allpurchases were made in open-market transactions in London in accordance with applicable
law. Pearson did not structure such purchases to fall within the safe harbour provisions of the
USSEC’s Rule 10b-18.
Insider trading policies
We have adopted an Insider Trading Policy, which, among other things, governs the purchase, sale
and other dispositions of Pearson securities by our Directors, executive officers and employees.
OurInsider Trading Policy aims to promote compliance with applicable insider trading laws, rules and
regulations and the NYSE listing standards. A copy of our Insider Trading Policy is filed as Exhibit 11.1
and 11.2 to the annual report on Form 20-F for the year ended 31 December 2025.
Cyber security
We believe cyber security is of critical importance to our success. We are susceptible to a
number of significant, persistent and evolving cyber security threats, including those common
tomost industries as well as those we face as a worldwide learning company with principal
operations in the education, assessment and certifications markets. The Group holds large
volumes of personal data on individuals worldwide, including that of employees, customers,
students, teachers and learners in the workforce, as well as other highly sensitive business critical
data such as financial data, internal sensitive information, and intellectual property. Despite our
implementation of security measures, threat actors of all types, including individuals, criminal
organisations and state sponsored operatives, have from time to time gained access, and may
inthe future gain access to the Group’s data through unauthorised means in order to
misappropriate such information for fraudulent or other purposes. Failure to prevent or detect a
malicious attack on the Group’s systems has in the past and could in future result in loss of system
availability, breach of confidentiality, integrity and/or availability of sensitive information, and
damage to the customer experience and the Group’s reputation and financial loss. Accordingly,
we continuously evaluate the impact of cyber security threats, and are committed to the highest
standards of data management and these will naturally evolve with our business as we continue
our digital transformation.
Pearson’s Executive team has overall responsibility for data privacy and security. Our reporting
and risk management structure feeds upwards from individual businesses to Board level. Under
the oversight of our Board of Directors, and the Audit Committee, our management has
established comprehensive processes for identifying, assessing and managing material risks
from cyber security threats, and these processes are integrated into our overall enterprise risk
management programme. We have established lines of accountability and reporting procedures
designed to enable senior management executives and business unit privacy owners to have
greater visibility over managing data privacy and security risks. Our approach is proactive and
adaptive, featuring regular security assessments, third-party audits and continuous
improvement of our cyber security infrastructure. We also provide all colleagues with training
onour updated and strengthened data privacy and cyber security principles and processes.
We work to align our practices with industry best practices and regulatory standards. Our
processes include detailed response procedures to be followed in the event of a cybersecurity
incident, which outline steps to be followed from detection to assessment and escalation to
notification and recovery, including internal notifications to management, the Audit Committee
and the Board, as appropriate.
The Audit Committee of our Board is primarily responsible for oversight of risks, including those
from cyber security threats, and is currently chaired by a Director with functional expertise in
cyber security matters. Members of management, including our Chief Technology Officer
provide the Executive Team and the Trust & Safety committees that have been established with
updates on cyber security risk matters on a quarterly basis and more frequently if circumstances
dictate. In these updates, members of the committees are apprised of cyber security incidents
that are deemed to have had a moderate or higher impact even if immaterial to us. In addition, the
committees review and actively discusses with management and among themselves the risks
related to cyber security and critical systems in order to provide input on the appropriate level
ofrisk for our Company and reviews management’s strategies for adequately mitigating and
managing the identified risks. The Audit Committee and management regularly update our full
Board with respect to cyber security matters.
Our Chief Technology Officer is primarily responsible for managing material risks from cyber security
threats, and is supported by a dedicated team of internal cyber security specialists led by a Chief
Information Security Officer. Both our Chief Technology Officer and Chief Information Security
Officer have extensive information technology and cybersecurity experience respectively, and many
of our internal team hold cyber security certifications such as Certified Information Systems Security
Professional or Certified Information Security Manager. We also engage specialised cyber security
consultants and leverage third-party expertise to bolster our cyber security defences.
In addition, our third-party vendors and service providers play a role in our cyber security. These
third parties are integral to our operations but pose cyber security challenges due to their access
to our data and our reliance for various aspects of our operations, including our supply chain.
Wehave developed a third-party vendor risk management programme to assess and manage
the risks associated with third-party partnerships, particularly in data security and cyber security.
Weconduct due diligence before onboarding new vendors and maintain ongoing evaluations to
ensure compliance with our security standards.
As of the date of this report, no cyber security incidents have had, either individually or in the
aggregate, a material adverse effect on our business, financial condition or results of operations.
Notwithstanding the extensive approach we take to cyber security, we may not be successful in
preventing or mitigating a cyber security incident that could have a material adverse effect on us.
While we maintain cyber risk insurance, the costs relating to certain kinds of security incidents
could be substantial, and our insurance may not be sufficient to cover all losses related to any
future incidents involving our data or systems.
See ‘Risk Factors’ on pages 244-250 for a discussion of cyber security risks that may materially
impact us.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 261
Shareholder information
Pearson ordinary shares are listed on the London Stock Exchange and on the New York Stock
Exchange in the form of American Depositary Receipts.
Corporate website
The investors’ section of our corporate website plc.pearson.com/investors provides a wealth of
information for shareholders. It is also possible to sign up to receive email alerts for reports and
press releases relating to Pearson at plc.pearson.com.
Shareholder information online
Shareholder information can be found on our website at plc.pearson.com/investors.
Our registrar, Computershare, also provides a range of shareholder information online.
You can check your holding and find practical help on transferring shares or updating your
detailsat www.investorcentre.co.uk. For more information, please contact our registrar,
Computershare, The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ. Telephone 0370 889 3250*
(or +44 117 378 5188 from abroad if calling from outside the UK)*.
Information about the Pearson share price
The company’s share price can be found on our website at plc.pearson.com/investors/
performance/share-price-dividend. It also appears in the financial columns of the
national press.
2025 dividends
Payment date Amount per share
Interim 15 September 2025 7.8 pence
Final
1
8 May 2026 17.4 pence
1. Subject to approval by shareholders at the 2026 Annual General Meeting.
2026 financial calendar
Ex-dividend date 19 March 2026
Record date 20 March 2026
Last date for dividend reinvestment election 16 April 2026
Annual General Meeting 1 May 2026
Payment date for dividend and share purchase date for dividend reinvestment 8 May 2026
Shareholder information
Dividend payments
Pearson dividends can be paid directly into your bank or building society account instead of being
sent to you by cheque, with the dividend confirmation voucher sent to the shareholder’s registered
address. It is important to note that, with effect from September 2026, Pearson will pay cash
dividends by direct credit only, cheque payments will no longer be available. Please ensure you
have submitted a dividend mandate and registered your bank or building society details with our
registrar, Computershare, prior to September 2026. For any shareholder who has not submitted
their dividend mandate prior to September 2026, any future dividends will be held as a non-interest
bearing deposit and they will need to contact Computershare to have the funds released. An
administration fee may be payable to release your funds. For further information, please contact
Computershare on 0370 889 3250 (+44 117 378 5188 if calling from outside the UK)*.
Dividend reinvestment plan (DRIP)
The DRIP gives shareholders the right to buy the company’s shares on the London stock market
with their cash dividend. For further information, please visit plc.pearson.com/en-GB/investors/
shareholders/shares-shareholding or contact Computershare on 0370 889 3250 (+44 117 378
5188 if calling from outside the UK)*.
Share dealing facilities
Computershare offers telephone and internet services for dealing in Pearson shares (other
providers are available). For further information, please contact their telephone dealing helpline
on 0370 889 3250* (+44 117 378 5188 if calling from outside the UK) or, for online dealing, log on to
www.investorcentre.co.uk. You will need your shareholder reference number as shown on your
share certificate.
A postal dealing service is also available through Computershare. Please telephone
0370 889 3250 (+44 117 378 5188 if calling from outside the UK)* for details or log on to
www.investorcentre.co.uk to download a form.
ShareGift
Shareholders with small holdings of shares, whose value makes them uneconomic to sell, may wish
to donate them to ShareGift, the share donation charity (registered charity number 1052686).
Further information about ShareGift and the charities they have supported may be obtained from
their website, www.ShareGift.org, or by contacting them at ShareGift, 6
th
Floor, 2 London Wall
Place, London, EC2Y 5AU.
* Lines open 8.30am to 5.30pm Monday to Friday (excluding UK public holidays).
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 262
American Depositary Receipts (ADRs)
Pearson’s ADRs are listed on the New York Stock Exchange and traded under the symbol PSO.
Each ADR represents one ordinary share. For enquiries regarding registered ADR holder accounts
and dividends, please contact JP Morgan via their Transfer Agent, EQ Shareowner Services,
P.O. Box 64504, St. Paul, MN 55164-0504, telephone 1 (800) 990 1135 (toll-free within the US) or
001 651 453 2128 (outside the US). Alternatively, you may email via www.shareowneronline.com/
informational/contact-us/
Voting rights for registered ADR holders can be exercised through JP Morgan, and for beneficial
ADR holders (and/or nominee accounts) through your US brokerage institution. Pearson will file
with the Securities and Exchange Commission a Form 20-F.
Share register fraud: protecting your investment
Pearson does not contact its shareholders directly to provide recommendations or investment
advice and neither does it appoint third parties to do so. We are currently conducting a
shareholder tracing programme with Georgeson.
As required by law, our shareholder register is available for public inspection, but we cannot
control the use of information obtained by persons inspecting the register. Please treat any
approaches purporting to originate from Pearson with caution.
For more information, please log on to our website at plc.pearson.com/en-GB/investors/
shareholders/shares-shareholding
Tips on protecting your shares
• Keep any documentation that contains your shareholder reference number in a safe place and
shred any unwanted documentation.
• Inform our registrar, Computershare, promptly when you change address.
• Be aware of dividend payment dates and contact the registrar if you do not receive your
dividend cheque or, better still, make arrangements to have the dividend paid directly into
your bank account.
• Consider holding your shares electronically in a CREST account via a nominee.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 263
Reliance on this document
The intention of this document is to provide information to shareholders and is not designed to
be relied upon by any other party or for any other purpose.
Forward-looking statements
This document includes forward-looking statements concerning Pearson’s financial condition,
business and operations and its strategy, plans and objectives, including but not limited to
forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are
cautioned not to place undue reliance on such forward-looking statements. In some cases, you
can identify forward-looking statements by terms such as “may”, “will”, “should”, “expect”,
“intend”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue” or the
negative of these terms or other comparable terminology.
By their nature, forward-looking statements involve known and unknown risks and uncertainties
and other factors that may cause Pearson’s actual results, levels of activity, performance or
achievements to differ materially from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking statements. This is because they
relate to events and depend on circumstances that may occur in the future. They are based on
numerous expectations, assumptions and beliefs regarding Pearson’s present and future
business strategies and the environment in which it will operate. Pearson believes that the
expectations reflected in the forward-looking statements are reasonable, although it cannot
guarantee future results, levels of activity, performance or achievements.
There are various factors which could cause Pearson’s actual financial condition, results and
development to differ materially from the plans, goals, objectives and expectations expressed or
implied by these forward-looking statements, many of which are outside Pearson’s control. These
include international, national and local conditions, as well as the impact of competition. Such risks
and other risks and uncertainties are detailed from time to time in Pearson’s publicly filed documents
and, in particular, the risk factors set out in this document, which you are advised to read.
Any forward-looking statements speak only as of the date they are made and, except as required
by law, Pearson gives no undertaking to update any forward-looking statements in this
document, whether as a result of new information, future developments, changes in its
expectations or otherwise.
All statements that express forecasts, expectations and projections, including, but not limited to,
trends in results of operations, margins, growth rates, overall market trends, the impact of interest
or exchange rates, the availability of financing, anticipated cost savings and synergies and the
execution of Pearson’s strategy, are forward-looking statements. The forward-looking
statements, specifically the margin target, financial expectations, 2026 outlook and 2027
ambition information, included on page 26 of this document have been prepared by, and are the
responsibility of, Pearson’s management. Ernst & Young LLP has not audited, reviewed,
examined, compiled or applied agreed upon procedures with respect to these forward-looking
statements and, accordingly, Ernst & Young LLP does not express an opinion or any other form of
assurance with respect thereto.
Pearson plc Annual report and accounts 2025Strategic report Governance report Financial statements Other information 264
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